There are two reasons why everyone should invest.
The obvious first one is to build wealth for yourself. Albert Einstein once described compound interest as the “eighth wonder of the world” for a good reason. If you invest £300 a month at an average of 8% growth per year, you’ll be have more than £1M after a 40 year period (£1,047,302.35 to be exact).
And here’s the kicker, your contributions would only total £144K. This means over £900K is interest!
The less obvious and second reason is that it teaches you to prioritise and focus on the long-term. And it teaches you in the best way – incrementally, by making mistakes.
I bought bitcoin in early 2017, but sold it in early 2018 because it started going down. Yeah, that was fucking stupid. I also bought and sold some tech stocks in that same period, for the same reason. Yep, stupid again. I sold on the dip because I let my emotions get the better of me. I was too focused on the short-term.
I’m incredibly unlikely to make the same mistakes again. I can’t even imagine it. I have 30% of my net worth invested at the moment (mostly index funds, but also some growth funds / stocks and cryptocurrency). If it were halved tomorrow through a market crash, I wouldn’t flinch. I truly believe that. I would just see it as turbulence towards my long-term goal. In fact, I would go as far to say that it might well be the best investment opportunity I’ve ever had. I would remain calm and continue to invest as it recovered (which history tells us it always does).
Investing helped me develop that mindset. When things go wrong (not just in investing, but in life and work), I’m now quite good at remaining calm and taking a step back. I look at the bigger picture, which helps give me the right perspective. And from there, you can decide how to move forward – which might mean doing something different, but also nothing.