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Fiscal Thanksgiving: Time to Heed … Time
Amazingly, Thanksgiving is here, and the year is almost over. Somehow, when we became distracted by the day-to-day details of our busy lives, we missed the year going by. It's one of the poignant ironies of life that the more precious we realize time is, the more quickly it passes us by.
We were also distracted by the news - the ubiquitous, overbearing, relentless news, digested continuously throughout the day, from the moment we wake up, during our commute to work and then again at the end of the day. From terrorism to hurricanes to avian flu to political scandals to economic uncertainty, the news media did what it does best: overwhelmed us with sound bites, simplifications, lack of context and sensationalism.
The complexity of modern life, coupled with the oppressiveness of the news media, can make us lose sense of the importance of time. Nowhere is time more precious than with investing. Time is one of the most underappreciated assets in investment success, the underdog of the investment world.
Asset allocation, expenses, turnover, manager tenure and integrity -- all are critical variables for investment success, but equally important is time.
If you've ever seen a chart on the power of compounding, you know that, more than debt, time is the ultimate form of leverage. The more time you have, the better your chances of riding the power of compounding.
If you're given the choice between five years of investing with some investment wunderkind and 30 years of investing with the proverbial monkey throwing darts at the stock pages of The Wall Street Journal, pick the monkey every time - preferably, the monkey with the lowest expense ratio.
The cliché that time is a commodity couldn't be further from the truth, unless we mean that it's a precious commodity like gold rather than wheat, an invaluable and even priceless resource that we should selfishly guard and reverently worship.
Time derives its value by giving us options, healing our wounds and offering us a second chance. This holds true for investing and for life itself. It's no accident that one of the key variables to valuing financial options is time: the more of it, the more the option is worth.
In today's world of increasing longevity, time can also be a burden. If you're settling down to retire at the age of 65 and you're blessed with good genes, you may have another 30 years to live off your assets. Spend wisely and invest prudently, but maybe not too prudently if you need that money to grow to support your lifestyle.
What this all means is that time is your ally. Use it wisely. If you haven't started an investment program, the time to do it is now.
As we approach Thanksgiving, we have much to be thankful for, including, we hope, more time to enjoy our families and our lives. In fact, we should take some time to appreciate time, to slow down our lives and think quietly about what we have.
And let's give thanks to the members of our armed services and their families, both overseas and here in the states, as many of these brave and selfless men and women have made the ultimate sacrifice, forsaking all time so that we can continue to enjoy ours.
To honor their memory, let's try to use our time wisely, be grateful for what we have, and never forget the price they paid for us.
Fred D. Snitzer is chief operating officer in the investment-management firm of Prudent Management Associates, specializing in high-net-worth and tax-deferred asset management.