Aug 14, 2003

Time: the Most Valuable Asset

by Marcel Chartier

There are so may cliches about time, and I will try to spare you of most of them. That being said, time is probably the most important asset we all have. What we make of the time we have is what matters. Ultimately, our use of time is the probably the largest deciding factor regarding success in life. Time spent on education, working to build careers, businesses or investments seems to be the most overlooked factor in accumulating "success".

The formula for investing is ultimately "time in the market", as over time the probability of success grows to almost certainty. Its ironic that usually those who really understand this come to understand it when they have less time than they would like. Time is fluid, it changes importance as we get older, our perceptions of time change, a day to a 3 year old is .0009 of their life, to a 60 year old it is .000045 of their life. That is 20 times less in percentage terms than the 3 year old 's perception of time. This is why time seems to go faster when we are older, and time seems to drag on forever, especially when waiting for something, when we are younger. It also explains that patience is easier to attain when we are older. This is the exact reason why investing is hard. We have to fight our innate perception of time to reap the benefits of time.

Try talking to the average 20 year old about investing, they are impatient for the things they want, the hot car, the latest clothes, the latest latest whatever. And, they want it now. Invest? Plenty of time to do that in the future, because either they are going to live forever or live fast and die young.

Talk to the 55 year old.

They wish they had invested sooner, more often with more money, because they know the power of time, as they have seen the effect.

We seem to be wired to be innately bad investors. We do not invest when we think we have plenty of time, and are impatient for other more immediate goals. When we understand the implications of time, we also have a lot less to use as a tool to achieve our investment goals.

We make good hunters and gatherers, but the world has changed a tad since the need for that survival mode.