Personal Development - April Ezine - Why You Should Learn To Invest

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Vincent Cooper

One of the things that I have seriously re-evaluated in recent years is the usefulness of the information I expose myself to and absorb.

Let me tell you a little about myself. One of my interests is in the political, economic, social and military history of the period following the end of World War One to the end of World War Two (from around 1919 to 1945). I have studied this period of history in great depth for more than half my life now. It has been incredibly rewarding as my view of the world and of people has been drastically altered. It has also led me to some places that are off the beaten track. For example, several years ago I flew from Manila to a small town called Tacloban to visit the site where General MacArthur gave his famous ’I have returned’ speech. I have spent time and money shopping for books and documents from that period and have spent more time – and lost more money through the use of that time – reading and studying.

I have enjoyed this immensely...but...

The information that I have absorbed has no real practical value for me, much less for my children. As a hobby, as an interest, it is rewarding, but from a practical viewpoint, that time and money could have been much better spent.

One of the key decisions I made a few years ago was to focus more of my time and energy on learning how to invest. The results have been phenomenal from a financial point of view, but also from the standpoint that I now possess knowledge that I can pass on to my children and clients. In addition, the time that has been created in my schedule allows me to pursue more self-indulgent pastimes…such as researching history.

One of the chief benefits of this switch in my attention, and the one I want to focus on here, is that I have effectively increased my lifetime earning potential by 20 years or more.

Here in Japan the average life expectancy is over 80 years (and for women, over 85 years). In the US, according to figures released in 2005, the average life expectancy was almost 78 years. If you compare these figures to those available 50 years ago you see that a while American male born in 1958 could expect to live on average 67 years, for women the figure was 74 years. If, over the next 50 years, we see the same increase in lifespan, we will see American citizens living into their eighties. Similar figures for Japan indicate that if we see similar increases over the next 50 years, people here can expect to live into their nineties, with women living into their mid-nineties.

In practical terms, what this means is that you will need more and more money to be able to enjoy your retirement and provide the necessary health care (particularly in places like America where the increased lifespan has more to do with improved but expensive health care than diet and exercise). Retiring at age 60 will mean you are only two-thirds of the way through your life. You will need to provide for yourself for an additional 25+ years after that. This in itself is a different topic and one I will return to. For now I want to discuss the importance of learning to invest.

Let’s take an average lifespan of 80 years and divide that into quarters. That is, from 0-20, 21-40, 41-60 and 61-80. These are approximates, but they equate to your period of education (0-20), your working life (21-60) and your retirement (61-80). For half of your life then you are not really making money (your childhood and your retirement). It is only while working that you receive an income if you follow the typical ’get educated and get a job’ route to life and happiness. Following this plan, what you study for the first 20 years of your life is crucially important because it will determine how much money you are able to earn while working and, in turn, the quality of your retirement. But – and this is important – there is a natural limitation to how well you can utilize that education and how much you can earn that is provided by retirement. No matter what you study at school and college your earning potential is limited to approximately 40 years while you work.

Time spent learning to invest on the other hand will provide you with the potential to continue earning money past your retirement. That is, for at least 20 years from the ages of 61-80. This gives you a 50% increase in your earnings potential over the 40 years you would normally spend working.

So if we re-evaluate what we want to be spending our time studying, we can arrive at a different conclusion, assuming we want to enjoy our retirement and earn as much money as possible. Time given to studying how to invest not only offers the potential to significantly increase the quality of your life right here and now, it also offers you the chance to continue creating wealth past retirement and right up until your change from the world of ego to the world of spirit.

With financial experts now beginning to talk about the bottoming out of continued nose dive of the world’s stock markets, now is a good time to start investing in yourself and increasing your knowledge of investing so you are well positioned to take advantage of a future upswing in either the stock market or the housing market.