Investing over Consumption

I have always found Warren Buffett’s principles on investing and his quotes very interesting. I have lived by one, so I thought I would share my experience. Also, I wanted to share why it might make sense and be essential for families in their 30s or 40s who come into money either through their career earnings or inheriting money.

Warren Buffett says, “Investing is forgoing consumption now in order to have the ability to consume more at a later date.”

Investing now provides a better opportunity to consume more in the future. Here are five reasons why it makes sense for a 30-40-year-old something to start investing now:

Compound Interest: The earlier you start investing, the more time your money has to grow through the power of compound interest. This means that the returns on your investments generate their returns, leading to exponential growth over time.

Retirement Planning: Starting to invest in your 30s to 40s gives you a solid 20-30-plus years to build a substantial retirement fund. This can ensure a comfortable lifestyle after retirement, free from financial worries.

Inflation: Investing helps to combat inflation. Money saved in a bank account loses value over time due to inflation, but investments in stocks, bonds, or real estate typically grow at a rate that outpaces inflation.

Financial Security: Building an investment portfolio can provide financial security and peace of mind. It acts as a safety net for unexpected expenses or economic downturns, reducing the need to rely on credit or loans.

Wealth Accumulation: Investing allows you to accumulate wealth over time. This can enable you to achieve long-term goals such as buying a home, funding your children’s education, or traveling extensively.

Why give up consuming now and the emotional side of investing now?

By sacrificing some consumption now, you can enjoy greater rewards in the future. This principle of delayed gratification is key to financial success. Budgeting and saving can help by reducing current consumption, allowing you to save more money for investment. This disciplined approach can lead to significant personal financial growth over time. Lastly, focusing on long-term goals rather than immediate pleasures can lead to a more fulfilling and secure future. Investing now ensures you have the resources to enjoy life later without financial stress.

Balancing Emotions

Finding a balance between saving and spending can help mitigate feelings of deprivation. Allowing yourself occasional treats while maintaining a disciplined investment strategy can be emotionally satisfying. Keeping your long-term goals in mind can help you stay motivated and positive about your decision to invest. Visualizing the future you want can make the sacrifices feel worthwhile. Lastly, sharing your financial goals with friends or family can provide emotional support and encouragement. Having a support system can make the journey less lonely and more rewarding.

Investing now is a journey that involves both emotional highs and lows. Acknowledging these feelings and finding ways to balance them as you work towards a more secure and prosperous future is important.

Chris graduated from the University of Maine, where he played hockey on a scholarship, and retired from professional hockey in 2007. In the community, he remains engaged, serving as a youth hockey coach. Chris holds the CERTIFIED FINANCIAL PLANNER™. Outside the office, he enjoys trying new food and wine, reading, traveling, playing golf and hockey, fat tire biking, and donating to local charities. His passions include being a husband and dad, lake life with the family, watching his son and daughter play sports, and spending time with his wife. To learn more about Chris, connect with him on LinkedIn.

Heisten Financial, LLC is a registered investment advisor with the SEC. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities, and past performance is not indicative of future results. Investments involve risk and are not guaranteed.