Our friends at Retire Early Lifestyle share their thoughts on whether to navigate investing if you have no faith in the future.
As many know, I am more than willing to offer financial advice in order to help others to become financially independent. The sooner the better – that’s good for everyone, right?
I met a lady at a recent event that Akaisha and I attended, and in our visiting together I steered the conversation towards finances. Knowing that she lived in Hawaii and seeing that she was probably in her 40’s, I falsely assumed she had some knowledge of money and how it works.
I was wrong.
After I shared with her that we retired at the age of 38, I asked what her financial plan for retirement was. She told me that she did not have much faith in the future, therefore she had no plan.
I asked her, “What if you are wrong?”
Her response was “I do not think I am wrong.”
The dollar is going to collapse
I have been hearing of the impending collapse of the dollar for the last forty years.
First it was going to be replaced with the German Mark, then the Swiss Franc, then the Russian Ruble, Chinese Yuan, and now Bitcoin. Maybe someday they will be right, but so far, betting against the dollar has been a costly investment.
I like to tell people that the dollar is the cleanest shirt in the dirty laundry bin. Maybe you have some special inside trading information, but for me, I’ll stick with the U.S. currency.
Various apocalyptic scenarios
Maybe it’s part of being human, but it seems that society creates ominous future scenarios of various sorts to scare the living bejesus out of everyone. I’m not sure what the point of these hopeless futures and prophetic collapses are, but I do know one thing: just as we take care of our bodies by exercising and eating well, it’s important to support our minds by investing in a beneficial and uplifting perspective.
You know the old saying “If you think you can or you think you can’t, you’re right both ways.”
If you find yourself holding onto a negative worldview and have no faith in the future, how is it possible to move forward with your life? Your retirement plans? Even day-to-day living?
Holocaust survivor Viktor Frankl in his famous book, Man’s Search for Meaning made profound points about enduring life challenges and even the unspeakable. Those in the German concentration camps who had a reason for living – those who had someone to love – survived that monstrous situation. Those who had nothing to live for, gave up and simply died.
Back to financial investing for profit, it was Baron Rothschild who said that “The time to buy is when there’s blood in the streets.”
When things look the bleakest is the time to buy. We seemed to survive Y2K and the Mayan calendar End of the World projections. Remember those?
When there is no faith in the future, it’s time to go long. Remember the 2009 financial crisis? The S&P 500 Index hit 666, today it is about four times higher. Buying on that day of the low would have taken some cajones…yet people did and have been handsomely rewarded.
None of us know what the future holds. If you have a bleak outlook for the future you can always short the markets and make money that way. But if you are more optimistic that the sun is going to shine tomorrow and the world’s problems are more manufactured than real, then you need to be an investor.
This is not to say throw caution to the wind and dump everything you have in the markets, but no matter what your age – and a good guideline is to subtract your age from 120 and that is the percentage you should have in the equity markets – it is important to have assets invested there so your portfolio has a chance of growing, out pacing inflation.
What do you think? Is now a good time to go long?