You’ll see all sorts of reasons advanced for why you should invest.
Retirement is a biggie, especially once you reach your forties — although it’s by no means uncommon to find twentysomethings also actively saving for retirement.
Speaking of twentysomethings (and thirtysomethings), house deposits feature too. Although that can be a little problematic, as falling house prices often correlate with falling stock markets — meaning that the best time to put that deposit towards a mortgage is the very time when your investments are enduring a cyclical downturn.
Vague notions of ‘wealth’ and ‘safety buffers’ figure, too. The exact rationale may not be articulated too precisely, but investing just feels to be the right thing to do.
That said, those people investing because they vaguely feel that they ought to be investing often don’t really invest enough to make any kind of appreciable difference — it can sometimes be little more than a box-ticking exercise.
Financial independence, retire early
Chances are, you’ll recognise your own investing motivation in one of those descriptions above.
But there’s another investing rationale out there, and one that is surprisingly powerful: financial independence, as a goal in its own right.
Now, you might have read of the ‘FIRE’ acronym — financial independence, retire early.
Google FIRE, and it’s not difficult to come across stories of abstemious young professionals living in sparse apartments, living frugally, and aiming to retire at age 47 or whatever.
Good luck to them: many do retire early, although not always as early as they had hoped. Early retirement isn’t for me, though: I decided that years ago. I’d be bored — and besides, what’s wrong with being paid for doing what you enjoy?
And I’ve a sneaking feeling that early retirement isn’t always for the FIRE folks, either. Once the thrill of foreign travel and the golf course wear off, I suspect quite a few FIRE folk go back to some sort of regular work — even if it’s working for themselves, or some kind of charity.
It’s not just about retirement
So no, I’m not talking about FIRE.
But, as I say, I am talking about financial independence — the ‘FI’ part of the acronym.
Sure, it might lead to early retirement, if you want. Let’s face it, if you don’t need to work, then why endure the slog of daily meetings and daily commutes if you don’t have to?
But financial independence brings much more than just the prospect of early retirement into view.
Simply put, wealth offers you freedom. Freedom in terms of capital lump sums, and freedom in the form of a valuable second income.
Live the good life
Freedom from money worries is part of it. The freedom to move away from a house or location that you don’t like, or no longer like, for example. The freedom to make large purchases without budgeting or saving for them.
Freedom of choice, too. Wealth opens doors, and provides opportunities. Instead of regretfully saying ‘no’ to things, you can say ‘yes’, instead.
And perhaps most importantly, the freedom to do the work you want to do, how you want to do it, and when you want to do it. Because with financial independence comes the ability to walk away from a job, or a boss, without necessarily having another job to go to.
That particular freedom can be priceless — not to mention good for your health, and your ability to sleep soundly at night.
