What Do You Hope To Achieve By Investing? What's The Point Of It All For You?

[Simon]

Haha, love it. (your honesty)

Does anyone else share this honesty?

It makes for an interesting debate. Do people build wealth for themselves, or do they build wealth so they can feel better about themselves in comparison to other people?

Studies have been done which conclude that people would rather earn $70k/year when all their friends are earning $50k/year, instead of earning $100k/year when all their friends are earning $150k/year.

"Rich" and "wealthy" are comparitive terms. You are only ever rich or poor compared to someone else.

Often the underlying desire to be rich comes from wanting to feel better, stronger or bigger than someone else. I'm not saying this is the case for all people, but if some people were happier in themselves, they probably wouldn't need all the window dressing to feel more content with their own life.

Most people would wonder if I was serious or making a joke - especially given the grin I added. I reckon those that know me would think the latter - it doesn't worry me either way as I am pretty thick skinned.

Interesting that you chose the option that fitted your perspective of investors, the one that supported your paradigm.

What do you think of this perspective of mine?

 

[oc1]

I find that when people give the reason as "do what i want when i went' is very..well...absurd. You can do what you want when you want NOW. You have the choice to do so. You working for someone else or yourself for that matter doesn't stop you from doing what you want. Property investing/making money etc is a means to an end. Your end can not surely be to take a holiday to an exotic place each year (you can do that while you work) or spend more time with the kids or "i love putting deals together" (so do i by the way and sometimes its a drag) or "freedom to choose" (choose what?).

What is financial independance/freedom? Financial freedom is a myth because we talk about it as if it would be the panacea to all our problems.
What would you do with all the extra time you would have if you ever achieved the financial freedom you desire? Most people dont have a clear answer to that question. Bill Gates, Warren Buffet have ALOT of money. But you dont see them running around concerned with financial freedom or retirement.

Anyway, i could go on about why passive income is a myth (nothing is passive) and more time is a myth but i'll leave that for another time. But i will leave you with this....."People who are successful in life do not wake up one day and call it quits. The ones who are wanting to call it quits are the ones who will never have anything to quit in the first place."

Cheers

Oscar

 

[Cherry Pro]

Financial freedom ... to do my own thing in my time and space.

Actually, have to thank my Dad for passing on his 'investing' spirit ... my
parents are quite wealthy but my grandparents were not ... so if ever
I told my dad "let's catch a cab instead of the bus" he'd always say to me
"you might have a rich dad but I didn't" ... and on to the bus stop we'd go.

Now I enjoy it as well and this forum is amazing !

Have a good weekend !

 

[Cherry Pro]

OC - the reason you don't see the likes of Bill Gates and Warren Buffet
running around concerned with financial freedom is .... simply because they
have it ...they have the money which brings financial freedom ... which is
what we aspire to ... when we invest.

 

[VYBerlinaV8]

I invest because I believe it is the fastest, low risk path to achieving the criteria I have set for myself for not having to work any more, that is:
1) Low risk passive income of $150k per year (in today's terms) shared between my wife and I; and
2) PPOR paid off completely.

At the rate we are progressing I believe we will achieve this goal in the next 12-15 years, putting our 'available retirement age' at 43-46 years of age.

I think that to achieve this goal we will need a nett asset position (equity position, I guess), of about $3M, in today's terms. At present we have just passed the $500k mark. The plan going forward is to purchase another 7 IPs over the next 7-9 years, depending on market conditions. At present I think market conditions favour me to do this (at least in my area). We also purchase units in a managed shares fund every month.

Ultimately, the plan is to have a nett position that generates a reliable 5% yield per year, with any growth incidental, and used to offset inflation in the longer term, and to support yield g rowth.

I don't think I will ever stop working completely. What I want is to be able to do is work when I want, doing what I want. I want to be able to work periodically, and then take chunks of time off to travel, and to do family stuff. Basically, I don't want to be reliant on my job.

 

[markp]

I dunno, I suppose I get a kick out of it. Like my mum always told me "Whatever makes you happy"

 

[Superstitionist]

To be honest, I can't see I can retire before the retirement age. All I am asking is simply financial independent after that date, don't need to rely on anyone...that include the government...

 

[caz]

I agree that we have the choice now, we can travel have fun while we are working but if we don't invest we will always be a slave to our jobs. We also will not be able to continue with our desired lifestyle into retirement. I don't want to be a poor pensioner and feel super won't be much better.
Although I say retirement, I consider this the choice of working or not while actively managing our investments so not sitting around doing nothing.

Simon I did think you were joking.

Like Cherry Pro my parents have lead by example and they did not have rich parents. Although the retired early they are continually managing their money and having lots of S.K.I. holidays.
And I know this is where I want to be

 

[alexlee]

I disagree, Oscar. I have the CHOICE but not the ABILITY or resources to do whatever I want now. Why stop at a holiday? Why not live in Italy for 6 months during the best seasons of the year? Why not buy that million dollar mansion on the Gold Coast? I am able to do SOME of the things that I want to do while working (this from a guy who quit and took 3 months off, mind), but certainly not ALL the things that I want to do.

If you can do everything that you want to do while working, good for you. I have bigger plans. If that means I’m greedier, so be it.

You’re right. Most people don’t have an answer to what they would do with all the extra time. That’s why most people make very unhappy ‘retirees’. That’s why part of the investment plan should be to prepare for what to do when you have the time and money. Develop hobbies, say, or just learn new things to do. In practice, I expect I’ll transition from full time work to full time investing, then part time investing, THEN whatever I want.

Gates and Buffett don’t do it for the money. They do it for fun. It’s great if you find work that you enjoy, but most people don’t.

It isn’t totally passive, of course, but it can certainly be less than the 60 hours a week that we usually spend on a job! Of course people don’t wake up one day and call it quits. Personally, I am developing a plan to transition slowly, over a number of years, towards the lifestyle that I want.
Alex

 

[GoAnna!]

I find that when people give the reason as "do what i want when i went' is very..well...absurd. You can do what you want when you want NOW. You have the choice to do so. You working for someone else or yourself for that matter doesn't stop you from doing what you want. Property investing/making money etc is a means to an end. Your end can not surely be to take a holiday to an exotic place each year (you can do that while you work) or spend more time with the kids or "i love putting deals together" (so do i by the way and sometimes its a drag) or "freedom to choose" (choose what?).

Cheers

Oscar

You cannot do what you want RIGHT NOW if your lifestyle dictates that you must geneate a certain level of money day in day out. Either your lifestyle would need to change or you need to keep turning up to that job/business each day whether you want to be there or not. Very few people have created a lifestyle that does not require money.

 

[VYBerlinaV8]

Alex, it's like you read my mind. Great post!

 

[alexlee]

To be honest, I can't see I can retire before the retirement age. All I am asking is simply financial independent after that date, don't need to rely on anyone...that include the government...

Create a spreadsheet, Superstitionist. Buy one $300k IP every year for 4 years. The IPs go up 7.2% a year so the second year you buy a place for $321,600 and so on. Starting year 5 you buy 2 properties a year, again at the increasing price. Starting year 9 you buy 3 properties a year. See how much you own by year 12.

Assuming you use 90% LVR loans for the first 2, and then 105% LVR loans for the rest, you will own 12.9m in property with 9.9m in debt, giving you net assets of 3m. Cashflow problems can be overcome.
Alex

 

[Dazz]

Maybe all those Buddhist monks have got their act together when it comes to big picture questions like this, and we in comparison are all just a bit slow off the mark.

 

[oc1]

Alex

You've missed the point Alexlee. The things you desire are just that...THINGS. Sure more money will allow you those luxuries but once you buy those things then what are you going to do? Surely you dont invest in property for the sake of toys trips etc etc.

I believe many people have the wrong perception when it comes to financial freedom. I take it on board that work commitment can and will interfere with choices. However, you do not wake up one day and be in a position where you've "made it". You need to keep working at it e.g. investing/managing your portfolio.

My point is this. Many fall in love with the effect...in this case "financial freedom" and not the cause. Everyone I know would love to be rich and have a great body and be in a wonderful relationship. Those are all Effects - and they are easy to fall in love with. The secret is to fall in love with the Cause. I dont know one successful person who gets up in the morning and does what they hate. Rather, every successful person I know is doing what they love. They may not have started out loving it, and maybe every single little thing about what they're doing is not their most favorite thing in the world, but big picture, they love what they're doing. Dont misunderstand what I'm saying. Money and wealth and financial abundance are a critical part of living a full life. But, it is not the only thing there is in life, any more than relationships or health or spirituality are the ONLY things important in life.

Alexlee...you say "then whatever I want". What is that? Thats the key and the cause for your actions.

Ah...if only i was better at expressing myself. Could have summed it up in a paragraph i reckon

 

[Dazz]

...or...figure it out whilst riding around on one of these.

 

[alexlee]

Alex, it's like you read my mind. Great post!

Thanks. I've spent a lot of time thinking about this over the years. In many ways this is as important as actually thinking about the specific strategies to get rich.

I agree that most people who say 'I want financial freedom' really have no idea what it means. All they are really thinking about is 'I don't want to work because I don’t like my job'. They have no idea what they would actually do if they had enough money not to have to work. But then most people are never going to achieve this anyway, so we can just let them bleat away. We, as investors, actually have the means to achieve it.

Not having to work is actually a very difficult situation in that you have to find things to do. At work you may not like what you’re doing but at least you have things to do. I change jobs every 2-3 years, and each time I take time off in between. I usually spend the first couple of days doing all the chores I didn’t have time to do before, but after that I find myself running out of things to do. It takes a little while before I settle into a routine: doing chores, reading, meeting friends, etc.

‘Retirement’ (that is, freedom from a job) has to be planned for carefully. Otherwise you’re going to go nuts and end up wasting what is a great opportunity.

A good exercise is to describe what your day might look like when you have as much money as you want. Then re-read what you've described and ask yourself if you can repeat that day in day out. For example, you might say 'sail around the world' but can you honestly live out of a suitcase for the rest of your life? I just did it for about 2 months: it becomes mentally tough, though maybe if I had more money it would be better?

Personally, my own 'day in the life of the rich jobless Alex' includes spending time with my wife, kids, family, friends, pets, reading, watching TV, enjoying my hobbies, with some time thrown in for managing the investments. I’m thinking about various systems to make sure that I can keep on top of things (and read reports from my assistant who will do all the boring work of filing and opening mail) when I'm renting that palazzo in Milan for the summer, for example, or when I'm shuttling between my mansion on the Gold Coast and the CBD penthouse in Sydney.

As always, preparation is key. We prepare so that we have the money to buy a property when a good deal comes our way. Similarly, we have to prepare things to do so that when we have the money and time, we know how to deal with it.
Alex

 

[oc1]

...or...figure it out whilst riding around on one of these.

Very nice

 

[alexlee]

You’re right. I AM missing your point. You’re thinking money is my sole goal, but it’s not. My goals just require lots of money.

You've missed the point Alexlee. The things you desire are just that...THINGS. Sure more money will allow you those luxuries but once you buy those things then what are you going to do? Surely you dont invest in property for the sake of toys trips etc etc.

Not solely, but it’s a part of it. I honestly can’t detach the material stuff from the mental. It’s all one big package. I want the good stuff, AND the time to enjoy it. If I wanted to live without any of the toys I could kick the job NOW.

I believe many people have the wrong perception when it comes to financial freedom. I take it on board that work commitment can and will interfere with choices. However, you do not wake up one day and be in a position where you've "made it". You need to keep working at it e.g. investing/managing your portfolio.

Yes, but spending a few hours a week reviewing the paperwork while my assistant does the filing is very different from being ‘on the clock’ (including commuting time) from 7:45 to 7pm 5 days a week. It’s a long transition period.

I dont know one successful person who gets up in the morning and does what they hate. Rather, every successful person I know is doing what they love. They may not have started out loving it, and maybe every single little thing about what they're doing is not their most favorite thing in the world, but big picture, they love what they're doing. Dont misunderstand what I'm saying. Money and wealth and financial abundance are a critical part of living a full life. But, it is not the only thing there is in life, any more than relationships or health or spirituality are the ONLY things important in life.

Depends on how you define success. I know plenty of people who are FINANCIALLY successful and do jobs they hate. No, money isn’t the only thing in life, but it sure helps. Often their financial success messes up with their relationship, health, etc.

I certainly don’t see money as an end in itself. The money doesn’t make me happy. It’s the material things that it buys for me that makes me happy. It’s the fact that with money I don’t have to work and can spend more time with my loved ones that makes me happy. It's the ability to afford the best healthcare that makes me happy.

For example, I like investing. That doesn’t mean I want to do it 100 hours a week. What I don’t get is that you seem to think if you enjoy something you must want to do it constantly.

Alexlee...you say "then whatever I want". What is that? Thats the key and the cause for your actions.

To be fair, I don’t know exactly. However, it involves spending more quality time with my family, having more toys, increasing my knowledge, travelling the world, and so on. I’m 30. I don’t think I need to plan the rest of my life just yet. I’ll just keep it flexible and accumulate wealth and CF, and develop the plan as I go along.

I didn’t think about getting married and buying my PPOR a few years ago. Now I’ve changed and I’m going to do that, but the money I've accumulated over the last 10 years is helping me meet this unexpected new 'want'.
Alex

 

[natmarie73]

He said I'd be happy on a farm living a self-sufficient life with his wife & child - living a simple life!

He said you would be happy living on a farm with his wife and kids? He must have one hell of a friendly wife...

Why build an investment portfolio for 5, 10, 20, 30 + years, when you could just buy 1 home & be happy???

Exactly - why? Because owning 1 home would not make me happy. I would be continuously worrying about what would I do for an income when I was too old to work etc etc and I don't even have any desire to own "stuff" at all. Also, I never ever want to have to have anything to do with Centrelink so being happy with one house and living on the pension is just not an option!

It is human nature to always want more than what we have, and to strive to improve our lot and have "more" or seem to have more than the people around us, but it is exactly this attitude what brings unhappiness. I am envious of people who are happy with what they have no matter how much or little it is.

 

[eggnog]

Why I want to invest. Well a pictures worth a thousand words

I actually saw this boat when it moored right outside my work at brisbane port

need I say more