Investing is the process of exchanging your time and money now for time and money in the future. If you are successful in investing then you will receive a larger amount of time and money back than you put in.
That’s it.
Probably not what you were expecting. The truth is that investing isn’t about trends, stock analysis, company fundamentals, rate of return, or compound growth. All of those things are important and small pieces of investing, but that isn’t what investing is about. Investing can apply to so many more things when you take that definition as it is.
Unconventional Examples
When you buy a dishwasher, you invest money to save you time washing dishes in the future. This is an investment, even though you will never hear a financial or investing news source mention it. When you cut coupons, you are investing time: searching for coupons, cutting the coupons, sorting the coupons, and using them causing a longer checkout. All of this in exchange for money at the time of use. This is an investment.
Takeaways
So what does this mean for you?
As you pursue learning about investing on this blog, don’t worry about not having a lot of time to manage investments, or not having a lot of money to invest. Those things don’t matter. In fact, sometimes they can be a hindrance to successful investing.
If you put a lot of time into investing, such as reading company reports, doing fundamental analysis and taking special care to choose each and every stock that you buy, that’s great. However, you’ve now invested both money and time into your portfolio. This requires that you now make more money from your investments than if you had spent only 5 minutes selecting an index fund and moving on with your day, because now you have to have a return on your money and an extra return for your time. If you only perform just as well as the index fund, well then you wasted your time, even if your money was invested well.
What are your thoughts on investing? How have you defined it in the past, and what types of investments are you most interested in? Is there something you can add to the discussion or something that I missed? Please take the time to comment below, and we’ll all benefit.
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