making time to study your investments

January 12, 2009 · Filed Under Money

In the personal finance classic The Millionaire Next Door, two men consider time spent on money-related activities. One spends a month researching new luxury cars, calling dealers and getting the best deal. The other buys a cheap car without significant research but spends a month studying investment possibilities. Which one do you think is going to have more money at the end of the next year?

One of the biggest concerns you may have about investing (I had it myself) is “how can I possibly spend enough time researching companies and making sensible investments?” In the past, many people assumed that stocks and mutual funds were “safe.” You may not feel a need to research GE’s debt or financial statements before investing in them. I am sure many Enron investors were unconcerned by the fact that they didn’t understand what Enron actually did. But any investment requires serious study and examination.

If you don’t feel you have enough time in your life to study investments – be it real estate investments, making a P2P loan or a stock market purchase – let me ask you a simple question: have you seen an episode of a sitcom this month? Voila – 30 minutes. If it’s a rerun, there’s 60 minutes of your life that could have been spent making yourself richer. I know people will say that they need to relax. I turn on an episode of Family Guy from time to time myself. But if you do that, make sure that it’s not time taken away from studying and research in your financial future.

Another reason people find they don’t have enough time to research their investments is a lack of focus. If you try to become an expert in the entire Fortune 500 and real estate investing and the best mutual funds and 15 different alternative investments, you won’t ever have enough time to master them all. You’ll be a dabbler. You can’t focus on just one area, of course; diversification is one of the granite cornerstones of the personal finance temple. But pick specific areas to focus your attention. I worked in the financial services industry, and I have always enjoyed following the news in that area. I try to follow stocks in those areas. I don’t do much real estate investing, but I do follow my local market and the markets in areas where I have some knowledge because I visit frequently. I used to spend time trying to research 100 different means of gaining alternative income but then I realized it was better to focus on a few I’m interested in like P2P lending and creating content (writing, developing websites), or studying the best ways to sell on eBay, where you can make money selling off your unused stuff!

So the next time you think you don’t have time to study your investments, make time. If you get as much enjoyment out of investing as you do from watching a favorite rerun of Seinfeld, you’ll always have time.

photo credit: Emi ♫