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Old 07-28-07, 06:27 PM   #1
DXchulo
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Investing vs. enjoying life- How to balance the two?

There's probably a better forum for this somewhere on the internet, but what the hell...

I'm 24 and getting married in a little over a week. My future wife just graduated in May and started her career. My career situation could be a whole thread in itself, but suffice it to say that I'm working and we're finally going to have enough money that we can start investing soon.

The basic dilemma is that on one hand we want to save money and secure our futures, but on the other hand we don't plan on having kids for a few years and there are a lot of things we'd like to do before we get too old. I'll give you an example. One thing we'd love to do is go skydiving, which we're thinking about doing to celebrate our marriage.

Skydiving would cost $239 each for a total of $478, which doesn't sound so bad. However, if we invested that and got a 5% return, that $478 could be $3,365 after 40 years. That means if we wait we could afford to sky dive 7 times when I'm 64. Sounds good and I take care of myself very well, but things happen and I could even die before that age.

How do you decide what's worth it and what's not? The cost of skydiving is low enough that it seems to make sense to go ahead and do it now. You only live once, right? But things get trickier once more expensive adventures are considered. My biggest cycling dream is to ride across the country. This would cost me at least $3,000 the way I want to do it. After 40 years that could be over $21,000. That's a pretty big chunk of change. But again, would I be in good enough health to do it at 64 years of age? Would 40 years of dreaming but never doing cause more than $21,000 worth of stress?

When it comes to financial goals, our #1 goal is to save up enough money to buy a house within 5 years. We can have a set dollar amount, which makes decisions simple. Want to go skydiving? Only if you've put in your $X per month and still have enough money left over. But how can you decide how much money you want to have for living expenses when you're 65 or so? I easily lived off of $11,000 a year as a grad student, but what about inflation? What if I decide to work past retirement age?

How do you weigh investing for the future versus living for the present? I don't want to be 65 and not have done anything exciting with my life, but I don't want to be 65 and broke, either.
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Old 07-28-07, 06:33 PM   #2
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Do both. Save for skydiving and invest.
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Old 07-28-07, 06:34 PM   #3
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You 'investment' earns 5% and the cost of living has gone up 7%... You just lost 2% right off the bat.
Then the gubmint taxes your ass on the 5% you've 'earned'.

Go skydiving.
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Old 07-28-07, 06:37 PM   #4
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There is a certain amount you should invest, on the offchance that you'll live to retirement doing crazy **** like skydiving

I'd suggest that the money you know damn well you should invest gets invested, and that the rest is there to enjoy life. If there is a little or a lotta extra you are on the fence about, invest it. Without fun, life is worse than death. So, you should and must make sure you have some fun. Just don't set yourself up for future misery.

I know, easier said than done.
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Old 07-28-07, 06:49 PM   #5
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The minimum you should save each year is first max out a 401k if it is available at work. Especially if the employer matches a portion of it. Second, Max out both your Roth IRAs. After that it gets more subjective and will depend on what you and your wife want to do. Save for a house? Need a new car? Want to go to Europe? Those things need to be prioritized. The important thing is that you both are on the same page.
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Old 07-28-07, 06:49 PM   #6
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Did you adjust the cost of skydiving with inflation for 40 years? What is av gas or whatever they are running prop planes off of in 40 years gonna cost? How about the back injury you sustain at age 46 that leaves you in a wheelchair unitl you die 3 days short of your 65 birthday. Just saying there is more to life that financial ROI .
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Old 07-28-07, 08:33 PM   #7
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Do both. Put some away for the future and spend some to enjoy life. Set up two different accounts aside from your existing checking account used for expenses. Once account is for savings/investments (ING offering great rates right now) and the other for spending/play. Divide your excess cash after expenses between your savings and spending accounts. This resolves the subconscious emotional conflict between saving and spending. Only use what's in your spending account for entertainment.

The trick is the time spacing between skydiving trips and vacations. You can do fun stuff once a month or once a week. The difference in savings is huge. Also the best investment is educating yourself. Learn sophisticated investment techniques, beyond the typical "buy-low/sell-high" mentality, there's easily 100 other tactics past that. These will reap you huge rewards after 10-years of learning. Think of it as a PhD that you earn through night classes.

You're young, the biggest risk to you is opportunity-cost; what you could've earned if you knew what to do. It's easily in the millions if you're young. You can afford to lose a hundred or two here and there to learn important lessons with investing. This hurts you a lot less now than if you had hundreds of thousands at stake with only 10-years until retirement. You've got decades of earnings left, so use that to your advantage in learning how to invest for maximum growth. Makes lots of small errors now, you'll learn very important lessons. Learn the money-pyramid, learn money(loss) management, learn emotional control.

Last edited by DannoXYZ; 07-28-07 at 09:16 PM.
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