Return On Your Time
The Investing Metric you need
Everyone knows about return on investments (ROI), total return, and other commonly used metrics to measure investment performance.
You buy a stock for $10 and it goes to $11, you got a 10% ROI.
Great.
But a 10% return that you spent 100 hours on is not the same as a 10% return that took 5 mins to do.
Let’s face it, your time is valuable. Arguably the most valuable thing you have. This substack tries to not be cliche, but here is one cliche example that sums it up nicely:
“Warrent Buffet is 420 years old and worth $69 Billion dollars, but would you willingly trade places with him today?” (whatever, I don’t even care enough to actually look the real age and net worth numbers up - you get the point, he is old af and rich af.)
“Would you trade places with Warren Buffet today? You get all his wealth but also all his health and age.
Almost everyone would say no to that deal (other than maybe his partner who is even older).
So thinking about money only in terms of ROI clearly isn’t the most important aspect.
Honestly, the constant droning on about ‘passive income’ is largely a recognition that earning a high return on a low time spend is optimal.
Unfortunately, we don’t tend to think about our investments with a focus on the time aspect. And it does ourselves a great disservice since earning the most amount of money with the least amount of time spent is definitely the optimal trade-off to make.
So lets spend some time digging into ROT - Return on Time…or maybe ROYT - Return on Your Time…actually since typing the extra Y is a negative time spent, we will stick to ROT to honor the theme of this post, even though ‘rot’ isn’t a word with positive connotation.
Then we will wrap up with some low time, but high ROT activities you may want to consider to get some extra money without a lot of additional work.
