Personal Investing: Time & Resources
When you think about your own investing what do you picture?
You might imagine a highway. Driving in a car down the road. There are a lot of things you’ve read about these roads and the environment on the highway. You’ve heard about the different vehicles on the road. The road conditions change, frequently. There’s an overhanging fog that clouds the navigation. It might consistently feel like you’re a little lost and not sure how far you are from home or the proximity to your destination.
Ok, now snap out of it! There is an infinite amount of detail to learn about investing highways that can distract from the high level principles of what it all should mean in the course of a lifelong adventure.
Investing is simply about what car(s) to get in, where they’re going, and how fast they need to go to get there…without crashing.
Allow this post to introduce an investing graphic to guide you in all future endeavors. Anything that’s good about anything has a graph attached to it. That is just a fact:
Discount for a moment there are infinite twists and turns making those straight lines squiggly wigglies in reality. Investing, in the context of your life (and driving cars), is a mix of applying time & resources. EVERYTHING you do is an investment.
Let’s break it down!
Time:
- Life’s most precious gift and our most valuable commodity
- The one thing that no organism on planet earth can purchase more of
- Early in our lives, we have more of it with more flexibility to use it
- Later in our lives, we spend many waking moments trying to buy it back
- How we invest our time drives so much of who we are and who we become
- Invest wisely as the flexibility of your time wanes
Resources:
- Roughly categorized into things like money, assets and energy to deploy
- Theoretically these should increase over time through the 8th wonder of the world (compounding)
- As they accumulate, your ability to manage them becomes strained (see the time plot)
- More resources require more focus. Mo money mo problems
- Money & assets allow you the opportunity to redirect your time to focus on the things you care about
Alright so, how can we apply this? One idea is a riff on the “barbell” strategy. In investing terms, a “barbell” strategy roughly means that, in order to balance risk, one should invest at opposite ends of a spectrum so as to offset the overall exposure. Nothing in the middle. Examples include mitigating interest rate risk by investing in short term and long term bonds. Or you could invest in startups & public equities. Opposite ends of a spectrum.
Early in life, you can take greater risks with your time and and your resources. You could invest your time on one end of an extreme like joining a startup. Then you might invest your resources in public equities. Opposite ends. You could join a large public company and then invest some of your resources in startups. Also opposite ends.
As Benjamin Graham would say, create a “margin of safety” in order to gain the flexibility to be more aggressive as the window of possibilities narrows. Experiment early while you have the time. The second best time to start is today, as they say.
Automating both ends of your barbell as you learn & grow allows you to sharpen the exertion of your resources toward the activities where you want to live your life. Of course, most people will need years to get to positions of strength. But that’s ok, keep toiling away until you can if you can! Aggressiveness is often rewarded.
You have brains in your head. You have feet in your shoes. You can steer yourself any direction you choose. You’re on your own. And you know what you know. And YOU are the one who’ll decide where to go…
^ and if you don’t know who wrote that, well…you can’t be helped.