Money, Markets, Stress and Productivity

You work hard to get ahead and ideally put yourself in a better financial situation and ultimately to retire to a comfortable lifestyle.

You know that saving and putting money away is important and you do it when you can. You wonder if you are doing the right thing.

You are bombarded all day everyday by the 24 hour news and the investerati that you need to do this and you better not do that. It’s confusing to say the least.

Studies show that employees waste a lot of time. Some studies put the figure at as much as one hour a day. In addition, those same studies show that as much as half of that time is spent on personal finance.

Opportunity cost or economic opportunity loss is the value of the next best alternative foregone as a result of making a decision.

When employees choose to engage in activities other than work while at work, they have made such a choice. Besides the time and productivity decrease, it is virtually impossible to know what they may have achieved during that time.

When the activity chosen at work is personal finance however, we can say beyond any reasonable doubt that they have chosen an activity which is not only detrimental to their employer but detrimental to themselves as well.

While it is great to see people taking an interest, it is entirely unhealthy for a business to have its employees re-balancing their 401k, day trading, calling their stockbroker, stock picking and monitoring the stock market.

And what’s worse is that it’s all likely to no avail since every study on the subject shows that passive investing beats active investing over any reasonable time-frame, especially given the lowering of index fund fees.

Engaging in an activity at work that isn’t work is a waste of valuable productive time but to engage in an activity that has been proven to be counterproductive is hard to imagine but it happens every day in every office.

The solution is simple. Consider the fact that over 90% of professional money managers cannot beat the simple S&P 500 index.

There is an abundance of evidence that suggests that simply buying an index fund (either ETF or mutual fund) will not only save you a fortune in fees over a lifetime but increase your investment results. Furthermore, you will personally be better off as well having more time and less stress.



About our Guest Author:

Scott Barclay is the author of ‘How the Investment Business Really Works’ (www.htibrw.com) and is a sought after speaker and workshop facilitator.

Mr. Barclay worked for some of wall street’s biggest firms and knows how the investment business really works. He graduated from the University of Alberta in Psychology and Physics and has completed graduate work in both finance and organizational behavior from McMaster University and the University of Texas at Dallas.

Play Now, Pay Later

By HR-Worldview Regular Columnist: George Krafcisin

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We went to our granddaughter’s third birthday party on Sunday. We gave her some cute new outfits, a book about cars and trucks, and a bill for $40 trillion.

Huh? Yes. By now you’ve heard that she and her older sister will be paying their share of a national debt that will grow from today’s $10 trillion to $40 trillion or more over the next few decades if we don’t do something about it today. I’m willing to bet that Congress (responding to YOU) will do nothing about it.  The decisions are too painful to address, so they’ll be ignored. And my granddaughter will end up sending most of her paycheck to Washington to service federal debt.

Why do we put off thinking about difficult issues? In your life, have you put off setting up a budget?  Talking to your spouse about something they do that bugs you? Planning for taking care of your elderly parent when they can’t drive any more? Cleaning out the garage? Starting a diet? Going to the gym?

I think we put things off because we all have a built-in procrastination filter. When confronted by an unpleasant future problem, we subconsciously shut it out. “Maybe something will change, or the problem will go away, or I’ll die before I have to face it.” There’s pain in facing the problem, no immediate pain to ignore it.  Instead, we watch football, eat pizza,  or go shopping. The pain comes later.

It isn’t just bad things we push off – we put off thinking about how good the future might be, if we start now.  Many of my coaching clients have no definite thoughts about what they want to be doing five or ten years from now. They come to me with an immediate problem – their company’s sales are slow, or they hate their job, or they can’t keep up with their workload. But when they stop and think about what the future could be, rather than how miserable the present is, they discover possibilities and a path to a more satisfying future. They learn that today’s to-do list is the first step towards that really satisfying career five years from now.

So the first thing to do about avoiding difficult problems is to give some thought to what you should be doing, but keep ignoring.  Talk it over with a good friend, your spouse, a trusted co-worker, or your coach.  But DO something about it.

About Our Columnist:

George Krafcisin is the President, coach and trainer of Mosaic Management, Inc. He writes regular installments on the topics of leadership and management here on HR-Worldview. 

His last article "Breaking the Rules" can be found here.