The Investment Return That Matters Most
The one return that supersedes all others...
Good morning,
It’s October, and you know what that means…
🎃 Pumpkin-spice everything!!!
Personally… not my cup of tea. Or coffee. Or anything.
What about you?
Are you a pumpkin-spice person?
There are a lot of acronyms that get thrown around in my line of work.
And while I make an effort to avoid acronyms - or any type of jargon - there’s one I’d like to call your attention to this morning.
It’s “ROI.”
You might be familiar with this term to abbreviate “return on investment” which is an important concept in your financial planning.
And while most often associated with your investment portfolio, there are all sorts of other investments you make every day, often without even realizing it.
Yes, you invest your money.
But you also invest your time. More on that in a minute…
You invest your attention.
You invest your energy.
You invest your emotions.
Beware the financial advisor that ignores all these other important “investments” and focuses solely on your financial portfolio.
It goes without saying that most people want the highest ROI available.
But at what cost?
My work - and your financial plan, along with the entirety of your life - is about trade-offs. Where you make one choice instead of another.
Back to how you invest your time, or really any other non-financial investment in your life…
Money is simply a utility.
It isn’t a goal.
It isn’t a purpose.
And you can always make more money.
Time on the other hand… well, time is your life. Once it’s spent, you can’t get it back.
And this isn’t a dress rehearsal.
You don’t get a do-over.
In other words, don’t wait to start living - really living on purpose - your one and only precious life. It’s the only one you’ve got and none of us are getting out of here alive.
Every day you’re investing your life (time), whether you do so deliberately or not.
With this in mind, I encourage you to think of financial investing and non-financial investing as a range.
Or spectrum.
Let’s call financial investing ROI - return on investment.
And let’s refer to non-financial investing as ROL.
Return on life.
This might help you picture what I’m talking about:
The above represents a perfect balance between ROI and ROL.
However, in my experience - there’s rarely this kind of balance.
For example, you probably know someone who appears successful.
They’re paid very well, but also work a lot of hours. And they have a lot of responsibility that they often can’t leave at the office.
As a result, they don’t really enjoy their life.
Sure, the work is challenging and and the financial rewards would be tough to give up.
But they’re missing their kids’ games, recitals, and other events.
Their relationship with their spouse is on shaky ground.
You get the idea.
Their ROI/ROL spectrum might look something like this:
High ROI, but low ROL.
And remember we each get only one life to get a “return” on. However we define that return.
But is the answer to live a rich ROL life while avoiding the creature comforts that money can bring us?
Of course not.
Yes, you can be perfectly happy without money.
But you can also be perfectly happy with a lot of money. I have seen it first hand with many of my clients.
It’s all about balance.
In my years as a financial advisor, many clients have shared that while they want to prepare for their own comfortable and confident retirement, it’s important that they put their children in the best situation to succeed and be happy.
This often involves some level of support for their kids’ college education, as an example.
But even if you don’t have kids, you might be interested in investing your time or money with an organization that is meaningful to you.
Or you might want to get out of your fast-paced career to pursue something that’s always been a personal passion.
Maybe take a 12-24 month break from work to travel. Or spend time with friends. Or to go back to school to explore something that’s always held your interest.
These examples might look something like:
And let me be clear… the image above isn’t meant to imply a higher ROL will necessitate a lower ROI.
This idea is simply about their relative “return” in your life.
However, it’s worth nothing that there are many examples of high ROL “investments” that cost little or no money.
While I’m a believer in balance across your financial planning and money decisions, I think this idea of “return on life” is an exception.
I’d encourage you to be more focused on spending, activities, interests, and relationships that provide the highest ROL. However you personally define it.
And remember that there’s more to your financial planning - and your life - than money.
Plan accordingly.
Links & Things
Check out the Legacy Letter Challenge.
I’ve seen this idea referred to by several different names, but the concept is similar… Make time to write down your most heartfelt thoughts, beliefs, advice, and support for the people that are important to you. This could be your children, grandchildren, nieces, nephews, spouse, sibling, or anyone else where you’d hate to leave anything unsaid once you’re no longer around.
What do you think? Does this “legacy letter” idea sound like something you’d want to work on? I’m curious, so hit reply and let me know.
A worthwhile read from Jonathan Clements, where he details his current financial beliefs that are quite different from his beliefs 20 years ago:
Thank You!
I’m glad you’re here. And I’m grateful to have you as a reader.
If you have any questions or an idea for a future email letter, blog post, or YouTube video, I'd love your input.
Or if you just want to say hi 👋
Simply hit reply - I read (and genuinely appreciate) each and every message you send.
Until next Wednesday,
Russ