Do we have a future?

I keep hearing people around my age (in their 30s) say that there is no point in investing because the way the world is headed it will be a waste of time and effort. That there is no future for capitalism or that the climate crisis will make it irrelevant and we will all be dead. It seems very gloom and doom. And I invest quite a bit and it makes me feel like I should stop and enjoy my money now rather than trying to plan for a future that is uncertain.

I think the key phrase in this question is right at the end: “a future that is uncertain”. This is the interesting thing about the future, it’s almost always uncertain. The world is full of variables, inventions, ideas, and billions of people all doing their own thing. Our view of the future is always a bit foggy because we don’t have perfect information about what is happening or what is going to happen.

Your peers may think there is a good chance the climate crisis will destroy civilization or that capitalism is about to collapse. That is one possibility, but is it the most likely possibility? What do you stand to gain or lose if you buy into their idea?

Before we get into discussing pros, cons, and probabilities, let’s first talk about predictions about the end of civilization as we know it. There are always people claiming the world is about to end. You may recall about twelve years ago a vocal group of people were certain the world would end in 2012. Some of this was marketing hype for a movie, some of it was new age predictions, some of it was a basic misunderstanding of the ancient Mayan calendar.

A dozen years before that lots of people were convinced the world would end on January 1st of 2000 thanks to the Y2K computer bug. Prior to that it was acid rain which was going to destroy our food sources and kill us all. Before that it was holes in the ozone layer which were going to let in all the unfiltered sunlight and cook us. Prior to that computers were going to rise up and kill us all. Going back further the Cold War was thought to be about to result in nuclear devastation which would destroy humanity.

We can continue going back through time, highlighting plagues, comets, famine, and prophesies which have all caused people to declare that the end was coming and soon. While some wars, famines, and plagues have had severe impacts on regional populations, the human race has continued on – civilization continues on a global scale. All the people predicting the end of humanity as we know it have been wrong. Sometimes they were wrong because they were dealing with incomplete information, or they were looking at trends which were unlikely to continue but assuming they would continue unchanged, other times they knew their predictions were wrong but stood to profit somehow by telling others the end was near.

Basically, what I’d like you to consider is this: Are the people you hear predicting the end of the world right now likely to be right where every other dooms day prophet has been wrong in the past few thousand years? Do you think it’s likely your peers have insight and wisdom which gives them more knowledge into how the world is going to work over the next forty years that no one else currently invested in the stock or real estate markets has? Do you think they’ve accurately predicted the end of our economic system where everyone else predicting the fall of capitalism has been wrong for the past few hundred years? In short, are your peers super geniuses while everyone else who is investing and saving is wrong?

Alternatively, do you think it’s more likely your peers are wrong (due to either incomplete information or due to being locked in their social media bubbles)? As another alternative, perhaps your peers are just uninterested in saving their money? Or maybe they are insecure about their lack of knowledge in investing and they are using dooms day predictions as an excuse to not engage? Perhaps they’d rather “live it up” now and try not to think about the future because that is easier than doing research and planning for their retirements?

In short, your peers could be right and the end of our civilization is coming. But it is far more probable that they’re being irresponsible and either using predictions of the end of the world as an excuse or have been living in an echo chamber of ideas too long and actually believe civilization is ending soon.

As to what you should do in this situation, let’s look at the paths you can take. Let’s say your peers are wrong. The world isn’t ending and capitalism continues into your retirement years. If you do save and invest carefully then you’re probably going to be able to leave work behind in your 60s and focus on enjoying yourself. You’ll be able to afford a home and food and the medical care people tend to need as they age. In the short-term you may need to give up some evenings out on the town, buy fewer toys, and be more careful with your spending. You’ll still be able to have some fun, but you’ll need to budget more carefully.

Now, what if your peers are wrong (civilization doesn’t end) and you do not save and invest? Then you’ll have some more fun, maybe some more wild stories in the next couple of decades. You’ll maybe travel more, enjoy some more cool gadgets. However, the price will be not having any safety net when you’re older. You may not be able to retire, you’ll struggle to afford a home and food. You may not be able to afford medication and care as you age.

The balance here is fun now versus survival and having a home later. It seems to me like a fairly easy choice.

Of course, if your peers are right then it’s a slightly different situation. If you do invest and save then you’ll have less fun and gadgets and, in thirty years, you’ll be dead. Which isn’t appealing. Assuming your friends are right and you don’t save or invest then you’ll be able to live it up more now, have some more adventures and, in thirty years you’re still dead.

My point is that the cost of assuming the status quo, the cost of saving for the future, is relatively a small burden. It’s slightly inconvenient, it’s slightly less fun. But it’s a fairly small burden to put away 20% of your paycheque for the future in case civilization continues as it is. However, the potential cost of not saving is that you end up tired, homeless, and hungry. Saving now costs relatively little compared to the insurance it buys you for a future where humanity survives.

There is a small chance that not saving carries no cost and we all die anyway, but if civilization lives on and you have no investments then the cost to your future self is significant. Investing is a low-risk, high-reward situation. Living it up now is a high-risk, low-reward scenario. The former is a much safer bet.