The importance of time: stop trying!
One of our main riches is time. Have you seriously thought about it?
Surely you have already realized that we repeat many times “I don't have time for anything!”. The answer on the other side is almost always the same: good sign. Will it be? Does working longer mean more income? Not necessarily. However, in the investment process, if we invest in the right portfolio and according to our plan, investing for longer means even more income.
Human beings have an incredible ability to adapt. So much so that, as in my case, 20 years ago I wouldn't have imagined that now I would be saying that I don't have time, but I do many more things than I did then.
What happened with time? stretched? I dare say that time is a deflationary factor. Over time we gain experience, knowledge, discipline, maturity, which makes us do much more in the same period of time.
There is also the issue of productivity, which has been talked about a lot. We work long hours and produce less than we should.
And this conversation leads us to inflation: Do you think we could live in a deflationary system instead of an inflationary system where the currency is constantly being devalued and where the solution to everything seems to be, more money?
Life is very short and there’s no time
We seem to have an economy, or economic system, that has completely lost interest in people. We use somewhat anachronistic and irrelevant indicators such as GDP (as mentioned by Thomas Sowell in Basic Economics), we look at the unemployment rate as an indicator of the health of the economy and not of the society. We also see the drudgery, which continues to spread. We are afraid of what technological innovation brings and the possible destruction of thousands or millions of jobs.
Perhaps this is the time to turn to the real asset of this equation: time. They do not think that economics, as a social discipline, should not be concerned with time, instead of maximizing the production of goods and services, knowing that we live in a world of limited resources and unlimited needs which are self-fed by an incentive and money production-machine? Economics should study how we can maximize time, knowing that we live in a system where this resource is limited.
In 1930, the economist John Maynard Keynes wrote a paper, Economic Possibilities for our Grandchildren, in which he predicted that in the future technological evolution would be such that we would work less, no one would need to worry about making money, and we would have more time. Time is the same, what changes is the use we make of it.
This is where Warren Buffett shines once again. Buffett allied himself with time. He always had time on his side. He didn't mind momentary instability, he wasn't in a hurry or after the easy profit, and he wasn't distracted by the daily wanderings of the markets. He took advantage of opportunities where others saw problems.
Investing in yourself
Kendrick Lamar and Ray Dalio also teamed up for an important investment message. They highlight the importance of “slow money”, which, in Dalio's words, means taking advantage of the capitalization effects over time, which we have highlighted in several articles like this one. Money itself makes money. Knowledge too. Invest in knowledge and invest with time!
We have talked a lot about literacy. Fortunately. Lots of courses, lots of articles, lots of podcasts. It's good! But it would still be better if people really took the opportunity to put into practice a plan, however simple it may be. But a plan that always has 3 factors in harmony: time, savings and optimism. And follow the plan. “Stay the course”, as John Bogle rightly said in The Little Book of Common Sense Investing.
As Morgan Housel puts it, “spending money to show people how much money we have is the fastest way to have less money.”
Starting to save with €1 a day is possible. We start slowly and increase savings whenever possible. How?
- with the annual bonus;
- with the return of the IRS;
- with the Christmas or Holiday money;
- with the salary increase;
- with a decrease in consumption.
Money doesn't grow on trees, but if we invest as patiently as one who plants trees, we will literally reap fruit in the future. And when we talk about investing, we can do it in the financial market as well as in land where we plant trees or even in real estate, art or other collectables.
But doubts remain. Is this the best time to invest? “Time in the market” – investing consistently and continuously over time – is better than market timing – making decisions based on forecasts – and requires much less mental effort. Watch this video, you suck at investing, in which the message is clear: stop trying! Peter Lynch, one of the greatest investors ever, advocated consistency. John Bogle, in his aforementioned book, too. We don't need great investment ideas. Investing with time is better than trying to find the best timing, relying on luck or misfortune and the cost of emotional mistakes.
No need to beat the market
You also don't need to try to invest like the pros, as most of them perform worse than the market.
No need to try. I reinforce the message above: stop trying! Stop trying and invest. Invest consistently, diversified and for the long term.
We know that investing like this is counterintuitive. The news, analysts, managers, and friends, all warn us that investing is being alert to each news, to market movement, aware of investment tips, and looking for the needle in the haystack. And, we know, we don't have time for that. Nobody has. So we give up and keep money in check, being eroded by inflation, being quietly transferred to taxes and drastically decreasing our purchasing power.
If you haven't started saving yet, start now. If you already save, increase your savings amount. If you've already saved enough, continue investing with your less ambitious goals in mind.
Investing is simple, but not easy.
Tips for surviving time:
Vítor is a CFA® charterholder, entrepreneur, music lover and with a dream of building a true investment and financial planning ecosystem at the service of families and organizations.