This past weekend, I was on the Chicago-to-Cincinnati Megabus, decked out in my Fool ball cap, with my laptop plugged in, trying to write an article, when I got a tap on my shoulder.
"I looked you up on my phone," said the guy in the seat behind me. "You do some pretty neat work."
"Thank you," I replied. "It's a lot of fun."
In the course of a brief discussion with him and his friends, the inevitable question came up: "If you're such a decent investor, what are you doing on the Megabus?"
Why was I on the Megabus?
The direct answer to that question is simple: I had an out-of-town wedding to attend, and the Megabus was the most cost-effective, reasonably time-efficient way of getting where I needed to be. But even beyond that, riding the Megabus goes a long way toward explaining how I got to be a decent investor and why it's such a great idea for people who want to get serious about investing.
When all is said and done, every successful investing strategy starts with two key ingredients: money and time. Without money, there simply is nothing to invest. And without time, companies can't prove out their merits to the market to justify the returns that an investor expects. As a result, unless you've got a large chunk of cash lying around, all successful investing starts with spending less than you earn to free up the money to invest and relies on keeping the investments going long enough to let them work.
Take it to the logical next step, and it becomes clear how the Megabus helps with both those key ingredients of time and money:
- From a money perspective: The Megabus fare saved me around $200 versus driving in gas, tolls, and parking alone -- not to mention the wear and tear on my car.
- From a time perspective: By being a passenger on the Megabus, the time I would have spent driving I instead spent writing, turning otherwise wasted time into productive time.
- From a "time is money" perspective: Since I'm paid by the piece, the work I got done on the Megabus represents income I couldn't have earned from behind the wheel of my own car.
More income. Lower expenses. More productive time. Add some great conversation with some potential members of the next generation of superinvestors, and it becomes immediately clear how the Megabus can be a great enabler for real-world investors.
Keeping it real for the long haul
On top of those immediate benefits of the Megabus, there's the economic reality that we're not exactly filthy rich. While we've been investing long enough and successfully enough to have a really good shot at retiring comfortably, my wife and I have additional financial goals on top of that retirement.
Key among those goals is trying to help our kids with their education costs. In large part because you can borrow for college but not very well for retirement, funding our kids' potential college costs has taken a back burner to funding our retirement. In order to best help them, we need to have money socked away, invested over the time between now and when they need it.
There go those two key ingredients again -- time and money. Spend less than we earn. Invest the rest. Repeat, and let the power of compounding over time work its magic. It's the foundation of all our successful investing to date, and we firmly believe it will be critical to our ability to reach the rest of our financial goals.
If that means more Megabus trips to keep our costs down, our income up, and cash available to invest, then so be it. That Megabus has already proven itself to be a great enabler of those two critical elements of investing success: time and money.