Am I investing or gambling with my kids’ college money?

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Let’s face it, not many people devote much time to learning how to invest their hard-earned money. It’s not really that fun and not at all entertaining to watch your kids’ college investment fund go up, up and– then down, down. (Sorry CNBC). The reasons we invest money in the stock market may not be so obvious. One of my best friends is divorced with two adorable kids. gamblingThey live in a comfortable, albeit, tiny family house. As a single mom, you know my friend’s on a tight budget. I’m impressed because this woman is brilliant at balancing her volunteer commitments, playing sports manager and working two days a week as a graphics designer. On top of all that, she has a vibrant social life. The glass is always half-full in her view. Now I’ve been in the business of helping people understand what works when it comes to investing and managing money for years. And I’m pretty good at keeping that conversation simple. So about a month ago the stock market had its biggest drop in four years, and of course, the word panic was repeated across every newscast and news website. On that particular day my good friend blurted out something about investing that I’d never heard before, and it stopped me in my tracks.

She said she’s out of the stock market. The headlines are making her sick, and so much drama makes her even less confident about having her serious money in the market. Overwhelmed by the rhetoric, she ranted on that she needs guidance but has no idea who to trust for advice. She’s asked, “why Bother to invest?” What’s the point? She told me her hard earned savings—more than $300k from her retirement accounts and divorce settlement is safe in the bank. It doesn’t earn any interest, but it isn’t losing anything either.

She said, “Look, all I want is to make sure I’ll have enough so my kids won’t have to take care of me financially when I’m 80. That’s it. That’s all I want to know.”

It dawned on me then and there. She thinks investing is something people do because they want to ‘play the market’. To those people investing is a sophisticated game. Clearly, she doesn’t SEE herself as an ‘investor’.

What she doesn’t see is that she is a real investor, and she’s investing for the best possible reason, to take care of the ones she loves, and given how much taking care of her family means to her, she has as much skin in the game as Warren Buffett.

Reframing how we talk about investing

These insights inspired me to start a movement to change the paradigm about how we talk about investing, and by extension, how we think about investing. Let’s reframe the conversation. Instead of viewing it as race to amass the most money, or appear to be in-the-know, let’s make it about how investing helps us take care of our families. If you can learn how to pack your kid’s lunch boxes, you can learn enough of the basics to build the right college investment portfolio. Investing by its definition is delayed gratification. The payoff comes only after you’ve developed the habit of adding steadily to your stock accounts. Wealth builds slowly over really long periods (as in at least 10 years) of time because over the decades stock prices (and your savings) rise more than they fall. You’re participating in that growth. That’s how wealth happens. The rest is simply taking time to get the right mix of investments to align with your temperament and your long-term goals.

Speaking of goals…Women, especially are all about relationships

Talk to a woman about money and notice how many times the phrase ‘financial security’ comes up. For us, our kids, and for those in the sandwich generation, it’s making sure our aging parents are comfortable financially. Investing is about taking care of any longer-term priorities and in turn, that reduces the stress around immediate money issues. Those are true financial goals and real reasons to invest.

Getting to your “why”

If you’re having trouble identifying what motivations resonate for you, you might like to try a technique called The Five Whys originally developed by Toyota to help engineers uncover the root causes of problems.

To try it out, think of an important financial goal. Then ask yourself, “Why?” and do it five times, progressively getting deeper into your motivation.

Here’s an example:

  • I want to invest $500 a month.
  • Why? So I can have more money saved.
  • Why? Because I want to make that money grow so there will be more of it later.
  • Why? Because in a few years, I’d like to take my family on some cool trips, and those are expensive.
  • Why? Because I love sharing new experiences with them and opening their eyes to the world.
  • Why? Because my parents couldn’t afford to do that with me and I want to have that connection with them, and share what I’ve learned about money with my own kids. That makes me feel like a good mom.

And that is why we invest money.

Investing as a way to achieve what matters most

Understanding clearly what underlies your goals is a great step toward making them meaningful. When you tap into an emotional motivation, you put the power of your intentions behind your efforts.

Want to join me in making investing a whole lot more personal and meaningful? Send me a comment right now about what motivates you.

 

 

1 Comment

  1. susan says:

    Hi Pam,
    I am only motivated to invest if I am ensured some type of interest income. I only want my money to be growing in a fund where it can never be depleted or lost or eroded.
    Thanks for the opportunity to share.

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