We invest for a better future, both individually and collectively. That’s the most genuine and straight forward answer I can think of. A lot of people think we invest to make more money or to be financially free. That is right, but that’s just a consequence of investing. What’s the purpose?

The purpose, I believe, should be to make sure the future is better than the present. Again, not just for you in a financial sense but also for the world in a technological and economic sense.

Now the question is how do you do that? — By investing in companies whose products and mission you think will be beneficial for the humanity.

There is a book called "The Company: A short history of a Revolutionary Idea". It's about how the creation of limited liability joint stock companies transformed the world. Before the creation of joint stock LLCs, people would have to have an act of parliament to get limited liability because it was considered very dangerous.

Think about this, if a person started an airline company and one of its planes crashed and people died, now, should that single person (the owner) be fully liable for this? Should he go to jail? No, right? Therefore, people demanded for limited liability. Joint stock LLCs made it very easy for people to raise capital. It was a phenomenal legal innovation that played a major role in the Victorian industrial revolution and helped in the creation of inventions like the light bulb, AC power, steam engines, railroads, cars, telephones, airplanes etc.

This is the foundation of investing. We invest so that our capital can help the world become a better place, so that we can come up with inventions that can change our lives, so that humanity as a species can advance and as a result of this, we also make money.

I think the first thing to look in a company or an investment is not how much money it’s going to make me but is this company building a product or a service that I believe will make this world better? Are they creating a future that I want to live in?

A really good example is Tesla. There is definitely an investment case as to why it can make a lot of money for its shareholders but more than that it is helping the world get rid off fossil fuels by building electric vehicles and sustainable energy storage products. This is a future I believe in. A future I want to live in.

Some other examples of a better future, according to me, includes

• Giving access to financial services to the unbanked people (1.7 billion)
• Finding cure for diseases like cancer, diabetes, Alzheimer's, etc and ultimately finding the cure for ageing and increasing life’s longevity
• Making humanity a multi-planetary species
• Commercializing nuclear fusion
• Giving access to Internet to the people living in remote areas (3 billion)
• Rethinking a new education system that caters the needs of 21st century
• And more...

These are some of the very important problems that needs to be solved.

Imagine how sad it is that there are some people who are born blind. The most prominent reason for this is genetic mutation. How tragic it is to not see the world, the marvelous nature or your loved ones laugh. However, thanks to the advancement in genetics, especially CRISPR technology, congenital blindness will eventually be cured. But this requires capital. It requires people to invest in these companies so that they can have enough capital to sustain their business. Literally, our capital has the power to shape the world. This is why we invest.

An important thing to note here is that you don’t have to pour money in every company out there that is making the world a better place. Because that’s not the only filter for your investing decision. However, that can be a starting point. If a company is making something that you don’t really believe contributes to a better future or aren’t that excited about then don’t invest. Period. Things like leadership, viability of the business model, underlying technology, financials of the company, etc are all secondary.

This brings us to another very important thing in investing i.e., be proud of your investments. A stock is an ownership in a business. When you buy a stock in a company you are a part owner of that company. And so it is of utmost importance that before you invest, you think like a prospective owner. At the end of the day, it is your name and money attached to what the company is doing to the world.

And lastly, have a worldview about the future and act upon it. Have opinions. Even better if those opinions are non-consensus, you will get a higher return if they turn out to be true. But the bottom line is to have a perspective of the future. Because how will you know whether you are investing in a future you believe in or not if you don’t even know what you believe in?

Peter Thiel in his book Zero to One writes that there are four kinds of worldviews of the future — 1) Definite optimistic 2) Indefinite optimistic 3) Definite pessimistic 4) Indefinite pessimistic.

Definite optimism works when you build the future you envision. Definite pessimism works by building what can be copied without expecting anything new. Indefinite pessimism works because it’s self-fulfilling: if you’re a slacker with low expectations, they’ll probably be met. But the problem lies with indefinite optimism as it seems inherently unsustainable: How can the future get better if no one plans for it? If no one invests in sustainable energy, then how can we all collectively expect to solve the problem of climate change? If no one invests in CRISPR and other genetic technologies then how can we expect that one-day diseases like cancer, diabetes will be cured? The world needs investors and entrepreneurs who have a definite optimistic world view, who are willing to invest in the future they believe in.

In the end, investing is just capital allocation. Where we decide to allocate capital today decides what the future holds for us tomorrow. So do it deliberately, because the future matters so very deeply.