Return On Hassle
There is more than one way to skin a cat.
Lots of people make lots of money doing entirely different things. Making a living is not a linear path - it’s very much “choose your own adventure”.
And what might seem like madness to one person, might seem like the most natural thing in the world to another. That’s ok! Variety being the spice of life and all that.
When we think about money, and investing specifically, we tend to think in terms of very traditional inputs and outputs:
How much have I invested?;
How much risk have I taken on?;
How much of a return have I seen?;
And over what time?
But when we undertake any kind of money making endeavour there is another input we should think about - hassle. Also known as “agg” or “donkey” if you live in my head.
Time is the most precious commodity we all have. In this context the amount of effort required to make an investment work surely matters. If I can earn the same rate of return for a fraction of the time spent, than that is surely a good thing?
As well as involving less hassle, “lower touch” methods of making money throw off another ancillary benefit. If they free up time to do other stuff (and you don’t fancy using all that extra time to play golf) we can potentially use it to make more money elsewhere. So the freed up time becomes a compounding factor in and of itself.
Of course, by investing our hard earned into stocks and letting capitalism do its thing over time we accept another kind of burden into our lives.
When the proverbial hits the fan and our (perfectly sensible) investment portfolio goes through one of its period big falls in value, it can be a real test of our emotional resilience.
But for me personally, I would rather accept this kind of test a thousand times over than devote large chunks of my life to an endeavour that may (or may not) move the needle financially.
The “returns” shown in the chart above are illustrative only. They are based on historical data, but they represent opinions and are not projections - future returns for each asset class/strategy may differ. I have endeavoured to make some allowance for costs and tax, in order to reflect net returns. I have also ignored the effect of leverage on any property returns - in order to compare “apples with apples”.
None of the above should be taken as investment advice. If you have any queries regarding your individual position please consult with a regulated financial adviser.
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