Meg from the World of Wealth and All Financial Matters recently wrote a very interesting article about investing, saving, and ‘having a life’. I encourage you to click over and read the entire article, the final line of which I’ll quote here –
Why not just accept market returns, keep saving, and enjoy your life?
Meg’s main point, if I’m reading the article correctly, is that there needs to be a balance between investing, spending time managing our investments, and actually living our lives. I could not agree more. While I enjoy thinking about my finances, I find that there are days when I need to get away from the computer, away from my bank accounts, and away from the stock ticker.
But, I also think that Meg is speaking to a rather specific group of people – people like me (and perhaps you) who spend hours thinking about financial matters. Some of us need to ‘chill’, just a bit, and enjoy our lives. However, I think that there is another group out there, a rather substantial group, who need to get-in-gear and actually START thinking about their finances. In fact, I’d wager that for every person who is obsessed with financial matters, there are a dozen people who are simply ignoring theirs, completely.
Meg’s article really helped me. I’ve been worrying (obsessing?) about my investments lately, especially with the state of the economy, and I need to chill, just a bit. So, if you are freaking out, relax. But, if on the other hand you have NO sense of urgency, NO desire to learn a little about investing and the markets, you might want to, you know, GET ON IT!
The easiest thing is simply to calculate the hourly wage corresponding to one’s surplus return. E.g. if one has $25000 invested and spend 100 hours on getting 1% above the market rate, then then hourly wage is 25000*0.01/100 = $2.5/hr. In this case it is not worth it. But consider $250000 with 2% …
Thanks for the mention! I shifted the point of my article there at the end to highlight the virtues of not spending so much time/effort on trying to raise the return of your investments. But the original purpose of the article is that your returns don’t even matter until you have around a million bucks anyway; what matters is your savings/contribution rate. So quit wasting time trying to beat the market or trade into a slightly higher yielding savings account.
I totally agree with you that many people (perhaps those spending their Saturday morning reading PF blogs, like me) spend too much time reading, analyzing, and agonizing over their finances. Obviously if you’re talking about most Americans nothing could be further from the truth. Good point!
Much harder than is sounds…
Easier said than done…I’m trying.