Having Any Investing Plan is Better Than None

I try not to be a money snob. I don’t discriminate between short-term “Early Retirement” planners, the longer-run value investors, or the more average index investor. I think that each method has both benefits and pitfalls, depending on risk tolerance, market conditions, and capital availability. Over the long-term, I think there is probably a “winner” in all of these investing strategies – there have been many studies showing how each will turn out over time, including risks of each method of investing.

One thing I know, is that given the choice between any method of investing for retirement and not investing at all, I’d take something over nothing. I have many people in my life who seem to take a long-term “hope it all works out” approach to retirement planning, and not really do anything (save and/or invest) that may help them when they can no longer work.

I don’t think everyone needs to retire at 35 or 45, or even 60. I think that there should be some recognition however that at some point in a person’s life, they may either not want to get up in the morning to work for money, or they might no longer physically be able to work anymore. It’s so easy to put off that inevitable day in return for vacations, a new car, a bigger house, or any number of purchases that could be made by an “average” middle class household.

For me, working towards financial independence is a long-term goal that I try to keep in mind anytime I start thinking about doing something foolish with lots of money. It’s the kind of goal that stops me from what I would deem frivolous spending. I would rather work towards an end goal with my available funds.

A different, probably less aggressive goal could be anything that would ensure that both my wife and I have enough money when we’re done working. Instead of a 40 – 60% savings rate, a more reasonable 10 or 15% rate would ensure a small fortune in savings over a 35 or 40 year period at even a very conservative rate of return, because the way I see it, any savings and investing plan is better than none.

Fight Lifestyle Inflation

I like new gadgets. I am mostly successful at stopping myself from purchasing too many new things. I don’t like to waste money and I know that within a month or so of purchasing something like a new phone, I’ll be eyeballing the next version that does almost the exact same thing, but looks just a little bit different. I have staved off buying anything new, mostly because there’s nothing inherently wrong with my current phone.

Most electronics have been made to become obsolete fairly quickly. Over time, programs stop working, buttons start being a little finicky in working and the overall user experience just isn’t the same as when you got the item. In the case of a phone, I’ve noticed my 3-year old phone is starting to get really “laggy” over the past couple of months. If all I used it for was a texting machine and camera, this would be fine, but I use it as my main source of reading news and social networks for most of the day and evenings, so it is becoming a bit more of a pain to use.

Phone companies creating the contract dates – Ideally, something that costs between $500 and $700 would last for more than 2 or 3 years (the length of time most people wait between “upgrades” due to changes in cell phone contracts. I know I’ve fallen into getting a new cell phone more than every 3 years, starting with various flip phones, and moving to two different smartphones in the last five years.

Going into retirement, the desire to constantly buy the newest and best stuff would be a huge burden on our savings plans. Living with a 10 year old television that still shows HD, but doesn’t show sports in 4k is something we might just have to live with, same as dealing with an 8-12 year old car or 3 year old cell phones. One of the reasons we are able to even contemplate retiring significantly early is because we have kept our expenses much lower than our income coming to this point in our financial lives.

Buying into the consumer lifestyle too far for things that really won’t change our lives that significantly will not allow us to retire early. Beyond the initial rush of buying and being able to compare the new shiny thing to the old beat up “heap” it replaced, living with the “old” will allow for less of a possibility of outspending our savings.

The Hope for More Free Time

I follow a few local fitness people on Facebook, they sometimes post good deals on classes or have interesting articles. This week, one overly ambitious business, which focuses on mobility and flexibility had the following question posted: “Are Pelvic Control Drills Part of Your Exercise Routine?”. My answer to this question, is that first of all, I don’t even know what a pelvic control muscle is, or why I’d need it, and secondly, why would I work on this pelvic muscle instead of just going for a walk.

In an ideal world, I wouldn’t have to go to work, and would have a solid 2 or 3 hours per day to lift some weights, go for a walk, and then work on things like flexibility or other physical things that will allow my body to stay together in the next (hopefully) 50 years. With work, I really don’t have the time to do much more than make sure that I don’t spend all of my time sitting around and doing nothing.

Besides not having time to work on pelvic control drills, and other things that I should be doing to get in better shape, there are other things that slide due to a lack of time. One example is the fact that I should be much better versed in investing. In order to reach the goal my wife and I have set out, we have nine and a half years to save and invest enough money to allow us to be financially independent of our jobs. This kind of “responsibility” should take up a good chunk of my available time, but seems to slide to the back burner some weeks to make room for the latest library book, round of golf or Netflix show.

I’m hoping that I’ve gained enough knowledge over time that I won’t look back in horror at the investing decisions I’m currently making in the future when I will be hopefully much more confident and savvy. Once my wife and I are out of the workforce, I will hopefully be able to leverage some of the free time I gained into better returns for our portfolio. Until that time, I battle procrastination, and trying to get everything done all at once, rather than having to rush to get things done in my free time.