Why Bother Investing?
In a sense, money is worthless until you spend it.
One of the main risks anyone takes by investing is the risk that market conditions may not ideally match their age bracket; there may be wars, depressions, and inflations at just the wrong time. Given enough time, conditions will generally recover, but the baby boom did follow one generation throughout its lifespan. And wars and famines may not just affect the economy, they may personally snuff you out. On the other hand, the steadily increasing life span of the past century gives most people three family generations to consider, when for centuries most people only personally knew two generations, and for centuries before that, only one. Generally speaking, huge demographic changes take place so slowly the law of averages dominates it, and if you are suddenly snuffed out by a rare disease, well, that can't be helped.
Investment is generally a process of taking surplus idle money from one period of life and making it grow until a period of heavy spending is reached; the working third of life funds the third spent in retirement. Paying for school is usually the gift of one generation to another to enhance its employability and social stature, displacing dowries and the clergy in the process. Scientific education, for the most part, did not exist until 1860.
The size of the starting investment nest egg is crucial; it can make a huge difference, but mostly doesn't. A frugal early life will enhance it; frugal habits are apt to be permanent. Generally speaking, leveraged investing is unwise, although there are periods of time when interest rates are so abnormally low that leveraging is tempting. Unfortunately, periods of low interest rates are generally followed by high rates, accompanied by ruinous declines in the value of the loan or bond principal. For the most part, long periods of stable interest rates are best for everyone in the economy, most periods of volatile interest rates are only safe for professionals, and long periods of extreme interest rate volatility are safe for the average investor only when his age bracket gives him a secure job when interest rates are low, and good fortune gives him lots of cash when interest rates are high.