The average stock market return is said to be 7% but you’ll need to take that with a grain of salt. Likewise, one must account for inflation, medical emergencies, career shifts, relationship changes, and the like. You can create a spreadsheet projecting your ideal path to retirement but there are simply too many factors!
Know what works well — something you can (somewhat) rely on? Time.
Time is on your side when planning for retirement thanks in part to the magic of compounding. The earlier you invest, the more you’ll have in those golden years. If you want to start on this path, go now.
Are We Financially Mature to Invest?
We’re what many call the “Instant gratification generation“.
We want instant access to information. We want items as we see them. We aren’t one to sacrifice to get what we want later — delayed gratification.
The unfortunate side effect of this “now” mindset is our inability to save toward long-term goals. It’s hard imagining what you’ll do in 5-years let alone the goals 30-years out.
You can see this by the fact most people don’t have savings, or they’re living paycheck-to-paycheck. Many instances are out of one’s control, but you could bet a good chunk are financially inept.
Building Wealth for the Long-Term with Gratification Today
Let’s consider long-term investments one can make today to appeal to this instant gratification mindset and lifestyle we’ve adopted.
Round-Up Savings
Apps like Acorns and Digit take and deposit loose change, from every purchase to the nearest whole dollar, into an investment account. Or, into a high-yield savings account. This passive opportunity removes most burdens one may have with investing.
Round-up/loose change investing is out-of-sight and out-of-mind. It doesn’t seem like much but someone swiping their card several times a day can create a substantial step forward in long-term investment goals.
Currency Arbitrage
Currency trading offers both short and long-term investments. The premise details holding weak or strong currencies, waiting for an opportunistic difference in the trade values.
Ever held a few notes when traveling abroad to later discover they’re worth more? That’s the idea!
One can play short strategies in forex or currency arbitrage. Or, bet on emerging markets as they improve GDP, stability, and politics.
Cryptocurrency is a sub-set of currency trades you could explore, too!
Stocks, Funds, and Micro-Investing
Apps like Robinhood, Betterment, M1 Finance, and WeBull have disrupted the financial and investment sector. These investment platforms and robo-advisors have all but eliminated the high trading fees and management.
Removing the fees and presenting an easy-to-use interface, in the palm of your hand, has attracted millions of users to these platforms.
Through these apps you can invest in:
- Individual Stocks
- 401k’s
- Mutual Funds
- IRA’s
- 529’s
- ETFs
… and more.
You can also find platforms, like M1, letting you invest fractional shares. This is perfect for those wanting instant action versus saving to buy whole stocks/investments (which they may never get to because of distractions).
Our Education
Cheesy as it sounds — building better opportunities through higher education or skills/trades is a worthy short & long-termination investment.
What soft skills can you learn now that will greatly benefit in the future?
- Sales and marketing (as we increasingly need to pitch ourselves)
- Communication and management (to avoid waste and mishaps)
- Entrepreneurship and finance (giving us a challenge and grounding)
Help your children understand finances early as this gives them better, compounding opportunities. Use this time to educate yourself, too, discovering what investment strategies best apply to your age group.
Invest Now, Think of the Long-Term
We may live in a “now” culture fueled by instant gratification. And, have trouble investing when there are demanding things today.
But:
It’s important to remind oneself of the benefits — how even a small investment amount can create real wealth decades from now.
What short-term investing strategies do you use? What are your long-term financial goals? Share your thoughts with a comment below.