At Christmas we focus on giving.
The next day, we turn our attention to time. We review the year that’s ending and preview the year just ahead.
So, how about some year-end (and year-beginning) reminders about giving and time?
1. You can give time to your money. What do I mean?
We have this amazing concept called “the financial markets.”
They’re essentially a collection of the best business enterprises in the world. Every day it’s as if they “hold an election” to see who believes in what they’re trying to do.
Buying stock in one of these companies is like casting a vote for the future of that business. Selling a corporation’s stock is like casting a vote of no-confidence.
Unlike political elections which are two or four years apart, this “economic voting” is constant. Some markets are open for business five days a week. Some never close.
Here’s the truth: The market system works! In fact, it’s ruthlessly efficient.
History shows us that over time, the best ideas and companies get more money coming their way, which they use to create better products and/or services and more wealth. Less successful entities get less.
And you, by using your money to buy an ownership stake in some of the world’s best run companies, get to watch your investments increase in value.
But the secret is time. In the short-term, markets are often messy and turbulent. Give your investments time, however, and you’ll likely discover this system to be a remarkable blessing.
2. You can give your money “borrowed time.” Suppose you can’t afford to put your money in the markets long-term. Perhaps others are dependent on all your current income. Or maybe you’re near the time when you’ll need your money for retirement.
In those cases, you can give your money “borrowed time.” How? By joining with other like-minded people in “risk-pooling.”
Pooling the risk of dying early is called buying life insurance. Pooling the risk of outliving your money is called buying a guaranteed income contract (or annuity).
In each case you are, in effect, “borrowing” from others in the same pool an unknown amount of time. Actuaries don’t try to predict precisely how long each person in these pools will live; but they are incredibly accurate with the averages.
These financial products are one of the best ideas the human race has ever devised, yet they remain hidden in plain sight to many who desperately need them.
3. You can give others something far more valuable than money. Putting your money in the market long-term and/or utilizing the genius of risk pooling can improve your financial condition.
But don’t stop there.
Money is not a tyrant to be served, nor a treasure to be pursued for its own sake. At its best, money is only a tool for funding the life you want to live.
The best financial plans are really life plans. And the best life plans realize the limitations—and ultimate value—of time.
We each only get so much time.
Which prompts the question: How will you spend yours this holiday season?
I hope it’s with those who know you best and love you most.
Merry Christmas to you and yours!
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