Saturday, September 26, 2009

The Purpose for Investing

Before getting into a discussion on why we should invest in real assets, I would first like to discuss the purpose for investing in general. Many people would like to say that they have different reasons for investing, but I would suggest that when you really look at it, there is only one common root for investing with many manifestations that branch out from that root.

The main reason for investing is to provide for our everyday needs and wants when we are no longer willing or able to work. It used to be that humans would spend each day meeting their survival needs. This would be done through hunting, gathering, farming, tending to livestock, etc. People would work until they died due to disease or injury. Few lived to old age. If they did, family and community members would help care for them. These matrons and patrons might help out with simple chores and share wisdom with the younger generations.

Now, the average life expectancy for a male in the United States is 74 years and 80 years for a female while the average retirement age is about 62. That leaves anywhere from 12 to 18 years of daily needs for which we need to provide. Unless you want to take up hunting and gathering at the age of 62, you need to invest out of your current income building up assets that will eventually provide you with income to last a lifetime.

You may say that you want to travel or spend time volunteering but unless you can provide income for food and shelter, these "reasons" for investing mean nothing. It may be difficult to think about being 65 and 70 when you are 25 and 30 years old, but you have to. There really is no other option. You need to start thinking about investing and thinking about it now. If the current financial crisis hasn't caused you to start thinking about your financial future, then nothing will.

In my next post, I will discuss why you should invest in real assets when thinking about retirement. Until next time--Keep it REAL!

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