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Investment Without Purpose: Why It Fails

Compass to show that investing needs direction and purpose.

Here’s something you’ve probably never been told before:

Investment without purpose is meaningless.

Here’s another one:

Money is boring.

Taken together, they are the two main reasons why for many superyacht crew investing is not only a wasted opportunity, but likely to fail miserably as well. And, unfortunately, a lot of the non-expert advice given to superyacht crew boils down to ‘invest without purpose’.

So let’s look at why investing without purpose is a pathway to failure, and how you can avoid doing so, starting with what investing without purpose actually is.

Investing isn’t about the money

A common misconception is that investing money is just about making more money. It isn’t. If you approach it from that limited perspective, you’re going to fail. You’ll probably lose out financially and you’ll definitely lose out as a human being.

The problem is that most people see money as something ‘exciting’. In reality, it’s shockingly dull. Frankly, the only time money is even remotely exciting is when you don’t have enough of it to pay your living expenses. And even then, the absence of money is only exciting for all the wrong reasons: stress, worry and anxiety.

The thing is, money by itself doesn’t do anything. It’s inert. It’s stupid. And most of it looks pretty ugly too.

What gives money its value isn’t its currency or denomination. It’s its potential. But its potential needs an outside force to unlock it. That outside force is you.

You see, while money is boring, what you can do with it is exciting. So instead of seeing more money as the goal of investing, look at investing as the creation of opportunity. You’re not creating dollars; you’re creating the potential to make dreams come true. Your dreams.

Coin converted into a key to show how money unlocks opportunity

Money unlocks opportunity for you

Investing without purpose is investing for the sake of investing, for the sake of just making more money. And that’s a really terrible way of investing. The most common form of investing this way is just putting some money in a fund that tracks the stocks of the top 500 companies. That might sound like solid advice, but it isn’t. That’s just making more money—which, believe it or not, is probably LOSING you money. And that in turn is limiting your potential to unlock your dreams.

Purposeful investing beats the short-term trend

You could say putting your money into a tracker fund is hands-off investing, and therefore the opposite of purposeful investing. Ironically, the same can be said for excessive hands-on investing, especially short-term hands-on investing.

Short-term, hands-on investing is another way of saying, ‘Chasing a quick buck’. And there is no end to the investment shortcuts that people come up with. Broadly speaking, they fall into two categories—neither of which could be classed as investing with purpose.

1. The latest ‘shiny’ thing

The most obvious shiny investment ticket that crops up time and again is cryptocurrencies. Bitcoin especially. Even as we type these words, Bitcoin is on another of its rapid rises. Each time that happens, the media go a bit mad, and people get caught up in stories of huge wealth created in a short space of time.

While we’re not going to debate the merits or otherwise of Bitcoin, we will say that Bitcoin is volatile. You only have to look at how its value has risen and dipped over time. The differences between the peaks and troughs are huge and the changes happen rapidly.

On top of which, many people don’t really understand what Bitcoin is and why it even exists. All they see are the spectacular rises in value, and they conveniently ignore the equally spectacular falls.

Basically, when you invest in something incredibly volatile that you don’t thoroughly understand, you’re speculating. Actually, it’s worse. You’re out there in the market on a wing and a prayer.

Sadly, most shiny investments fall into this category. But such is their sparkle that people are drawn in by the lure of a quick investment windfall. After all, investments only go up, don’t they? (They do not.)

2. Play the market

The absolute best way for superyacht crew to lose their invested money is to play the market or try to become a day trader.

The online ads (YouTube especially) make it sound so easy. Wake up in the morning at your luxury villa in the South of France, or your heritage property in Scotland, and over coffee lock in your guaranteed-to-deliver trades for the day. Then spend the rest of the morning doing rich people things, only interrupting your luxuriating to check on how much richer you are than you were before you had your coffee.

Seriously, if it were that easy, do you think one of us would be typing these words right now? No. We’d be off luxuriating on our own 100-metre superyacht, thanks.

Yet the idea of making your own trades and beating the market is very appealing. You could be successful, but chances are you won’t be because you’ll end up chasing the market, constantly one step behind what is actually going on, desperate to make money in the moment.

We’ve said it a million times: you cannot time the markets. The best you can hope for, certainly on a short-term basis, is to sell at a slightly higher price than you bought. But to make any kind of significant money doing that, you need to buy a hell of a lot of shares, so that a small increase in individual share value adds up to a worthwhile return when you sell.

And there’s always the chance that you hang on for a fraction too long and the share price dips below what you paid. Which means, if you have a hell of a lot of shares, you’ve just lost quite a bit of money.

For most people, chasing the market and day trading don’t represent investing with purpose.

Investing without purpose is a harming you

Before we go any further, let’s just clarify that it’s better to do something with your money than nothing. So if you have no real interest in getting the most out of your investments, then, yes, putting your money into some form of tracker fund is a good idea. You will end up with more money, which, let’s be honest, isn’t a bad thing, is it?

But doing so will probably rob you of two things:

1. money

2. personal growth

It will rob you of money for several reasons.

Firstly, you haven’t set a time frame. When someone tells you to invest in a tracker fund, do they ever tell you for how long? Here’s a tip from Warren Buffett, the world’s most successful investor: “If you’re not willing to invest in a stock for ten years, don’t even think about investing in it for ten minutes.” There are lots of ways to interpret this, but if you know anything about Warren Buffett, you’ll know he is all about the long game. 

So if you want to get the most out of a fund that tracks one of the key stock markets, the longer you invest, the better. The experts know that nothing powers a better return on investment than time in the market. 

Putting money into a tracker fund is all well and good, but if you’re not purposely investing for a longer period of time (think at least five, or better still ten, or even better still 40 years) then you are leaving money on the table. You’re dabbling. And you’re mad if you think dabbling in the markets is going to get you a better return than investing with purpose.

Rule one of investing with purpose: invest with a timeframe in mind.

What your time frame is depends on what you want to do with your money. What opportunities do you want your money to unlock for you? And when?

Money heading towards a target to illustrate the concept that investing needs purpose to make it effective.

Investing with purpose is investing with an outcome in mind

If investing is all about making opportunities for you, then it only really works when you know what those opportunities are. In other words, when you know what you are going to do with your money. Simon Sinek wrote a very powerful book about business called ‘Start with Why’. In essence, businesses are more successful when they know why they are in business. Spoiler: being in business isn’t just about making money. Successful businesses have a higher purpose, which generates money, almost as a side effect.

It’s the same difference between you ‘existing’ and you ‘living’. There is a purpose to living. Existing is merely an inert, dull state. Do you want to exist or live? Do you want your investments to sludge along lifelessly or balloon with purpose to help you achieve your dreams?

When you start with your end goal in mind, you are placing your money in service of you. And doing so gives your money purpose. It gives your investments purpose. In effect, you’re working back from your end goal. Which is exactly how you plot a course on board the superyacht. You don’t just set off to sea aimlessly. That’s the equivalent of putting money in a tracker fund: it’s going somewhere, but no idea where really, or when it might reach an interesting level of return.

When you plot a proper course, you know where the boat is going to end up and by when. The same goes for purposeful investing. You know what amount of money you want to raise in what amount of time. And you know exactly what it’s going to pay for.

Purposeful investing is an investment in you

Having a purpose for your money and your investments inevitably means you are going to benefit somehow. Even if the thing you want to use the money for isn’t for you. 

Imagine you want to raise funds to build a school in an underprivileged part of the world. Can you imagine how that will make you feel as a human being? How doing so would have huge mental benefits to you for the rest of your life. You built a school and gifted education and opportunity to children.

OK, admittedly most superyacht crew don’t start investing with that sort of end goal in mind. Typically, they’re investing in something for themselves. They are investing to enhance their own lives somehow. That, by the way, is perfectly OK. We just wanted to make the point that purposeful investing brings personal rewards, regardless of who the ultimate beneficiary is of your investments. You always win. You will always grow as a person when you use your money to unlock your dreams.

That’s why aimless investing is so detrimental. Forget the missed financial opportunity that lazy investing will cause you. Worse still is the missed opportunity for personal growth and fulfilment. If you spend five, or ten, or however many years investing your money, wouldn’t you rather end up with the money you need to unlock as much potential for you to live your dream life as possible? The more purposeful your investments are, the more you’ll be able to shift from existing to living.

Don’t live a little. Live a lot.

Investing in projects and companies solving environmental, social and economic problems is a form of purposeful investing.

Purposeful investing is impact investing

Purposeful investing also allows you to set your money to work doing actual good in the world. We touched on this a little bit above, with the example of using your money to build a school. That, though, is a positive final outcome. And, like we said, not everyone wants to (or even has to) spend the fruits of their investments on altruistic projects.

But you can let your money do good in the world while it is invested. In fact, some of the most purposeful investors we work with are superyacht crew who are keen to invest their money in companies or projects that bring about social, economic and environmental enhancements and improvements.

Take the environment as an example. We all know the world is facing significant environmental problems. But where there are problems, there are people looking to solve them. And the more pressing the problem, the more valuable the solution, making them viable investments for green-minded superyacht crew. And if you look, you’ll find there are thousands upon thousands of innovative environmental projects and businesses you can invest in.

We’re not saying that everyone should invest in green solutions. But what we are saying is that investing in companies and projects that are tackling issues close to your heart is an investment that not only has the potential to enrich your bank balance, but, because it aligns with your interests and values, can enrich your mind and mental health as well.

Purposeful investing is its own motivator

In another blog post, we spoke about the number one reason why people’s financial plans fail: lack of commitment. Without an internal driving force to see the plan through, people simply stop investing. A robust financial plan has to work backwards from the reason for investing in the first place. Not ‘more money’ but ‘more opportunity’. Without a clear grasp of the opportunity they want to unlock, their commitment to the plan wanes. The plan peters out. They don’t achieve their financial goals because the goals aren’t in service of something meaningful to them.

Purposeful investing avoids this problem.

When the going gets tough, when the enthusiasm starts to dim over time, purposeful investors can draw energy from their end goal. ‘Eye on the prize’ isn’t just some empty platitude. It’s a reminder of what it is you want to achieve and why you are doing it. Having a rock solid purpose is like having an endless ability to top up your commitment when you need to.

When you invest with purpose, you’re bringing along your own well of motivation.

Purposeful investing makes you a god of time

When you start investing with a real goal in mind, you’re going to have to address the issue of time.

Maybe your plans require 500,000 US dollars. You’ll need to balance a few things to achieve that. One is time. You can’t expect to grow your money to that amount in a couple of years unless you are investing significant amounts of money to begin with. So you’ll need to plan accordingly and perhaps invest less money for a longer period of time.

Regardless, you’ll be conscious of the role of time in your investment plans, which will allow you to put a realistic deadline on when your investments will reach the value you need.

Instead of merely hanging about until some random point in the future when your investment value will have grown enough, you will be in control of when that moment is. You will purposely set an achievable deadline, which will put you in command of when in the future you can unlock your dreams and opportunities.

Purposeful investment overcomes stupidity

Things people say about investing that sound good, but really aren’t (reasons in brackets):

  • Just stick your money into a Fortune 500 tracker fund. (Seriously? We spoke about this already.)
  • I’ll figure out what to do with my money when I have enough of it. (What’s enough? Enough for what? Also, this is a pretty open-ended statement that has no timeline or end point. Don’t forget: you have a limited shelf life in the superyacht industry. Your ability to invest significant amounts of money won’t last forever. Your window of opportunity is time-limited, so your financial plan should be time-limited too.)
  • There’s no point investing based on a future goal. I might change my mind between now and then. (You probably will change your mind. But that just means you change the purpose of your investment as well. It doesn’t mean investing without purpose.)
  • I can put my money into crypto (or whatever the latest investment fad is) and make a big return in a short space of time. (Putting money into high-risk or volatile investments is only something you should consider with money you can afford to lose. Even then, you need to really understand what you’re investing in and have the fortitude to ride out some very rough storms. Risk is an important driver of investment returns, but it can be a destructive wildman if mishandled. You need to know when risk is useful and how to tame it. If you don’t understand how risk works in investing, then you’re approaching investing as if you were gambling.)

Recap—purposeful investing is turbo-charged investing

Working in the superyacht industry offers crew a fantastic opportunity to build a meaningful investment portfolio that will fund their dreams after yachting. But it’s a limited-time offer only. You won’t be working on board a superyacht forever. You have a use-by date.

The only way to really squeeze your full financial advantage out of your yachting career is to align your investment strategy with a higher purpose. That higher purpose is best described as ‘in service of your dreams’.

If you do that, your investment plan will have the best chance of success. If you don’t invest with purpose, your plan (if you can even call it that) will underperform at best, and be a complete failure at worst.

We’re guessing that if you’ve read this far, you’re in the small group of superyacht crew who are interested in investing with purpose. And maybe you’ve realised you might need some help with that? Well, you’re in luck. Our purpose is to help you with your purpose. Why not get in touch today?

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