Losing money can really make you angry, but, eventually, you can make up the losses. But when time is lost, you will never get it back.
The factor of time in investment return calculations is limited to the time period of the investment, e.g. One Year, Year To Date, Trailing Three Years, Calendar Year, etc. Return calculations are objective and purely mathematical. The value of your time is left out of the calculation of investment return. What about the time you spend as an investor? What is it worth? Isnʼt that part of your whole return and shouldnʼt you include it in your performance?
As an example, two people invest $100,000 each and both have $120,000 at the end of the year. They both gained 20%, so, traditionally speaking they experienced identical rates of return. What if one of these investors spent two hours every weekday reading investment news on the web and in the papers, watching financial shows on TV, and listening to investment guruʼs on their car stereo. What if they spent another hour analyzing what to buy or sell? What if the other investor spent eight hours over the course of the entire year on their investment portfolio? Both have the same return in dollars and percents, but do both really have identical
returns?
If you knew you could receive a comparable investment return on your investments without spending any of your personal time, wouldnʼt that mean your return is higher? You have the same amount in dollars, but more time to do the things you would like to do.
Traditional investment returns include income and the gain or loss of an investment over a period of time. You should always consider your investment return but you may want to add a new calculation, one that considers your whole life. The Whole Return is your investment return over a given time period divided by the amount of time you spent, as an investor, generating the return. You should add satisfaction if you are investing consistently with your values or enjoy investing. And you should subtract from your return if you experienced fears or worries relating to your investing.
Here is an example:
Your Investment Return + Satisfaction – Stress
Your Time
This is NOT a mathematical calculation! It is intended to remind you that your time, satisfaction, and stress are considerations when it comes to your investments. You are the only one who can “calculate” your whole return. It is a subjective calculation that doesnʼt require a calculator. It requires you to think about your money in the context of how you live your life.
Your Whole Return considers more than just money? It may not be easy, but you can make up your losses. But time, well, you do not know how much time you have and the time you lose can never be replaced!
Including your time, satisfaction, and your fears in your return calculation more accurately reflects your “whole” return.
Money is not your life, it is simply the means to the life you want!
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