2020 has seen a massive upsurge of first time investors and a vast number have a strong preference of managing their investment portfolios by themselves. Investors who were of a relative passive mindset towards their investments, became hyper active (passive is good). Stocks & multi-bagger opportunities have become one of the most frequently asked and searched question on social media platforms.
A part of me is glad to see this change considering investing can be a highly rewarding wealth creation journey. However, larger part of me feels irritated to see this hyper activity. People are spending (wasting) disproportionate amount of time towards scanning for the next best investment option versus spending time towards their primary source of income & family. Social media posts are frequently updated with investors (rather traders) who are making a lots of money. I have yet to find out a post where a person lost money. Such examples end up being a source of enhanced motivation for investors – ‘if he can do it, so can I’. I find nothing wrong here. However, the question to ask is – are you making the best out of your time?
Working vs Stock Trading
Working from home has been one of the positive side effects of the COVID crisis. It gave organizations, managers and employees a hard push to make working relationship effective in a remote setting. The flexibility was of great help where employees needed to manage both work and family demands in a lock down environment. However, if you ask any one, the common feedback on their life in COVID would be – I am much more busy, occupied and under stress versus pre-COVID.
With already stretched time at hand, researching, tracking & trading in stocks has also become a major contender for time. In order to find good stock bets, investors are putting in hours of their time going through the countless videos on Youtube, social media chats, charts, company data, etc. This is all great when one is a full time investor. But the sad reality is, for 99% of people, their home is being run by the pay check of their employer and not the outcomes of their investing activity (better read as stock trading). Even harsh, in a raging bull market, investment bets have a disproportionate chance of giving decent outcomes. With this falsely acquired confidence, the size of bets increase both in monetary and time invested in finding such bets. This continues to happen till such time the party gets spoilt by a major stock market correction. Such a moment wipes off entire accumulated trading gains in within a few days.
Your Employer and Your Time
Please ask yourself a question. How will you feel if you hired an employee for doing a task and such a person ends up getting diverted in non work related matters? One may argue – how does that matter as long as I deliver what is needed on time! Post that what I do with my time is my choice.
However, try to introspect on a few questions (no answers needed):
- With the same finite hours at hand, from where do you squeeze that extra time to fit in the demands of a ‘stressful’ stock trading or mind grossing research activities?
- Have you reduced the time spent with your family?
- What time to you sleep and wake up? Are you getting good 7-8 hours sleep?
- What is your true time invested at work during the market hours? Are you skipping or declining some work demands during your peak market hours?
- Do you exercise enough? Is your health getting adequate attention?
- Would your current routine be feasible when you will be forced to work in a supervised work environment?
Time Better Invested
Many DIY investors I have spoken to, end up investing over 2-3 hours a day to track market events during weekdays. In addition, the clock keeps adding during weekends. This could easily add up to between 20 hours a week OR 80 hours a month. With this significant investment of time, one would expect a superb return on investment.
On an average, the most successful traders in the Industry have claimed that they do not make more than 30 – 35% per year on their invested capital when working on a full time basis. In other words, if they have invested a capital of Rs. 1 crore, they make around 30 lakhs a year. I am not getting in the complications of taxation yet. This may sound a super cool number, but please focus ‘on a full time basis’. How much could you earn on a full time basis via your employment? What is the probability of you to be in the list of those privy-league traders / investors ?
How about considering following alternatives for an investment of around 80 hours a week :
- You could complete a rigorous qualification in 1-3 years with this much time. Imagine the impact it may have on your CV and future career and earnings prospects;
- How about embarking on additional skills which could immediately boost your work efficiency;
- For people who do not know how to code – in a year from a zero coding proficiency, you could achieve an advanced coding proficiency;
- How about a second part time job or providing consultancy in an area of your expertise (provided your employer allows it) ?
- Did you consider teaching or even creating your blog or a Youtube channel ? This requires a significant time investment but makes you a thought leader in the industry.
- Care about society – how about volunteering with a NGO ?
- How about a jab at fitness – both mental and physical ?
There are so many additional things you can do with this time. Do you think your extra efforts of being a DIY investor may be a rewarding match to the above options ?
Hire Some One Else’s Time
Considering time at hand is finite, a single person can only do upto a point in a day. Organisations with bigger tasks at hand need support of hundreds & thousands of man hours a day. They can only do this by buying time or in other words leveraging upon the time of other people.
If organizations can do it, why can’t you? Have you considered hiring an advisor who takes care of your money while you focus on your core skill sets? By doing so, you may be able to break your time restrictions. Just imagine that you are focusing on your core job, having a good break with your loved ones, a lovely night sleep and a good work out in the morning. In parallel, while you are doing this, your advisor is working on your behalf to help your money grow money, in return for a fee. If this sounds reasonable, hey you have created an organization for your own self.
Bring Back The Focus
I may be considered as conflicted while writing this post as I assist people with saving solutions to help them achieve their life goals. It is odd where at times investors bicker around expense ratios being charged on investment products but they waste multi times of their life’s worth in trying to achieve similar or if they are lucky marginally better outcomes. The question I ask – is it worth the effort? Life slowly ends. Clock ticks. A moment wasted today will not come back. Make the best use of your time where your forte lies. If after this introspection you conclude being your own money manager – so be it. You may have made a right decision. But atleast pause and think. Bull markets bring in a lot of freshly created DIY money managers till they meet the reality.
Happy investing and peaceful living.