Last night, I read an article on US News and World Report (you can see the article here) about how the majority of "investment experts" are now recommending members of Generations X and Y (I'm at the tail end of X, my wife is at the beginning of Y) to set a retirement savings goal of at least $2 million. I could write a post every day for at least a month about where I disagree with this article. However, the one thing that I focused on is that the investment advisors's recommendations are to "save money in your retirement account and build a nest egg." I did a word count and throughout the article, the word "save" shows up 11 times. They talked about saving a lot. I also did a word count on "invest". Guess how many times the word "invest" showed up? None. The only time the term investment came up in the article was in reference to the people advising us to save. On the surface, this makes sense. Most people do believe that saving for retirement is investing. I went to the dictionary to compare saving versus investing.
Save (v): Keep safe or rescue (someone or something) from harm or danger.
Invest (v): To commit (money or capital) in order to gain a financial return.
It looks to me like saving and investing are not the same thing at all. Instead, I believe it's a decision (choice) between the two. Some people save for retirement and hope their nest egg will last them when they retire at 65 (or later, as the article suggests). Others invest their money, build passive cash flow, and have a much higher chance of success. I've known both savers and investors and one thing I can say about them is investors seem to enjoy investing a lot more than savers do saving. Even though investors do lose sometimes, it's just part of the game.
Now I'm not saying don't ever save money. It's important to have an emergency fund set aside as a buffer (about 3 months of income is my buffer). But for my overall retirement plan, I am choosing to be an investor and I plan on retiring way before the age of 65. I believe the key reason I will achieve this is because I first chose at the age of 25 to become an investor instead of a saver.
