24-11-2011, 10:48 AM
(24-11-2011, 10:23 AM)piggo Wrote: So what's the motivation behind investing when savings rate beats investment income anytime? Shouldn't most people be working their bums off In free lance work after their day job for supplementary income? Until it comes to a point where absolute returns beats your max possible savings, I'm starting to see less reason I'm doing very detailed research into companies. Time is better spent generating more secured income!
My 2 cents. Not saying that either decision is right or wrong but I think there's some conisderations to make if there's a either/or decision.
I think if a free-lance job ends up being a second job (i.e. not the case where it throws off passive income), one will still have to sacrifice time for money.
The rate of return from savings will seem extremely high at first but once your Net Worth hits a certain level, you'll realise that returns from investments make more sense. If your portfolio is $1,000,000, every $1,000 saved is 0.1% increase in your portfolio. So unless the freelance job can continually generate income w/o a ceiling, at some point, there will be limits to this strategy.
Knowledge gained from doing research now can be carried over into the future and I find that while doing research is painful at the beginning because one is looking at every aspect of the company;in future, further research on the industry or competitor will allow an investor to zoom in on the crucial bits making the research process less painful and/or lead to superior insights.