Why I Don’t Invest in the Distant Future
From a young child, I was taught the importance of studying hard in school to get accepted into a good college, get a degree and a good paying job to support my family, buy a nice home, reliable vehicle and put food on the table. The goal was retiring without debt, and enough savings in the bank to be able to sit back, relax and enjoy the fruits of my labour.
If what you have just read excites you, you may want to stop right here.
It is an easy mindset to accept, because it brings low risk comfort, pays the bills and puts food on the table and a roof overhead. We work hard most of our life to retire—to enjoy the life we have worked so hard to create. The problem with this mindset is that the benefit is in the distant future.
About seven years ago, my friend (let’s call her Sarah) was gifted a home to share with her brother. Sarah and her husband (let’s call him Steve) decided to buy out her brother, so she could own the complete house. Even though Sarah and Steve already owned a home, they thought this would be a great opportunity for extra revenue. The began renting out the home and accumulating the monthly income until there was enough to put a down payment on their third home.
After speaking with investors, ready to purchase their third home, they were given advice that I thought was absurd. They purchased the home through that bank as usual, but instead of getting a traditional mortgage, they got a line of credit mortgage in which they only had to pay the interest and zero principle.
When I heard this, I was set back. It made no sense to me. Why would they want only pay interest and never actually end up owning the home? After they explained it to me, it took a while to sink in, but eventually made complete sense.
When I tried explaining this to someone else, they too thought it was absurd. I explained, “Why wait until retirement to enjoy the money?”
You see, Sarah and Steve take the income from the rent, pay their small monthly loan interest, utilities and taxes on the home, and then put the remainder in the bank to accumulate. Once that amount grows enough, they purchase another revenue home. In a short eight years, they are now owners of over eight revenue homes!
The more homes, the bigger the snowball gets and the faster it gets rolling. If they want to use the money and pay down one home, they can. If they want to continue growing their portfolio, they can. If they get to the point where there is enough money coming in, the could even choose to be fulltime landlords… or even contract it out and enjoy life that much more! The nice thing is, if the market climbs in the next 20-30 years, as housing markets tend to do, the house will be worth more than what is left owing to the bank. If needed, they could also choose to liquidate one home or any number of homes whenever they choose.
They aren’t investing into retirement at the end of the road, they are enjoying life NOW!
We are not guaranteed tomorrow. Once in a while, you hear a sad story of a person who worked their whole life to make it to retirement, only to get cancer and die months later. We work our whole life to pay down our mortgage and save money to live on when we retire.
Sarah and Steve are not working for money. Money is working for them. They have found a way to enjoy life now, AND for the rest of their lives. This is why I no longer live for the distant future, but rather live in the moment, and you should too! Worry about today for tomorrow will have enough worries of its own. Enjoy life now, because you are not guaranteed tomorrow.
If you are working hard, taking care of your customers and loving what you do, the money will come. Live in the present. Make your dreams a reality TODAY. Invest in your health TODAY. Invest your life TODAY.