Economists call it purchasing power. Most of us simply call it having the money to buy what we want.
It may sound trite, but it’s profoundly true, the goal of investing is future spending. Truth be told, if we never had to buy another thing we’d throw our money in the street.
Jeremy Siegel states it plainly in his definitive book, “Stocks for the Long Run”, “The focus of every long-term investor should be the growth of purchasing power.”
Purchasing power is the financial key to living richly. Charles Schwab writes in his “New Guide to Financial Independence”, “Investing is about your life, and the reward it offers you is having enough and being able to live the way you want.”
For this reason, failing at investing is a tragedy, a life-robbing tragedy.
Here is a simple two-point strategy for investing for purchasing power, the financial key to living richly:
POINT ONE
Own equities. Ownership of businesses, common stocks and other equity type investments, is the eternal truth to wealth creation. Charles Schwab writes, “To be a successful long-term investor, it’s crucial to be invested for growth. I believe that there’s simply no other way to meet your long-term goals, to stay ahead of inflation, and to have your money outlive you. Investing in stocks is investing for growth. Companies grow; when you buy stock in a company, you’re buying part of something that’s like a living organism. As it grows, so will your investment.” Professor Siegel states it succinctly, “stocks hold the key to enriching the lives of all peoples everywhere.”
POINT TWO
Use managed money. We’re convinced the best and safest way to own equities is by using professionally managed money. Whether it’s called Mutual Funds, or Managed Portfolios, or Private Investment Pools, or a number of new investment vehicles being developed, you simply cannot beat Portfolio Managers working with a team of Investment Analysts.
