When making investments, it is important to consider not just monetary returns but also returns on time invested. By analyzing return on time, investors can better evaluate investment opportunities and maximize overall returns. This involves assessing potential time commitments, opportunity costs, and earning rates per hour for different investments. Approaching investments from a return on time perspective allows optimization of capital allocation and pursuit of best possible hourly returns.
Assessing time requirements for investments
Different investment types require different time commitments for research, monitoring, and maintenance. Actively managed stocks and real estate require more time than passive index funds. When estimating returns, incorporate time spent into calculations to accurately reflect net returns.
Opportunity cost considerations
Time spent on one investment represents opportunity cost of forgoing another potential investment. Analyze what else the time could be spent on and the potential return. This allows properly weighing investment options.
Earning rate evaluation
Look at likely returns from an investment on an hourly basis. Compare potential hourly earnings to current job or business earnings per hour. Optimize time allocation based on highest earnings rate per hour.
Capital allocation optimization
Taking a time-based view allows determining which investment opportunities provide the best return on time invested. Focus capital on those areas, while minimizing time allocated to lower return investments.
Evaluating investments from a return on time perspective, in addition to monetary returns, allows investors to maximize overall capital efficiency. By analyzing time requirements, opportunity costs, and potential hourly returns, investors can optimize allocation of both money and time.