What caught my eye this week.
The idea of trading money for time underpins early retirement, although it’s not often put that way.
We can debate safe withdrawal rates, passive portfolios, and whether investment trusts have a role to play in creating a retirement income.
But the day you leave work and never intend to go back – however you got to that point – there’s no argument. You’re by definition turning down the chance to make more money.
You are swapping money for time.
There are excellent reasons to quit work ASAP. Nobody lolling on their death bed ever wished they’d spent a few more years at the office and all that.
Personally, I see downsides, too, especially to very early retirement. As a result I expect to keep doing some work indefinitely.
But you don’t have to go totally cold turkey to swap money for time.
More flexible working – especially from home – can kill your commute and give you the freedom to work around you, instead of an employer. Or you can try to work fewer hours at a conventional job.
Either way the pay-off is a double whammy, because they don’t tax free time.
In contrast early retirement back loads all the extra time into one initially distant but eventually never-ending block. It’s a slog to get there, but in theory a coast thereafter.
For some, it’s nirvana. For others it can lead to boredom, ill-health, social isolation, and a life more ordinary if it cuts down your options.
For the latter reasons, for me financial freedom is the better part of FIRE.1 But wherever your own heart takes you, think about the value of time.
As Harvard Business School professor and happiness researcher Ashley Whillans noted this month:
Over and over, I find that prioritizing time over money increases happiness.
Despite this, most people continue striving to make more money.
For example, in one survey, only 48% of respondents reported that they would rather have more time than more money.
Even the majority of people who were most pressed for time – parents with full-time jobs and young children at home – shared this preference for money over time. […]
Research shows that once people make more than enough to meet their basic needs, additional money does not reliably promote greater happiness.
Yet over and over, our choices do not reflect this reality.
True, plenty of people strive to survive. Work isn’t optional for them.
But many regular Monevator readers do have choices – or at least they can create them.
Not everything that’s valuable shows up in a net worth spreadsheet. Far from it!
Time to choose.
From Monevator
Apple Card, fintech, and the future of good money habits – Monevator
From the archive-ator: The Devil’s Financial Dictionary: An ABC for passive investors – Monevator
News
Note: Some links are Google search results – in PC/desktop view you can click to read the piece without being a paid subscriber. Try privacy/incognito mode to avoid cookies. Consider subscribing if you read them a lot!2
First house price fall in England since 2012 – BBC
Investors face ‘unacceptable’ delays to switch platforms [Search result] – FT
UK households spend above their income for longest period since 1980s – Guardian
Why investors are worried about the yield curve [Search result] – FT
Mobile eWallet usage surging around the world – ThisIsMoney
Households’ stark net borrowing position has been partly financed by non-secured loans – ONS
Products and services
Five ‘favourite’ cash ISA options – ThisIsMoney
Ways to own gold: Raising the bar into a safe haven [Search result] – FT
Ratesetter will pay you £100 [and me a cash bonus] if you invest £1,000 for a year – Ratesetter
One in 14 used cars for sale have had their mileage tampered with – ThisIsMoney
Moneyfarm offering up to £600 cashback if you open its ‘Brexit ISA’ with £20,000 – ThisIsMoney
Investing platform Willis Owen retrospectively identifies top performing funds [I’d also point out active investing is a zero-sum game, so you can also safely ignore the comments about when active funds do better than passives et cetera] – ThisIsMoney
Comment and opinion
When everything declines at once – Morningstar
The myth of average returns – The Evidence-based Investor
Nothing is safe – Of Dollars and Data
You probably don’t want another ‘generational buying opportunity’ – Bona Fide Wealth
Better than golf – Humble Dollar
Pension Calculator: How much money do you need to retire? – The Humble Penny
Never confuse luck with smart investing – Bloomberg
Different kinds of information – Morgan Housel
Will Nutmeg’s crowdfunding plans cut the mustard? [Search result] – FT
Five years into the slog and not bored yet – Quietly Saving
Pensions, doctors, and the NHS crisis caused by the tapered annual allowance – Young FI Guy
The 4% rule is dead? No it’s not! – MoneyMaven
How to increase the odds of owning the few stocks that drive returns [PDF] – Vanguard
What went wrong at Interserve? – UK Value Investor
Five personalities who can boost the value of your professional network – Financial Samurai
Brexit
MPs reject all possible Brexit solutions. What now? [Excellent videos] – TLDR
The obscene moral spectacle of Theresa May’s resignation – Politics.co.uk
Brexit: What the fuck is going on? [Video, week old but still relevant] – YouTube
The humbling of Britain – The New Statesman
Game of Thrones, hamsters, and other things that didn’t last as long as Brexit – BBC
When even the BBC turns to swearing [Video] – YouTube
Theresa May and Jeremy Corbyn have never been less appealing – YouGov via Twitter
Kindle book bargains
How Women Rise: Break the 12 Habits Holding You Back by Sally Helgesen – £0.99 on Kindle
The Talent Code: Greatness isn’t Born. It’s Grown by Daniel Coyle – £0.99 on Kindle
The Complete Guide to Property Investment by Rob Dix – £0.99 on Kindle
Winners and How They Succeed by Alistair Campbell – £1.99 on Kindle
Off our beat
Man stole $122m from Facebook and Google by sending them random bills – Boing Boing
How Moneyball ruined baseball – MarketWatch
Life After Facebook: The second act of billionaire co-founder Eduardo Saverin – Forbes
How to share a bed and be happy – Guardian
And finally…
“The two greatest enemies of the equity fund investor are expenses and emotions.”
– John C. Bogle, The Little Book of Common Sense Investing
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The old maxim if time = money doesn’t quite stand anymore.
The problem for many seeking less work and more free time is that few jobs or careers offer part-time hours.
I know that in my job if i asked for 1 extra day off a week i would get 5.
Lucky if that’s not you but that’s the employment paradigm- 100% 40 hours a week or nothing.
It’s not luck, it’s by design and I gave up quite a bit to make it possible. 🙂
(I do take the point generally though. It’s non-trivial.)
I don’t know what world y’all live in, but absolutely loads of people work less than full time hours.
Both myself and my spouse have left a lot of money on the table over the last couple of decades, to trade for the time needed to raise a family. Among my peers I can’t think of anyone with children where both parents have worked full time throughout.
Then of course there are the millions of people in crap jobs who can’t get full time hours. Most of the people on in work benefits are in this situation (and it’s not that they have chosen it. There are many many lower end jobs which simply won’t give you more than 16,20, 24 hours). Granted, they won’t be reading Monevator, but they certainly exist.
@GFF The Telegraph recently ran a number of articles on high flyers who were working part-time. I don’t consider myself one of them, but I have a decently paid rewarding job which is now part-time at my own request. It helps that my bosses and nearly all of the rest of the time are part-time too. Elsewhere a few companies are experimenting (and finding good results) with part-time workforces – while paying them the same.
I read the title and thought this was going to be a Brexit article (time to choose…). The article was slow to load so I even started musing on how it fit into the start of Trainspotting (“i chose not to choose Brexit, I chose something else”). Then started analysing Trainspotting as a metaphor for Brexit (Begbie as the ERG?), before the article loaded.
What you wrote is good too though.
Anyway, as the stay at home dad, whilst my partner is on maternity leave, we are currently experiencing our own mini retirement. And its going well. Would much rather have the year now than retire a year early. Although as parents will know, a walk on the golf course it ain’t
‘Research shows that once people make more than enough to meet their basic needs, additional money does not reliably promote greater happiness.
Yet over and over, our choices do not reflect this reality.’
Is he/she unfamiliar with the expression “revealed preferences”?
I like the Jonathan Pie youtube vid. Tom Walker that plays him is very funny and one of the rare Brexit dividends. They sometimes have me crying with laughter.
He just uploaded a new one today called May’s Obituary. It’s really funny
The funniest one for me was the one in jan talking about being “happy with your purchase”!
Work is often the best use of time we have, to feel productive and useful, and have self worth
Hobbies can be just evil, I’ll demonstrate;
Hobbies take time and money
Hobbies = time * money
Time is money, so
Hobbies= money ^2
And money is the square root of all evil, so
Hobbies=evil
Part-time doesn’t always work… I offered some years ago – would have much preferred it. But the deal from the employer for about 80% of the work, would have been less than half the pay!
I know it is off topic and it is maybe the last thing people want to be reminded of ……. but on Brexit, I have now put the UK into my list of unstable countries for investment purposes. This means that in practice new investments in my portfolio will go to equities and bonds that are not very UK-related. I have taken this view not because of any particular event at Westminster but because I have reached a conclusion that this matter will roll on for probably beyond my lifetime, even if at times it will give an appearance of having been sorted.
I am one example of a senior NHS doctor who has cut back working hours due to pension taper tax.
I have 2 young kids, and realise I don’t want to work every weekend any more, so in a weird way I’m grateful for the tax issue opening my eyes and am now much happier.
I’ve got flexible working. Nobody cares how many hours I do or where I do them from. For over a decade I’ve been able to work from home. In my experience, however, this lengthens rather than shortens the hours I work. It means I swap looking at my mobile phone while commuting for more time sitting in my home office watching the screens. It also means I am still in front of those screens at midnight. One work day just merges into the next when working from home.
I’d love to work part-time but it’s simply impossible in my line of work. It’s all about “100% commitment” or some other BS. Instead, I’ve taken took two 12-month periods out between jobs over the last decade. More than a year, however, could be lethal. Once you are out of the system, you’re forgotten, and it’s very hard to return.
So really the is no other option than a big continuous slog and then early (and permanent) retirement. Once retired, there is no possibility of a side hustle, no side jobs etc. I have precisely zero useful skills in the outside world. So really, it’s continue in work or stack shelves at Tesco.
Or box number 3: accruing useful skills in the outside world, perhaps spending time on this on one of your 12 month periods out?
There are always options. Very few people have ‘zero useful skills in the outside world’, most people have a bunch of transferrable skills acrrued during a career, never mind from their outside interests.
A thirty-something of my acquaintance took a six-month honeymoon. It’s one way to break up the long littleness of life.
“The two greatest enemies of the equity fund investor are expenses and emotions.”
… and investing outside of a tax wrapper (ISA or SIPP).
I always trying to find the Balance between work And private Life. And the some principles are related to money Management.
We all have our priorities.
Working Less for same Level of money. Brillant!
Switch off your smartphone for weekend – it is like back to early 90’s. Priceless
@12ZXSpectrum48k
I can identify with this. Being in the high tech communications sector working for american startups meant everything older than about 12 months was out of date. My skills and knowledge had a very short shelf life.
Being on the other side now (retired, having transitioned through part-time consultancy), it is interesting to find there are people out there who have NOTHING to do with the design of computer and mobile networks. Who knew?
Hmm, I’m not totally convinced with the ‘office hours on the deathbed’ cliche. Its so widely agreed with that I think its probably not right 😉 The flip-side is all the people who got a lot of satisfaction from their work and look back with fond memories of the people they met and the things they managed to achieve, could well be the case they’d be worse off (not just financially) if they’d worked less hours. Of course its fine to hold both of these opinions and come to the conclusion its about striking a balance between work and play with neither taken to extreme being particularly optimal.
@ZX – I’m guessing you’re a quant and you have outlier level numerical/programming skills. Yep you’re right, you’ll never be able to find a job anywhere else 😉 (I’d hire you).
Maybe what you mean is that you’ll never be able to work in a different field for anything like the same level of pay?
The curse of working from home, for sure, is blurring the line of when to finish for the day, looking up and realising its 02:00 again!
Thanks for the shout out and the ensuing spike in traffic to my blog! 🙂
@ZX
That’s the line I took, and I didn’t even work in finance. I sweated three years of saving like hell in a job that had gone wrong, because else I’d still be stacking shelves and still have earned less in total than I did, six years down the line of not working.
Some jobs really are all or nothing, and part-time is for wimps in some areas. Sure, if you design your career to include part-time options then fine. Jobs which require expertise and a lab full of expensive capital assets like test equipment, perhaps aren’t so side hustleable.
It’s not absolutely true that I wouldn’t be able to do something in electronics engineering or software now, but it would be at a pretty low level and commensurably low pay, or it would be hit and miss. I have done the odd job since at a higher day rate than when I was working. But there’s a second aspect of the whole side hustle that I really hate, and that is the ‘hustle’, having to pitch for work. Some people get a buzz from that, some don’t. I don’t.
Another thing that is barking mad about side hustles is that I have lost count of the number of times I have a drink with some starry-eyed wannabe that thinks they will be making money for themselves. So many have no idea – if you want premises to meet clients or provide the service it costs money to rent this, you often can’t switch it on and off with variable demand. They add up the hour rate with nary a look at the cost of the capital asset standing fallow 18 hours a day. And I have to choke back the words ‘as an investor, I’d run a mile from that proposition’ and look encouraging, or at least suppress the eye-roll. What the heck is it about side-hustling that makes people channel Del Boy’s “This time next year we’ll be millionaires” without seeing the road ahead is littered with obvious land mines?
I’m with ZX. I have precious few ‘transferable skills’ from work. People that get paid well enough to retire early tend to be specialists, and specialism isn’t generalisable by definition.
It doesn’t matter that much. Work is overrated IMO. I’ve done my bit for the world of work over 30 years. There’s a fascinating world outside work out there, and you don’t need a battery of ‘transferable skills’. All you need is an inquiring mind, a decent level of curiosity and an appetite for learning. Adaptability and learning are good enough to get on well, provided you don’t need to earn money from your time.
@ermine — I guarantee both you and @ZX Spectrum could make well above the median income, pro-rata, from doing some work if you wanted to and applied yourself to it. Obviously it doesn’t sound like this sort of income would float @ZX’s boat as he’s accustomed to making multiples of that, but the average smart educated person with experience can without doubt generate money without a job. I’ve seen in done multiple times, and I’ve been traditionally employed for 3-4 years *total* out of more than 20 years in the workforce, including stints co-founding a start-up and a total switch of industry. 🙂
Fair enough if it doesn’t appeal, but I’d gently suggest that in denigrating the concept you might be reaching beyond your domain. 😉
p.s. I don’t mean this unkindly, but your fevered opposition to ‘side hustles’ (not the term I’d use here) and much you’ve written in the past makes me think again that for all your ranting about the tyranny of the workplace, the truth is you liked it very much, until those last few years. I suspect you enjoyed the culture, the certainty, the habits, perhaps even the camaraderie and even the career advancement.
i.e. What actually happened was in the end you found yourself in a workplace you didn’t like. You actually didn’t end up hating workplaces generally, albeit this is how it often comes across (perhaps to yourself? Deep. 🙂 )
Sorry if this is too personal, as I say it’s an observation and of course we put ourselves on the line with our public positions etc.
I’m very different. I am uncomfortable in a traditional job/office within *hours*. I like being outside the system. The ability to create income streams under my own steam is not a hassle to me, it’s a strength.
You may be an ermine, but I am a (law abiding!) stainless steel rat. 🙂
> but the average smart educated person with experience can without doubt generate money without a job
Well, heck, that’s why we are all here and it works rather well, nearly 10 years of ISA contributions, a boatload of decent luck and the learning from here does very nicely. I am one of your early success stories, I thank you for the Knowledge 😉
> denigrating the concept you might be reaching beyond your domain.
I got nothing against the concept, but it’s the assumption of its universality I have issue with. But then as an introvert, perhaps I found the whole idea of selling, and above all else selling myself, repugnant.
Every single piece of work for pay I have done since retiring came to me. I did not hustle for it. If it needs hustle, then in Thoreau’s way, I am rich enough to let it be. I am the guy in the woods with the better mousetrap, and that sits ill with the way things are normally traded. And I couldn’t make a living from it.
I tip a mustelid hat to your metallic carapace, however. Cheers!
@ermine — Ha ha, I’m as introverted as they come. (Seriously, I’ve been described as a “high functioning introvert” 🙂 ). Basically I *couldn’t* work in an office for years. It would in all seriousness possibly kill me, or certainly make me sick.
I have spent about 30 minutes overtly hustling. If you’re hustling you’re doing it wrong. 🙂
I think hustling is the wrong terminology as well. I’m just reflecting on all the tradespeople I’ve been dealing with over the last month or two. Not one of them has had to come to me with any form of hustle. I’ve had to do all the running and none of them can start for months – because they all have a reputation. With a reputation, you don’t have to hustle. But you need the character and skill to develop one? Character and skill massively appeal to me, hustling is about as attractive as a Tommy Robinson demonstration.
@ermine. I’m with you. Over twenty years in investment strategy, prop trading and as a hedge fund manager has given me expertise and a track record. That defines my value. Outside of a niche part of the finance industry, however, this doesn’t really amount to a hill of beans.
I can’t programme in C# or Python. I have no formal background in economics or accounting. I was a founding partner of a fund but I wasn’t the CFO/COO, so I’m not experienced in business management. I can’t fall back of my academic qualifications: a PhD in quantum field theory isn’t exactly a “vocational” qualification.
When I last took a year off, I attempted to move sideways. I tried consultancy, risk management, fintech etc. It was a resounding failure. Mostly I didn’t even get interviews. When I did, recruiters didn’t understand me. Being bored and trying to learn something new was not a valid motivation. The drop in compensation seemed a bigger problem for them than for me. The reality was that they had to be risk averse when hiring. They had no upside from getting it right; but could get fired for picking the wrong hire. So safety first. The low-risk hire with a proven track record is the correct decision. After a few months I gave up. It was just easier to accept a job running a pod of PMs at new fund.
I don’t deserve sympathy. I started work in 1998 and the last time I earned less than six/seven figures was 1999. It’s been a gilded career. It’s just odd to think that in my mid 40s, I’m perhaps as unemployable as my dad (who was both unskilled and uneducated) was at the same age. It does explain why most of my colleagues, as they leave the industry, are basically also retiring, rather than changing careers. A few go back to uni but it doesn’t seem to lead anywhere.
To be fair, I’m not sure I’d able to survive in other jobs. I went from academia to a workplace full of ex-academics. I transitioned into trading roles that were purely about performance. I’m not sure I could cope with the constant assessments, nonsense pop psychology and the other crap that now pervades most workplaces. I throw my toys out of the pram at far too regular intervals. You’re correct: (most) work is over-rated.
@ZX – that is very interesting – I can see your (and ermines) point.. I wonder what you’ll end up doing?
@ermine @Rhino @ZX Spectrum @all — I’m genuinely interested / impressed / envious of @ZX Spectrum’s career trajectory but in my initial reply to @ermine I agreed it would be hard for him to replace his very high income in the unconventional world of earning money I recommend for those who fancy a change. I said it would be possible to earn well above the median income, not minor football star salaries. 🙂 @ZXSpectrum acknowledges his elevated position himself, this isn’t any sort of comment on his position/thoughts. (On the contrary I love having his value-adding input here!)
But with the greatest will in the world I don’t think we can extrapolate it to whether the average person — even a person doing averagely-better-than-average — can try something less constrained / going their own way. 🙂