Why do we invest (emotionally)?

This is an exact repost from an old blog, originally posted in May 10, 2008. Today’s #ThrowbackThursday . Enjoy reading.

Invest (v)
– To spend or devote for future advantage or benefit
– To devote morally or psychologically, as to a purpose; commit
– To endow with authority or power.
– To endow with an enveloping or pervasive quality

As with financial investments, there is always a risk to spending or putting something of value into anything. We typically invest in something, decide to devote time and energy on something hoping that it would turn out good and productive in the end.

Why then do we choose to invest emotionally? Perhaps it’s like other types of investments. When we see the possibility of something good coming out of something, we choose to take the gamble and put a little of our self into it. We put a stake on something when we start to build an affinity to it.

Why do we invest in romantic relationships? We enter romantic relationships to find out the possibility of being together until the far future. You don’t go into it expecting it to fail or end, although we should admit that it is still always a possibility.

So, the investment is a little of ourselves, our emotions, and our commitment. The payback we are wishing for is a wonderful future. But let’s admit it, we don’t always get what we are wishing for. More than anything else, emotional investments are most uncertain.

The real question is, why do we even attempt to invest emotionally, even on things that has relatively no future? Why do we keep on loving people and hoping that these people who would perhaps not disappoint? Why do we give someone else that power over our happiness?

In the end, life turns out to be one big gamble, especially on the matter of love and romantic relationships. You will never have the chance to win unless you bet on something. Oftentimes you don’t win, cause it’s a million-to-one chance. But if you do win, it would really change your life. It’s just up to you, are you brave enough to bet with your heart?

On investing

I attended a talk on investing a week ago, the very first talk about investment that I went to, and it was well worth it.

I never had an eye for finances, accounting, and investments. I know the basics but I never had a talent for effective planning in this aspect. I had lessons on some of the computational aspects of it in before, but I never truly understood what it was for and how I could use it to my advantage. This talk was a big eye-opener for me.

The talk focused on how to invest with the goal of beating inflation. They say that the reason for investing should not be just about amassing tons of wealth. The first reason for investing is to be able to keep up with inflation. Since inflation means that the actual value of money actually decreases over time, we should make sure that our money is growing alongside inflation, so that we at least have the same purchasing power with what we have. The average inflation rate of the Philippines over the past years is around 7%, although last year’s inflation rate was just 4.8%. Of course, one should consider long term values when planning to invest long term.

Second reason for investing is to be able to achieve a financial goal. If we would like to retire at a certain age and sustain ourselves with interest revenue of our money by that time, there is a certain way we can save up and invest our current money to achieve an adequate retirement fund.

Further, they discussed the portfolio concept, and the corresponding risks of certain investment instruments. Basically, the higher the potential return, the higher the risk. Sometimes, the people who invest just because of the desire to earn lots and lots of money go for investments that bring the highest possible return but with very minimal “stated” risk. These are the people who are most likely to get duped by scams and questionable investments, again because high returns will always mean higher risks. If someone offers you a high return investment but with a very low risk, think twice.

In case you are interested to find out, you can try to find a financial advisor to give you more information about your options. You can also check online. Here are two sites I’m most familiar with: