Investing's role in life

Almost universally, when people look back on their lives while on their deathbed [...] they wish they had spent more time with the people and activities they truly loved and less time worrying about aspects of life that, upon deeper examination, really don't matter at all that much. Imagining yourself at your own funeral allows you to look back at your life while you still have the chance to make some important changes.

- Richard Carlson, Don't Sweat the Small Stuff ... and It's All Small Stuff: Simple Ways to Keep the Little Things From Taking Over Your Life

Welcome to the latest post in my journey to build financial literacy for young adults. If you have been following me, it’s been several months since I last posted and that’s due to my family having experienced a number of deaths over a short two-month period. As you might imagine, going through this intense loss and grief has led to a lot of introspection, especially with respect to what I want out of my life. To that end, I’d like to take a short detour from my ongoing posts to share why I invest, the goals of those investments and the role investing plays in my life – in short, while investing is important to me, it only plays a support role to enable what’s really important in my life. For those of you who may not want to read today’s detour post, my next post will go back to the basics of investing that I had previously been in the process of sharing. For those of you who do read today’s post, I hope it can provide some insights and help as you determine the role that investing should play in your life.

One of the most valuable things that anyone can do is to clarify what’s truly meaningful in their life. If you haven’t taken the time yet to sketch this out, I would highly recommend doing so. It isn’t always easy as it requires introspection and honesty with yourself, but can really bring focus and direction to what you’re trying to accomplish. Of course, you’ll most likely have to do this a few times over your lifetime as what’s important will evolve across different lifestages. However, the time spent on this introspection is truly worth it because it really helps you focus on how to spend your limited and valuable time by determining goals that align with what truly matters to you.

To me, the most important part of life is my relationships – with our family, friends, colleagues at work or within our community. Having the time to spend with people I care about and the ability to build those relationships is ultimately what I want to focus on in my life.

Now, while I’d love to be able to spend all my time with friends and family, I have a household to run, which brings a set of financial obligations. Meeting these obligations requires a meaningful amount of money and a sense of financial security. For those of you who have read about Maslow’s hierarchy of needs (you can view his pyramid at: https://www.masterclass.com/articles/a-guide-to-the-5-levels-of-maslows-hierarchy-of-needs#:~:text=Maslow’s%20hierarchy%20of%20needs%20is,%2C%20and%20self%2Dactualization%20needs), you probably recognize that one needs to have a level of certainty that their basic physiological and safety needs are and will continue to be fulfilled in order to have the confidence to work on achieving higher level needs such as love and belonging. So, for me to be able to devote the time and mental energy to building my relationships, I need confidence that my financial obligations will be met. That’s where investing comes into my life. It is a means to provide the physiological and safety needs which are a pre-requisite to achieving what’s really important in my life.

So, why is it important to recognize that investing is a means vs. an end? For me, it helps me prioritize my time and my emotional energy. As an important enabler in my life, it merits the time to do the reading, researching and thinking which underpin good financial planning as well as investment decisions. For example, it’s forced me to think through what I need financially in order to have the level of security and confidence in the first two levels of Maslow’s hierarchy. Essentially, my wife and I have three major categories of financial obligations:

• Day-to-day expenses: we need basics like providing shelter, food, clothing and generally providing for my family
• Large known expenses: as of next year, we will have college expenses starting for the older of my two sons. Once they are both through college, retirement won’t be that far away and I definitely would like to travel and enjoy an active retirement
• Unexpected expenses: These always come up in life: for example, we recently had to get our house tented for termites

Knowing these obligations, I’ve been able to identify an amount of financial resources we’ll need on an annual basis and a reasonable investment plan to achieve that level. Now, my time spent reading, researching and thinking about investments has a concrete goal of the types of savings and returns I need.

At the same time that I have a financial goal, I also know that investing is not so important that I devote a lot of my emotional energy and feeling of wellbeing to it. That is determined by the relationships I have in my life. So, I put my time and effort into managing my finances but don’t tie up any emotional energy as I know that is far better spent on my personal relationships.

While it’s been a very difficult few months, all the introspection and thinking about what life means has helped me really clarify where I need to put my mental and emotional effort. With respect to investing, it’s enabled me to simplify my goals and determine a target that I need to work towards while freeing up my emotional energy to focus on what’s really important.

Thank you again for joining me on my journey to build financial literacy for young adults and, in particular for today’s post, bearing with this detour topic of the role investing plays in my life. I hope that getting some insight into how I think about investing and the relative balance I put into it with respect to my time as well as my emotional energy can be helpful to you as you determine your personal balance. If you have any questions on today’s post of if there are any topics you’re interested in my broaching in future posts, please let me know. I can be reached at [email protected].