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Enough Money From Enough Time

July 8th, 2014 at 06:02 pm

Tending my stock portfolio can take over "too much" of my time if I let it. And up to recently I have let it do that. Managing my investments had grown into a substantial part-time job eating around 16 hours a week of my supposed financially free retirement. And that just did not feel right.

Putting in the time was necessary to maximize the income from my investments(1*). But I have recently realized that maximizing that income is not really necessary(2*). So I have revised my approach to my investment management. Now I put "enough time" into it to generate "enough money." Here is what that means and how I figured it out.

The key was to find a balance point between enough free time and enough money. But what does that actually mean? I had to define how much money IS enough and to set up a system that would keep my stock portfolio generating that much income without getting sucked into devoting more time than was necessary to get that done.

My baseline living expenses do not factor into the "enough money" calculation. That is because I have gotten those costs down to less than $18,000 a year(3*) -- and that is more than covered by my earned Social Security "annuity" payments. So I actually do not have to work at investing at all to enjoy my baseline satisfying lifestyle(4*).

Money to build up back-up funds does not factor in either. That is because I have already set up my financial reserves(5*), and because my baseline budget already includes premium payments for a comprehensive suite of insurance coverages(6*). So I do not have to work at investing for this either.

I just need to work for fun money. Since I do not need my investment income to cover basic living or to build up reserves, all that money can go directly into my discretionary fund(7*). To a point then, all my investing work time is optional, it produces optional income, and it funds optional expenditures. So how much optional discretionary income is "enough" for me?

An extra $20,000 a year is enough fun money for me. From experience, I know I will be hard pressed to actually spend that much on discretionary purchases and activities(8*). And that much investment income will give me a nice security blanket to backstop my Social Security payouts(9*). So there was my answer to the enough-money part of the balance point question. Twenty thousand bucks a year.

Now that just left the second part of the balance point question: how much time do I need to work at investing to generate $20,000 a year?

Stay tuned!

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1* Profiting From Working My Stocks:
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2* Letting Enough Money Be Enough:
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3* My $18K Annual Baseline Budget:
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4* My Financial Independence Key:
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5* Making Over My Reserves Plan:
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6* My Stash-Shielding Insurance:
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7* A Discretionary Fund, Not a Discretionary Budget:
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8* Making Sure I Spend That Money!:
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9* My Six Lines of Financial Defense:
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