It’s about time
“How long a minute is, depends on which side of the bathroom door you’re on.”
— Zall’s Second Law
It finally happened this past week. My daughter couldn’t wait for this day to come, and I have been fearing it since her birth. I have to admit, there is something special about 16 candles on a birthday cake. After years of fearing this iconic moment in my daughter’s walk towards womanhood, I found myself filled with happiness as she embraced the celebration and I was reminded what a joy the last 16 years has been.
Maybe time isn’t against me after all. Maybe there’s more to be done with time than only looking for the best way to deal with it’s passing. How do you feel about time? Are you racing against it, or is time on your side? Is Father Time a charitable giver or a devious thief?
There is an unbreakable bond between time and money. We are captivated and driven by both. Benjamin Franklin even famously proclaimed that “time is money.” No wonder he got his face on a $100 bill. Yet, despite man’s best attempts to elevate both to equal status, we must recognize that one is greater than the other. Time has value all on its own without the help of anyone or anything, and is constantly adding to or stealing value from money. But have all the money you want, you still can’t buy time. In any circumstance, the real value of both time and money is only experienced when we are actively engaged with them.
The real question is: Are you as actively engaged with your time and money as you could be, or has life lulled you into a time and money nap?
Reality check: One of the most powerful and attractive aspects about investing is the magic that can happen when you combine time and money. They activate each other and create opportunities that neither could provide alone. We simply need to let them spend as much time together as possible.
The importance of getting invested and staying invested cannot be overemphasized. Consider the performance of the S&P 500 from 1970 through 2009. A $100,000 investment over that time period in an index fund that tracked the performance of the S&P 500 and matched its returns would have grown to $4,961,400 (minus expenses)!
Often times, the market’s best daily returns occur after some of it’s worst performances. Freaking out and pulling all your money out of the market after a losing period can have a devastating impact on your portfolio. By missing only the single best performing day during the 40 year time period, just one day out of 40 years, your investment suffers a $512,200 loss for an ending value of $4,449,200. Missing only the best 10 days out of those 40 years would cut your returns nearly in half to $2,186,801. Clearly, much of the stock market’s strong returns can be attributed to only a small number of days. If you are looking for strong returns from the stock market, you must be committed to your investment strategy.
Real Advice for Real People: Time is neither for or against us. It’s simply offering to us a chance to experience everything it brings to the table. The Stock Market is no different. Sure, we will have good times and we will have rough times, but it sure beats living in fear of the future. Consider your time frame, measure the risk, invest with a plan and stick with it. The amount of time you allow with your money is more important than the amount of money you invest. So give time and money a little romantic getaway in a well managed investment account and see what happens.
RC Arseneau is a certified financial planner who lives with his family in Delaware. Please submit any questions or topic requests to AskRc@mail.com.
The information and opinions in this column are provided only for educational and entertainment purposes. Any reference to a financial product or strategy is not to be considered an endorsement or recommendation. The information is of a general nature only and does not take into account your individual objectives, financial situation or needs. It should not be used, relied upon or treated as a substitute for specific professional financial, legal or tax advice. Investment Performance may vary due to timing and expenses. Rc recommends that you obtain your own independent professional advice before making any decision in relation to your particular requirements or circumstances.