(03) 9020 2905“Invest or Die!” was the alarming title of a finance book by a mate, John Beveridge, a few years back.
I was expecting cold hard facts showing that “if you don’t invest, you’ll die”.
Good book, but that’s not what it was about. However, it is true that wealthier people are healthier people. While the rich can’t buy immortality (yet), the stats say they can cling to the perch longer.
How do I get me some of that living longer wealth elixir, then?
Some people are born with a silver spoon. Others have their lucky numbers come up. Some find a mixture of a brilliant idea and hard work deliver them rewards.
For the rest of us, it’s called investing. It’s a hard slog. It means going without and making sacrifices and saying no every month for decades.
Keeping your motivation going for that long is too tough for most. If you want motivation to start, or continue, or get back into, or ramp up your investments, here are five reasons why you must invest now.
Above the breadline
Most Australians financially limp into retirement. Their super balance is woefully inadequate. It is, according to a report by CPA Australia, often just being used to pay down the mortgage.
If you arrive at retirement with no super and a fully owned home, have you done okay? Um, no. You’re now on the government age pension. That’s $356 a week for a single, or $536.70 a couple.
You need either more super or other investments.
If you’ve got time – particularly those in their 30s and 40s – you need to start now. If you’re in your 50s, it’s never too late to make a difference.
Or be fatalistic about things. Start joking to yourself about how many different ways you can serve tinned spaghetti for dinner.
Clocking off early
But who wants to work to 65 anyway? Anyone got a goal of 60? 55? How’s that plan going?
Investing is about creating income streams – unearned income – that will eventually replace your salary.
If you want unearned income of $60,000 in retirement, without relying on the age pension, there is no investment on this planet that will magically create that. You need around $900,000 to $1.2 million in net investments, not including home.
Predominantly, that income is going to come from share dividends, rent from property and a super pension.
It won’t arrive magically. Unless you consider sacrifice and “the power of compounding returns” to be a kind of magic. A little extra a week, into investment, or your super, is the only way to get there.
If you’re 35 now, you’ve got 25-plus years for compounding to do its thing before retirement. Putting away $10,000 a year at age 35 is far easier than having to find $40,000 a year for 10 years at age 50.
Wealthy and healthy
If you’re loaded, you tend to live longer, according to studies. It literally is a case of “Invest or die!”
While Australia’s public health system is good, being able to afford the top quality healthcare is certainly better.
Higher incomes and better private health coverage generally mean you can get access to better medical help earlier, even before it gets serious.
Buy time
What’s the thing we seem to have the least of? The thing we crave the most? The thing we regret wasting?
Money! Well sure. But that’s not the correct answer. It’s “time”. Why? Time can’t buy money. But money can buy time. It’s what money does best.
Time away from the kitchen (ordering in), from mowing lawns, from doing your taxes. Time to spend watching your son play footy, or helping your daughter to add more brains to her unending beauty. Time to watch an entire day of a test match.
Don’t wither on the vine
The current life expectancy for a man is 79 and for a woman is 84. That has been growing at two years each decade. If that trend continues, in 50 years, men and women will be straddling 90.
If you’re going to hang around playing bingo, bridge or bowls for 25-30 years, then don’t you want to have some financial independence?
Invest or … have a miserable retirement. And die earlier.
Bruce Brammall is the author of Debt Man Walking (www.debtman.com.au), a licensed financial adviser and mortgage broker. bruce@debtman.com.au.