Recently, my life has become crowded. Being married, working, serving in church, trying to work on the side… it all adds up. It seems everyone I know is in this predicament. Too many things to do, only 24 hours per day. So, I have been discovering the brilliance of living by purpose. Put simply, this means that if something does not fulfill a major goal in my life, I simply don’t do it. You may think this takes all the fun out of it, but it’s quite the opposite. One of my major goals is rest and relaxation (to counter the times of extreme productivity), and thus I can watch some football or play some games. I have made a list of core goals I have in life for now, and if something doesn’t fit it, I remove it from my life.
For example, I had several blogs I would read daily, wasting hours of each day. I decided that I only really wanted to read about 2-3 blogs I really loved, and a few daily comics. This has cut down my RSS reading by over 90%, and after a few months of adjusting I simply don’t miss those subscriptions I no longer have. Same with money; I have learned to only buy things that support my goals in life, and not to waste money on things I don’t need. Since I don’t watch a lot of TV, I don’t need a 52″ Plasma taking up space in my living room. Sure, it would be nice, but what would be nicer is to own my own home. My wife and I could go out more, but we are childless and do not need a “date night” outside the home. We get Netflix instead.
Now, I find myself in the predicament (or joy) of investing. My debt is paid off, my student loans consolidated, and I want to start looking at investments beyond a money market account. I want to do it right. I used to have a retirement IRA that completely tanked when the economic bust happened, and lost over 70% when it was all said and done. So, I wondered, how could I use this concept of doing things on purpose, and apply it to investing?
It’s actually simple. I did not read about stocks, bonds, commodities. I did not analyze charts and graphs, nor did I read forums about investment advice. I merely took a step back, and thought about what the word “investment” meant centuries ago. Investing in something used to mean that you were supporting a person, company, or cause that you believe in. There was risk of failure, of course, but also risk of great success. If a family member wanted to open a small factory to create widgets, you might loan some money to get it going. Your money became directly proportional to the profit he made. If you lost money, you simply made a bad choice in who you were investing in.
The contrast among this type of investment with today’s markets is easy to see. It’s somewhat the same, but instead of really believing in the person or product, you are shielded for many layers from the CEO and product. Shareholders are numbers on the screen, mere percentages. Profits and losses do not always correlate to what you earn. It’s a loser’s game, where it becomes pure speculation based on what others are doing. If Berkshire Hathaway bought a stock, you can be sure the price will then rise due to massive purchasing. Of course Berkshire then sells it and shows “once again, we picked right”, when in reality they earned money on their own fame, not necessarily the merits of the stock itself.
So, I’m going to invest in what I know. If there is an existing company I believe in, I will invest in it. If a family member needs a startup loan, maybe that is something I can help with. I want to start my own business, and that will be its own investment. If I fail, then at least it won’t be due to market speculation. I’m willing to bet that if I really believe something will work, then it will probably return a good deal on that investment in years. The plan is not to speculate or day trade, it’s to keep buying stock that I believe will rise, and stock in products that I personally use and like. If Chick-Fil-A traded publically, I’d buy it in a hearbeat, because I think they offer the best service and food of any fast-serve restaurant out there. There are other businesses that I think offer good service and good products, and I will continue to put money there.
Likewise, I can invest in our nation. If I think the policy makers are headed in a great direction economically, I may buy bonds or notes to invest in the US. If I think Brazil is more expansionary, then I might buy into it instead.
Of course, I may not earn anything. Or I may even lose. But this way, even if I lose, I did it while supporting something I believed in. But I have a feeling that supporting things you believe in will usually return on that investment. Clearly, the days of earning 10% return are over for now, and we have to be satisfied with a few percent anyway. Why not put that otherwise stagnant money into a business you think has a good chance of succeeding? For me, it’s all about purpose. What better way to live by purpose than to put your money where your heart is?