Time is Overrated… Most of the Time

What I’m Drinking as I Write – Tripplo

I think people often overestimate the value or meaning of time. This is not to say that time is not precious, meaningful, or infinitely valuable. This is to say that we put too much reliance and excuse on time. Let me provide you with an example to further explain what I mean. Yes, time goes by quickly and I wish (like most people) I had more time to spend with family and friends. I am not arguing time in this theory. However, the theory that time heals all things is debatable. I do not believe it is time that allows us to forgive those who have wronged us, we just think it is. I believe it is, in part, a change in mindset, viewing and understanding additional perspectives, and a ‘want’ to forgive. 

I think we as people feel the need to base our decisions in the concept of time. We think that if we take more time to make an important decision, weigh the pros and cons, discuss our thoughts with others, seek advice, and consider the opportunity cost(s), then the decision must be the right one. After all, we have done our due diligence. However, I don’t think we are giving ourselves enough credit in these situations. We don’t need weeks to begin a relationship with a significant other. We don’t need months to think about purchasing a car. We don’t need a lifetime to fully love someone. We just think we do (or should). However, there is one area where the importance of time cannot be belittled – we do need time to be more successful in the stock market. Let me break these down one-by-one.

Many people will ask someone out because they like them (based on looks, personality, common interests, etc.) They will go on a first date with this person, and if there is chemistry there will most likely be a second. After several dates and weeks or months go by this couple may choose to make their relationship exclusive and official. Great. However, did they have to wait so long to know if they wanted to be with the other person? Maybe, but most likely not. It’s more likely that after the first date, they already knew whether or not they would want to see this person again and again. If they really liked each other, one of them most likely already imagined what it would be like to spend the night with this person or rent an apartment with them during the first date. 

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Purchasing a car can be very fun, yet very time consuming. There’s the process of figuring out a budget, which cars you’ve always had an interest in, which would be most practical for your situation, which gets the better gas mileage, etc. Then you will spend hours online and/or driving to dealerships to look at as many cars as possible. Once you narrow down a few choices you will most likely compare a few cars and ask friends and family their opinions. However, what if I told you that most people know the exact, practical, budget-friendly car they want before they even begin this process? It’s true. If I asked you today what other car you would enjoy driving if you crashed yours and had to affordably buy another tomorrow, you’d most likely give me an answer without having to put too much thought into it. This is because our subconscious brain already makes these decisions for us, and is doing so constantly. Another way of thinking about this might be to imagine craving a certain type of food. Some days we crave Wendy’s, for example, and we know exactly what we would order. No one had to ask us what we wanted for lunch, and maybe it’s only 7 am and you haven’t even had your morning coffee? But, you know what you want for lunch. Whether or not you satisfy this craving is entirely up to you, however, it’s there and no one even had to ask you to make this decision. 

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Love is something that grows deeper and fonder, but it is not something that grows with time, rather it is something that grows with memories and experiences. You may be thinking, “Sure, but it takes time to make memories.” While I agree with this statement, it is not what I am basing my concept on. Just because we spend more time with someone, it does not mean the time is “well-spent”. I’m sure you have heard the saying, “My brother from another mother”. This is one concept I am basing my writing on. For example, you may have grown up with a sibling your entire life, all eighteen years, and have an okay relationship with them. Then you move out of the house, start a career, or go off to college. Somewhere during this time you will meet a friend or two, and you will develop a deeper, stronger relationship than you ever had with your sibling. How is it possible you have only known this friend for a year and you feel more love from them than your sibling that you’ve known and loved for eighteen years? The number of years in any relationship does not matter in this context. A couple that has been married for ten years may experience a deeper and stronger love than a couple that has been married for fifty years. It’s the level of communication they have with each other. It’s the depth of trust in the relationship. Time is only a small matter when it comes to love. I’m sure you have also heard the saying, “Love at first sight.” I am an avid believer in this saying. Love doesn’t need time to fully develop. It’s something that can happen in an instant, and it can continue to grow in another instant. 

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Now I want to talk about the exception to my rule: time in the stock market. There have been several studies on the importance of time in the market, and I would like to discuss one with you. Let’s pretend a 45-year-old realizes they would like to retire in 20 years and do not have nearly enough money invested. This individual thinks $1M would be a nice goal to reach to retire comfortably. At an 8% return annually (the average annual return of the S&P 500 from 1996-2021), this person would have to contribute about $22,000 annually for the next 20 years to have a future value of approximately $1M. 

Now let’s pretend a 25-year-old realizes they are planning to retire in 40 years and would like to have $1M to reach this goal. At the same 8% annual return, this person would have to contribute $3,900 annually for the next 40 years to reach the same $1M. That’s an annual contribution difference of $18,000 and a total difference of $284,000. This is a huge difference to illustrate the importance of starting early (like when you are 40 years from retirement) and periodically (at least annually). This is one concept where time is the single most important factor. Annual returns differ year-to-year, additional deposits could be made periodically, etc. but nothing will beat the power of compound interest over time.  

Lesson:

We have been raised to take our time, to seek advice, to weigh important decisions heavily, to really think about something before we make a move. I don’t believe in this. I’m not condoning the behavior of purchasing the first $500,000 car you come across, or proposing to a gorgeous stranger on the subway. I’m asking you to try to channel your subconscious thinking more often. Allow yourself more opportunities to think with your instincts, gut, and heart rather than drawing a Venn diagram. You may be surprised just how happy you are with the outcome after only taking a few hours to come to a (oftentimes the same) conclusion rather than a few weeks. It’s said that you can tell a lot about a person just a few moments after meeting them. Try to listen to this feeling more often. Surround yourself with people you get initial “good vibes” from. Limit your time with people who give you not so great vibes. Open an investment or retirement account with $100 and start investing now – don’t wait. I hope you try some of these methods, and that you utilize the time you are saving for better things – like spending more time driving to Wendy’s in your new car with people who give you good vibes and even better financial advice. 

Have a Happy Belated National Coffee Day!

Happy Sipping,

E