Return on Hassle
Some financial questions can be answered with a spreadsheet, but most are some combination of spreadsheets and behavioral psychology.
What many people don’t consider when making decisions of all types is Return on Hassle (RoH).
Set In Their Ways
We had a family event this weekend, and as it tends to happen, I was asked my thoughts on an individual stock that someone owned. I had never even heard of the company and let them know this, but they insisted it was a great company and told me all about their trading strategy.
He was exhausted just from telling me the strategy; I couldn’t imagine how much time and effort went into implementing it each day while juggling being a dad and husband and his full-time job.
During the interaction, I think he was waiting for me to ask him what his return had been or to ask for some performance metric. Instead, I asked him what his RoH was.
How much time are you taking away from being in the backyard throwing a football around, or cooking dinner with your spouse, and enjoying a meal during a cool summer evening?
You’ll Never Retire if You Buy Coffee
This old argument of Gen X and Millennials never being able to retire if we don’t lay off the avocado toast and Starbucks coffee, but when you break down the math, five dollars a day on coffee, five days a week, for fifty-two weeks a year, is $1300. Multiply that by thirty years, and you get $39,000, which is not an insignificant sum of money, but not going to move the needle on retirement by very much.
Finding savings of five dollars per day can be done without the hassle of being unable to grab a coffee while you rush to catch a train or get to a meeting (that could have been handled in an email!) on time.
Let’s Buy a Beach House
We are a beach family; nothing makes us happier than a day with our toes in the sand. Every year while sitting on the beach, I try to convince my wife to buy a beach house. I give her the same argument each time of renting it out for 80% of the summer season, but then we get to use it for the other 20%.
The thing is, I am not handy at all! We also don’t live near the beach, so if the toilet breaks, do I want to drive for two hours to replace it?
Real Estate investing is an excellent opportunity for many people with the skill set to be a landlord. Still, the Twitter pundits will tell you that the ONLY way to become wealthy in America is through Real Estate investing, and many people buy into that advice.
Real Estate investing comes with its own set of hassles, and if you ask any investor, they will tell you the term they hate the most when it comes to Real Estate is passive income. The income is anything but passive because of the work that goes into finding suitable tenants, making repairs, and dealing with the unexpected things that come with owning a home.
The Best Return on Hassle
My son, AJ, turned ten years old this past Saturday, and undoubtedly having children is the best RoH. The hassle is high; some days, it is downright stratospheric, but it goes away when seeing your kids grow and thrive. While financial advice is given to us from every direction we look, perspective is everything regarding financial success.
With the families I serve, I have learned that Return on Hassle is more important than Return on Investments because they all know that we can’t control what the stock market does, but we can control how much we enjoy life by minimizing the hassles that are not worth it.
Stock market calendar this week:
|MONDAY, AUGUST 7
|TUESDAY, AUGUST 8
|NFIB optimism index
|Philadelphia Fed President Harker speaks
|U.S. trade balance
|Richmond Fed President Barkin speaks
|U.S. wholesale inventories
|WEDNESDAY, AUGUST 9
|THURSDAY, AUGUST 10
|Initial jobless claims
|Consumer price index
|Core CPI (year-over-year)
|FRIDAY, AUGUST 11
|Producer price index
|Core PPI (year-over-year)
|Consumer sentiment (prelim)
Most anticipated earnings for this week:
Did you miss our blog last week?
About Amit: I am a first generation American, the son of a working-class Indian family, and I lived through my parents’ struggle to find their place in this country, to put down roots that would sustain them as well as their children in a new land. As they encouraged me to excel in school and fostered my hobbies and interests, I was keenly aware of the dynamic between them. I understood that there was a difference between where they came from individually and where we were now. They worked hard in their individual capacities, but they weren’t always on the same page about financial issues – and that can make or break a family’s future. I didn’t know it at the time, but this laid the groundwork for my passion towards financial services and helping families succeed.