We have just recently found this outstanding blog post by Dan Caplinger on the Motley Fool, one of our favorite sites for financial news and advice. Dan's words are too good not to share, so voilà: Here is an extract from his writing. Worth reading, guys!
Introduction
In the investing world, you often hear about how time is your biggest asset. The earlier you start to invest, the more time you'll have to put the power of compound returns to work, and the more money you'll have at the end. That's simple math, and it's undeniable.
But there's another way in which time is extremely important to investors. Most of us invest with particular goals in mind, and although money plays an important role in achieving them, piling up money isn't an end in itself. Rather, great investments let you spend more of your time the way you want to. Get more control over your time and what you do with it, and you'll open up doors that can lead to a happier life.
Doing Time
Like many kids, I worked summers during high school, and my first job was bagging groceries. For the princely sum of $3.35 an hour — and the occasional quarter as a tip — I'd shuttle back and forth from the front of the store to the parking lot, wearing a long-sleeve button-down uniform shirt in the Houston summer heat for four to six hours a day.
It wasn't the worst job to have, but it put things into a different perspective. When I spent $70 buying a Pac-Man video game, it wasn't just $70 — it was a full week of part-time work. When that game turned out not to be anything like what I thought it'd be, I was angry — angry that I'd wasted a week of my life lugging groceries. I didn't just want the money back — I wanted that time back.
That realization guided my entire career path. I went to law school expecting that I'd be able to sell my time for more money. Even when my dreams of actually enjoying the work I was doing evaporated, I still held tight to the idea that I was getting the most value for my time — and saving as much as I could to reach the point when I wouldn't have to make that sacrifice anymore.
Investing With a Purpose
Being able to save was an important part of my fight to get my time back, but investing was the key. Even when you set aside a large part of your salary, it still takes years of work to save a single year's worth of pay. But investing in the stock market brought the promise of making that money work harder and grow on its own over time.
As with every new investor, it was slow going at first. Even strong percentage gains translated into agonizingly small amounts of actual dollar-value growth. But month after month, those brokerage accounts got bigger, and milestones like reaching one full year of salary — and then two years, and five, and 10 — came sooner because of those investments.
It wasn't always easy, though. As people with dreams of early retirement can attest, the mindset of putting saving and investing first runs against the grain of what most people do. For them, rising salaries mean spending more money on luxuries, which in turn makes them more reliant on future pay increases.
Moreover, the stock market doesn't just go up the same way those graphs in financial planning projections suggest. I started in the late 1990s, so the tech bust in 2000 to 2002 took its toll, as did the financial crisis in 2008 and 2009. There were times when my brokerage statements looked really ugly. Yet the stock market inevitably recovered from those losses, and my portfolio recovered along with it.
Living How You Want
Coming out of college, I was convinced that work would only ever be a means to an end. As my investments grew, I realized that working didn't have to be just doing time. Having a financial cushion meant not only being able to retire earlier but also choosing to take jobs that paid less but that better aligned with broader lifestyle goals.
It's that backstop that gave me the confidence to give up a safe career as a financial advisor and sign on to become a freelance writer with The Motley Fool. That decision changed my life, as it lined up what I did for work with who I was and what I believed in. The flexibility of contract writing let me balance time spent working and time with my wife and daughter, as well as important community commitments.
I never would've taken the leap without the safety net of my portfolio. Investing has made my dreams come true.
Invest as If Your Life Depends on It — Because It Does
Countless Motley Fool members have told similar stories, and if you're reading this, it's because you wanted the financial security that comes with investing. You wanted it badly enough to become a Fool and join us here.
The details of our specific goals are all different, as is what we all want to do with the time we have. For some, meaningful work will always be a part of a well-lived life. For others, the absolute freedom to live life on their own terms is paramount.
But we all share this common bond to become successful investors, and at its root, what drives us is the wish to reclaim our time. That takes long-term vision, and you have to put time on your side to pursue and realize that vision. But as long-term investors, we know the value of patience, and the companies we choose to invest in have leaders with their own vision of what they want the future to look like.
Putting their skills and insight in our corner and then giving them the time they need to realize the full potential that their businesses have is an invaluable tool that investors have at their disposal. It's the way that all of us can become who we want to be, and how we can finally realize the true value of time — and put it to best use in our lives.
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