“To invest is to allocate money (or sometimes another resource, such as time) in the expectation of some benefit in the future”
– that’s Wikipedia’s definition and I’ll run with it.
An investment is fundamentally an expression of optimism. The pessimist sees no reason to put aside time or money for the future , valuing today more than tomorrow.
I am not sure if I am right in economic terms, but philosophically, the opposite of investing is reserving. Reserving money (or another resource) for the future is the natural activity of the pessimist, who sees nothing but trouble ahead.
Hence the polarity in thinking between those who invest (in real assets) and those who reserve (in cash and bonds) , is a philosophic as well as an economic phenomenon.
I will explain why I am an investor, and why I cannot think like those who would have us de-risk, lock-down and reserve for our (but no other’s) future.
The optimist’s point of view.
To be an optimist, you have to think not big but long. In the short-term Houston will be flooded, Trump will be imbecilic and Britain will stagger from one political crisis to another. If all we can see in this is a mosaic of ineptitude, then there is no point in thinking of any future, it is simply a detoriation of whatever we have today.
This is not my view. My view is the optimistic view that sees long-term investment as producing a future benefit. I do not see the future as a calamity to reserve against.
There is nothing particularly odd about this. It assumes progress rather than regress. In the particular period in which I am writing, investment has taken second place to reserving and my optimistic view, at least in the circles I move in, is seen as naïve and even reckless.
But set in the broader historical context of the post-war period, we must accept mankind has made considerable progress. We are adopting a more responsible way of managing the earth’s resources, tending to our environment and we recognise in the world “sustainable” both what we have achieved and what is yet to come.
Although we have moved from a peak of optimism in our private pension system, the current negativity may be seen as a blip in a longer trend towards social welfare. My memories as a teenager in the seventies are of a refusal in my generation to accept that the planet was on “the eve of destruction”, many of us baby-boomers are now seeing in the Paris Accord , a genuine turning point. I consider we are at the same stage in the cycle regarding social welfare, may the generation we have given birth see a similar flourishing in terms of private pension provision.
There is no way that this can happen unless we accept we have a future worth having. We must invest our time and resources in a progressive way and move beyond the historically narrow perspective of “de-risking”.
Re-risking our futures , reminds me of a dictate from my first sales manager. He forced me to go out and buy a car I could not afford in the hope that I would earn enough to meet the finance repayments. I paid for the car and did not miss a payment.
In conclusion, unless we set ourselves financial challenges, we will not make financial progress. We must set ourselves targets for the future which assume an investment of our human and economic resources. We cannot put the world in lock-down.
Gearing up for the autumn
As we head back from holidays, and start thinking about new terms, new quarters and a return to work, we need to get re-motivated.
Summer’s lease has all too short a span, but at least it has given us space to plan ahead. I return to work with renewed vigour , determined to invest my time and capital in a positive future.
The other thing my sales manager taught me – was to adopt a positive mental attitude.
So I’m an optimist, an investor and someone who believes that – for all the clouds – the sun is still there – ready to shine on us tomorrow!
Henry – affording a bike would have been a challenge when I was your manager.
You’re supposed to be retired!