As investors we are always looking to the future. Profits earned in the past have no bearing on what is to come. We are always setting deadlines and goals for “what we’ll do once we achieve [insert milestone]”. Accordingly, we tend to put off to tomorrow what we could be doing today.
We work tirelessly to strike a balance between today’s wants and tomorrow’s needs. Typically, the line of thinking runs that we should achieve a certain level of passive income through dividends or other means before taking the foot off the gas pedal and relaxing. We are all aware of the power of compounding and know that we are best served to invest as much as possible today to take advantage of growth over time.
While at the beginning of one’s investing journey it makes a lot of sense to go all out and invest every extra penny, eventually a time comes when a certain level of passive income has been built up and maybe one should rather begin enjoying themselves. At this point two options present themselves:
- Continue investing and don’t relent until the ultimate goal has been reached.
- Begin enjoying the fruits of one’s labour and taking more time for oneself.
Table of Contents
Option 1
Continuing to work at full capacity to sock away as much money as possible to reach the final goal of complete financial freedom is a noble pursuit. For most people working in this way, they have a goal set for their early 40s or so to be able to walk away from the workforce if they so choose. As noted, however, this requires them to continue working tirelessly over a decade or two.
This option is not without risks; the largest of which is the risk of burnout. Punching the clock day in and day out just to make your future self happy can be stressful. Nobody likes living on less when they don’t have to and certainly not over decades at a time. The future is uncertain and this makes it all the more difficult to feel confident that one is doing the right thing by foregoing pleasure now to prevent pain later (not being able to ever fully retire).
Another significant risk is that all of the things one might plan to do at a later age once the financial means have been secured may no longer be available due to concerns that crop up. What if you get to 50, have attained financial freedom, but are wearied from a life of endless toil and no longer have the desire or capacity to travel the world anymore? What if your health has failed you because you neglected your fitness to work overtime over the years?
Option 2
Ten years of diligent investing is long enough for anyone to significantly improve their financial footing. By then one should be able to achieve at least a few thousand dollars worth of annual passive income and have their snowball of wealth rolling along comfortably on its own, notwithstanding additional contributions.
Once this level has been achieved, the question to invariably be asked is, “When should I start enjoying the hard work I’ve put in? When have I done enough to lay off a bit, work less overtime, and take more time for myself?” The answer to this is subjective, of course, but the question certainly needs to be asked. There should be no guilt or shame in relaxing a bit after so much hard work has already been done.
After all, what is the point of living anyway if not to enjoy oneself? There is something to be said for taking time to enjoy life while still young enough to actually do everything you’d like to do! It’s been said a million times, but nobody ever on their death bed wished they’d put more hours in at the office.
Conclusion
Having a solid work ethic is incredibly important, but so is taking time to have experiences with the people you love. Be sure that while you’re working and investing that you’re not at the same time sacrificing the person you most want to be. Be sure that you’re not losing who you truly are in the pursuit of securing your future self. With a strong enough why, staying on the right course as an investor and person will be far more manageable.
There is no clear cut answer to what this article is asking. You need to find what works for you.
Life is about balance; find yours.
– Ryan
What have you found to be the proper balance in your life between work/investing and personal endeavours?
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Excellent point! In my case, balance is the key! I, unlike many others, love my career and worked for it since I was a kid. So, I do not necessarily want to invest solely to quit; rather, I want to invest for overall wealth building and a nice nest egg at the end of the tunnel. Luckily, I can still retire relatively young with a full pension (50), so that is the plan, but having a nice portfolio built up would definitely help if something comes up (illness or disability).
Thanks for stopping in, Special Agent Div!
It sounds like you’re in a very fortunate position to be able to walk away from the game at 50 with a full pension. The fact that you are still investing regardless of having this safety net through your employer bodes well for your future prosperity. It adds a second level of insurance than you’ll be doing well as time goes on rather than struggling to make ends meet.
Balance is definitely the key. We often as dividend growth investors pressure ourselves to feel like taking a break from full steam ahead is a complete failure. While it is of course best to reinvest dividends to maximize growth potential, it is also important to make sure we’re enjoying a healthy lifestyle as well and loving life. Taking a breather can sometimes be the refresher that we need to get back to grinding away.
Thanks again!
– Ryan