Why You Need to Start Investing

So you’ve picked out the savings ratio that fits best for your life. And you’re now stashing that money every month. (If you have a loan, you are putting that money into the loan. And keep it up!)

Then one day you will summit your first mountain. At this point you have 4 months of living expenses sitting in your savings account.

Once here you should celebrate with a 90s dance party in your living room. Or at least jump around on your bed alone to ACDC. Good on you!

The reason you want to keep 4 months of living expenses in your savings account at all times is for emergency situations. For reasons like if you get kicked out of your current rental house or if you get seriously hurt.

So at this point your accounts look like this:

After you hit four months of living expenses it’s time to start investing. I know it totally freaked me out at first. But don’t let that scare you! Just breathe deep. It is okay. We’ll talk through it all.

The most important rule of investing is nobody knows nothing. There is not one person in the world who can predict with 100% certainty what will happen. Not the financial professionals, not the brokers, not the hedge fund managers -- no one.

And now that I’ve discredited everyone on this planet, including myself, I’m a bit baffled at how I’m supposed to talk to you about investing. But I’m still going to give it a try.

Money is not a concrete substance. Money is a liquid that ebbs and flows, rises and falls. One of the ebbs and flows of money that you may already be familiar with is inflation. Inflation is the rising value of goods and services over time.

Ever hear your mom or dad say, “Good lord! I remember when a gallon of gas was $1.00. Now look, it has hit $3.00!”? The rise in the value of gas (or any other good/service) over time is inflation.

US currency (just like gas) has inflated, with its rises and falls, at a rate of 3% over time. This should scare you a bit because it means that unless your money is growing by 3%, you’re actually losing money. Your money is losing its value to inflation.

For example, if you had $1,000 in a checking account in 1990 and left it there till today, your $1,000 would only be worth $472 of what it had been in 1990! (Calculations.) The $1,000 lost its value to inflation.

The same thing is happening right now. All money is slowly losing it’s value to inflation. So if you have your money as cash, in a checking account, or in any medium that is not increasing your money by 3% long-term, your money is losing value. If you haven't simplified your bank accounts with a high-interest savings account, get on it!

We need a vehicle that is going to combat that -3% and drive us forward to freedom. That vehicle is called investing.

We’re going to begin at the basics. Then we’ll talk about a place where you don’t need a large lump sum of money to start. All you need is a solid savings ratio and a fun-ass life.


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