Planning Fire

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Summary

Join the Discussion on: Planningfire.com

This is going to be a bit of a different blog than my normal blogs because normally I am speaking about how to invest, different vehicles, and similar - however, this one is going to be about the number one problem with investing. There is any number of issues, it could be a lack of extra funds, a lack of knowledge, or even time. However, in my personal opinion the number one problem most people have with investing…

Show Notes

Join the Discussion on: Planningfire.com

This is going to be a bit of a different blog than my normal blogs because normally I am speaking about how to invest, different vehicles, and similar - however, this one is going to be about the number one problem with investing. There is any number of issues, it could be a lack of extra funds, a lack of knowledge, or even time. However, in my personal opinion the number one problem most people have with investing…

It just isn’t sexy or fun!

Basically, we (humans) are very bad at doing anything without incentive, and it gets even worse when we are considering delaying gratification for the next 10, 20 or even 30 years. Let's take a look at saving 20% of your post-tax income as an example, if you make $3,000 a month, you would aim to save $600 of that right off the top. Now, what else could you do with $600 tomorrow? Go out on the town, new phone, new computer, camera gear, very nice whiskeys, the list goes on and on. Or you could “spend” it on your investment account with nothing in return. 

That said “nothing” in return is the lie we tell ourselves. However, let us look what that $600 means to our future selves:

10 years @7%:  1,180.29
20 years @7%:  2,321.81
30 years @7%:  4,567.35

Assuming a conservative 7% annual return, you are looking at increasing that $600 almost 800% over the next 30 years! Depending on your cost of living, that $600 a month pays for many months worth of expenses in retirement. That is not even considering things like dividends.

Honestly, just seeing the numbers may not be enough, but one thing that may help - picture yourself in retirement or if you never plan to retire, picture yourself in your 40’s, 50’s, and 60’s. Do you still want to be grinding, or do you want the freedom to do what you want when you want to do it. It may be worth thinking about all the thing you could be doing with your time other than working as a motivator.

What kinds of activities do you plan to do in retirement or if you had more time? 
Do you currently save - if so what is your savings rate?

Until next time!

What is Planning Fire?

Spencer, Chris, Laura, and Sean meet up to discuss their business ideas and report on how their journey to financial independence is shaping up. This show covers all wealth development and financial independence (FIRE) topics. We would love your ideas and to join the discussions!