I know what you're thinking, dear reader: "Oh great! Another boring, vanilla blog on asset allocation. Only now, my advisor is so bullish he things we should use leverage (investing with borrowed money)."
Well, that's not what this blog post is about. Rather it's a pithy play on words that will prove worthwhile if you read to the bitter end.
The Asset Allocation that Matters Most
You have three primordial assets that are the building blocks to the life you build for yourself. They are: Time, Talent and Treasure. Typically, we use our time and talent to build up a treasure for ourselves. We trade time for hourly wages. We wield our talent as a tool to move up through the company for higher wages and a better view from the corner office. Allow me to illustrate this dynamic below:
Today, I'd like you to consider two things. First, properly value all three of these assets. Second, create a compounding and virtuous cycle of time, talent and treasure.
A Proper Valuation
For a moment, forget about your treasure. The investments, the real estate, the savings accounts, the cash value in your life insurance, the gold coins and the fine art will still be here in the 15 minutes it takes to read this blog. Instead, let's turn our attention to those 15 minutes. Forgive me for being so philosophical, but I think it's justified.
When you appraise the value of your treasure, let's say real estate, you simply look at comparative purchases in the surrounding neighborhood. You determine the market price. But time is different. With real estate, you know how much you have. With time, you don't. A lighting bolt can strike a young athlete and a cigar-smoking, whisky-drinking grandma of eighty can celebrate her 101st birthday.
It is this unknown quantity that makes quantifying the value of your time all but impossible. To be conservative, we must assume that life is short and fast. Short because a long life isn't guaranteed. Fast because the older you get relativity kicks in and you realize it was a vapor. The Buddha is quoted as saying, "The trouble is, you think you have time.” After saying that, he dropped the microphone, no doubt."
So this asset, time, is priceless. But it's how we can understand the cost of everything else. Thoreau explained it thus, "The price of anything is the amount of life you exchange for it." In other words, the value of a rose is not determined by the price of the rose but by the amount of time we spent in getting the rose. On one hand, time is philosophically priceless, yet practically, we spend a fair bit of it looking at cat videos on Facebook. Perhaps it's true that time is the asset we want most but use the worst. At least that's what William Penn said when I googled quotes on "time."
Compounding by Outsourcing
What if I told you that you can get more time if you use leverage? You already do it unintentionally. Throughout the progress of civilization one technique has caused our race of cavemen to reach the moon and beyond: the division of labor. Somewhere in our timeline, we realized that some of us should be warriors, others farmers, others bankers. Others politicians, others criminals, but I repeat myself.
Early on your choice of labor was due to ability or status. And that still exists today. At 5’9”, I never tried out for the NBA. And with my musical ability, never quite left the garage with my guitar. Thanks to technological advancements, however, there’s so much that I can do myself. I can grow my own crops, build my own home and diagnose my own disease. And that’s the problem. We diffuse our time with countless things we can do. These aren’t bad things, they are good things. And good things are the real enemy of the best things we can do with our time.
My point is to focus your time on what only you can uniquely do. In your family, work and community roles spend time that leverages your unique abilities and responsibilities. Then outsource the rest. This is best explained by an example. I enjoy mowing my lawn. The sun on my back, at one with Mother Earth, enjoying the fruits of my labor. Then, I got a life. I gave up mowing my own lawn because it took my entire weekend. The lawnmower needed gas, the weed eater needed string, the trimmer needed to be fixed. Once the gear was ready, the afternoon showers started and I was left Monday morning with grass Mohawk in my yard. (Get it? Mowing, Mohawk?)
After an intervention, my wife convinced my to spend my time and talents elsewhere. It took a portion of my treasure and called a landscaper. This story has repeated itself time and again as my life progresses in a virtuous, compounding upward spiral. I have to review how I spend my time and ask myself can I leverage my treasure (money) to outsource this task so I can create more time. Compare this virtuous cycle to the simplistic one above:
The idea is to use time and talent to create more treasure. Then use your treasure to create more time by outsourcing as much as possible. This investment discipline is difficult. Don’t get me wrong, if you enjoy a hobby that takes time and makes no money, that’s fine. But that joy is the return on your investment. What I am saying is be careful to obsess about piling up your treasure. It’s just there to create time. Invest it by outsourcing all the aspects of your life.
And that’s a philosophical reason to use a financial planner. You have to mind your time, talent and treasure. Hire a financial planner to free up the time you might spend caught up in fear, greed or market noise. We cannot guarantee you a return on your treasure, but we can return your most precious asset: TIME. We are here to help, click here to contact us.