Time is your single, most important asset. It’s probably the only, completely undisputable truth that anyone can find and verify for himself in this world. Time is limited, and every minute, every second that is passed, won’t return.
It didn’t take me long to recognize this, subconsciously, but it took me a while to truly understand the meaning behind it. But more on this a little later on. To finalize my short series about the 3 most important topics for successful investors, I will write today about the importance of investing time to make informed decisions when it comes to investments. For those who would like to take a look at the previous articles, here the short-links:
- Understanding and accepting the principles of the so-called “financial triangle”
- Overcoming the emotion of fear when it comes to investments
- Investing time to make informed decisions on investments (the topic for today)
The first two topics have something in common and this last topic is not different: It requires studies, practice, and experience to master all of them. Time plays, therefore, a crucial role here. Let me explain.
The difference between spending and investing time
You might think that when it comes to time, spending it is all we can do. You also might guess it already: You might be wrong on this one.
Coming to work on Monday, your co-worker or your boss might ask you, how you spent your weekend. What he or she is really asking you is actually this: What did you do with the time you had available, out of your regular work?
Now to be perfectly frank, most people don’t really care about the answer. For one, because, well, most people don’t really care much about others. But secondly, even more importantly, most people do nothing productive on weekends. Watching a movie in the cinema or visiting the new, fancy restaurant in town, going with your kids to a theme park, or just sleeping through and going for a lazy-in-bed-Sunday… it’s all good stuff, and time (probably) well spent.
But if you want to get out of the rat race, you need to re-think the idea of what you do with your time out of regular work, which includes after hours and weekends, holidays and basically every hour you can spare on doing something productive.
Talking about investing time is a different issue, and you may not like it at first. Coming back to the previous question about how you spent your weekend, a more accurate version of this question from someone who might be actually really interested would have to go along something like this: How did this weekend help you to reach your goals in life?
Now that’s a deep question, but in my opinion, a pretty good one. Not only because I wrote it, but because this question shows a genuine interest in enquiring about your actions, that you were able to do while having some time on hand, to work on your life goals.
Investing time includes spending it. But while the time we spent is usually just time that passed, investing time means, that we perform actions that we expect to have a beneficiary middle- to long-term effect on the goals we set in our lives.
Investing time for FIRE aspirationals
If you are reading this blog, you know that it’s all about FIRE – Financial Independence & Retiring Early. Investing time can have a different meaning for every single individual, depending on the goals we have, but for me and for every other FIRE follower, here is a list what you should be doing whenever you have some time on hand:
- Reading. Expanding your knowledge is a crucial element when it comes to making investment decisions, and the single most important point in this blog post. Understanding how our economy works, how things relate to each other and being able to grab hints and read between the lines when markets change directions or new products are being introduced, can have a significant impact on your success.
- Side hustling. Even the smartest investor won’t benefit from his knowledge if he/she has no cash on hand to actually start investing. I was recently reading an article, that saving only 5 EUR a day for 30 years might be already enough to become a millionaire. The math behind it, with an average 7% return on investment year on year, is, of course, depending on market conditions. But it has a clear point: Even small investments in combination with a dedicated follow-through will lead to success. If your current job doesn’t offer you enough support to hit your goal OR if you want to hit your target as early as possible, then it means that you got to invest time to make it happen. Luckily, it’s 2018 and there is an almost unlimited amount of jobs at our fingertips. I will write more on this next week.
- Budgeting. I spend about an hour every weekend, to go through my month-to-date expenses and to adjust my annual forecast, which is closely and accurately calculated and aligned to my goal of retiring early. You don’t need to do it in such a super detail as I (or many other FIRE followers) do, but it is truly helpful to reflect after a week on your spendings and savings and to understand what happens with your money. The more you learn about the process, the easier it will be for you to control your money.
Now, this may sound like a lot. But it’s actually not. Start slowly and dedicate 2 hours each weekend. 1 hour should be for reading and the other hour for whichever one of the other tasks you feel up to.
I can’t emphasize enough how important reading is. One part should focus on economic and political news. When you got through it, I recommend reading news about specific companies that you are interested in, to follow a blog or a specific investment website or to subscribe to an online course that might cover some basic financial topics. Reading about industries that you would consider to invest your hard-earned cash and about the people behind the companies. It’s a huge puzzle and tons of information to cover, but thanks to the internet, it has never been easier to find all these information.
For beginners, I recommend following The Motley Fool. As some of my readers may know, I am frequently writing for the German subsidiary, The Motley Fool GmbH, which is my side-hustle. This online magazine greatly helps to provide information on the daily things that happen on and around the stock market, in a simple and non-fuss manner. It’s easy to read and a perfect weekend lecture for those, who don’t have too much time on hand.
I don’t promise anything, but you might rather quickly recognize, that investing time will make a huge difference in reaching your goal of escaping the rat race. It’s Sunday. Why not start today?