The First Step to Fearless Investing [You Should Follow]

My clients often share with me that they want to travel.

They want to explore historic European landmarks that they’ve only seen in pictures, traipse through Africa in search of the Big 5, and eat their way through exotic Asian cuisine.

I’m always eager to build a plan to bring these travel dreams to life.

And really, planning for travel is simple. All you have to do is price out your trip, pick a date, and figure out how much you need to save between now and then to make it happen.

And yet, when I try to help people figure out how much to save, they get wishy-washy. They say, “Oh, I don’t know when I want to go or if I can get time off of work then. I don’t know what I want to do—how long I want to stay. I have no idea what it costs.”

They don’t even allow themselves to get dreamy with me over Skype. I’ll tell them that I can build a plan if they just pick something—but they sweep their dream under a rug and say they’ll get back to me.

And at that point, I know one thing for certain: their dream trip won’t happen. Ever. It kills me.

Unfortunately,  that’s the exact problem I see when it comes to saving for retirement.

People are very hesitant to make plans for their future—especially when it feels as far out as retirement.

We don’t know what life will be like in the future, and we are really hesitant to pin things down. We feel like it limits our capacity for serendipity if we make a plan for some 30+ years out.

But without picking something (hopefully, a lifestyle and a date) we may not retire. Ever.

Just like the big trip that never happened.

And that’s sad!

Steps to First Fearless Investing

The first of those steps is to plan out a year in your life as a retiree.

This is so important because (if you never read anything else I write, please read this): If you plan far enough in advance, you can achieve virtually any goal.

I know it’s “more suggestive” to await the time where you spontaneously come into money and finally live the life of your dreams.

But you know what’s better? Planning for your dream life and actually getting it.

So, let’s start with the basics: visualizing your retirement. From there, we can build a plan to reach that goal.

And don’t worry if it changes. It’s better to get started down a path than to never get started at all.

Back to The First Step.

In order to know how much you need in retirement—you need to start from a point of lifestyle.

Imagine your beautiful face at age 65. Add some smile lines around your mouth and a slight little peppering of gray on your gorgeous head.

Where do you live?

Are you in an urban oasis? Do you have a lake house with a boat? Do you live in the community you grew up in and love?

What hobbies are you involved in?

Do you swim at a local club? Teach T-ball to your grandson’s little league team? Do you volunteer for local animal shelters or a museum close by? Do you have a book club or host dinner parties? What do you like now? How can you continue that in retirement?

What sort of accomplishments do you want to have in this period of your life?

Do you want to support your kid’s or grandkid’s college expenses? Do you want to launch a business? Start your own philanthropic organization? Win an award for being the strongest CrossFitter over age 60?

Now, come up with a hypothetical yearly budget for all of this. No need to hammer out a detailed spreadsheet (unless you want to, of course!), just tally some things up on the back of a napkin.

Take into account any mortgage you hold, your utility and food expenses, hobby costs, charitable donations, family giving, and travel and vacations.

Guesstimate-what does all of this cost per year in today’s dollars?

If that’s all too much, imagine this–what kind of salary does a person earn who lives your ideal life?

Once you’ve done that, CONGRATULATIONS! You’ve completed step 1 of the 6 steps to fearless investing. Really!

From this point, we can start to build a real plan.

Using some fancy math, I’ll share with you a little tool to help you figure out how much you need in retirement. It’s not the easiest path, and I don’t want to overwhelm you, but, for the curious–it takes into account inflation, what kind of returns your investments will earn in retirement, how many years you want to stay retired, and a few other variables.

But above all, it starts with knowing your ideal retirement lifestyle.

From there, we can talk about the beginner’s process for getting started with investing–accounts, amounts, investment types, and more.