Calculate how much time you put into your money; it adds up, like any other investing fee.
There’s a point of diminishing returns when it comes to spending time on your money.
What’s your time worth? A lot, you might say. But it can be hard to put an exact price on it.
You might charge a day rate, if you’re a consultant. Or maybe you’ve divided your paycheck based on your time at work, just to gauge your hourly rate. But that’s different from what your personal time is worth to you.
Does it matter? Yes. If you viewed your time as you would any other investing fee—expense ratios, loads, trading charges, 12b-1 fees, etc.—those hours likewise would have an impact on your returns.
After all, the time you spend managing your money is a maintenance fee of sorts. And as with other investing costs, you ideally receive a benefit (you’re getting better information, expertise, you hope). But it’s important to be clear: your time is an expense, like the others, and shouldn’t be invisible when you’re calculating your overall returns.
Again, it’s hard to measure, in large part because most people view time as a part of the upfront cost of investing. Also: time isn’t really a direct expense, like a measurable 1% fee. But although time spent is a hidden fee, it’s a tangible loss, because as everyone’s financial life grows more complex, it takes more time to monitor and manage every task.
You might spend time:
Gathering information about funds, companies, markets, and trends (i.e. reading the news, watching TV) and discussing the information, with friends, colleagues, advisors, your spouse/partner
Analyzing companies and funds in an excel sheet, checking an asset allocation, managing it dynamically
Planning (anticipating, worrying, weighing various priorities and outcomes)
How many basis points is that?
What do you get for the time you spend?
Now we’re getting closer not just to the value of your time, but how you value your time. It may be worth it to spend time on your money—to feel in control, to feel safe, to be informed. But if you could cut a 1% expense ratio in half, you’d jump on those 50 basis points. What would it feel like to cut your yearly time-spend in half?
There is a point of diminishing returns, when it comes to the time you invest in managing your money. And there’s more and more evidence suggesting that most long-term investors stand to gain the less time they invest: typically, more time = more attention, which increases the likelihood of emotional reactions and biases that can drag down returns.
Plus, look at the personal upside: If you could gain some time, say, an extra hour or two a week—a free afternoon (or two) per month—what would that be worth to you?
What’s Inside the Betterment Portfolio Strategy?
Explore the asset classes in Betterment's recommended set of portfolios. Then, take a look at the exchange-traded funds (ETFs) underlying each part of the portfolio strategy.
Investing in Your 30s: 3 Goals You Should Set Today
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Using Investment Goals at Betterment
Goal-based investing. The idea is prized among financial advisors—and our team at Betterment—but to the everyday investor, it’s often difficult to put into practice.
Explore your first goal
This is a great place to start—an emergency fund for life's unplanned hiccups. A safety net is a conservative portfolio.
Whether it's a long way off or just around the corner, we'll help you save for the retirement you deserve.
If you want to invest and build wealth over time, then this is the goal for you. This is an excellent goal type for unknown future needs or money you plan to pass to future generations.
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