If you wish to obtain monetary independence, each funding we make serves one objective: to purchase again our time. Time is infinitely extra priceless than any object, expertise, or luxurious. Given how brief our lives are, we should always use our cash not simply to build up extra, however to purchase freedom. After you have freedom, you may extra simply craft the life that you really want.
And when occasions are good, as they’re now, with roaring inventory market returns and threat property surging, it’s value pausing to ask: How a lot time have my investments truly purchased up to now yr?
If you can begin fascinated about your monetary beneficial properties by way of time saved from doing issues you do not need to do, not simply {dollars} earned, you’ll start to see your monetary independence journey in a way more tangible and motivating method.
Let’s undergo a sensible train to calculate how a lot time your funding returns have purchased you, whether or not you’re already retired or nonetheless grinding towards monetary freedom.
The Philosophy: Changing Returns Into Time
Earlier than diving into numbers, it helps to reframe what your investments characterize. Each contribution to your portfolio is a deposit into your future time financial institution. Each greenback earned in returns is a slice of freedom – time you not have to spend working for another person.
However many people by no means translate this connection. We take a look at share returns, web value trackers, or steadiness will increase with out ever contemplating the human aspect – the hours, months, or years of labor these returns might save.
Right here’s the framework:
- Select your preferrred protected withdrawal price (SWR) in retirement: 3 – 5% is advisable.
- Evaluate your annual funding returns to that SWR.
- Convert the distinction into years (or fractions of a yr) of time purchased or misplaced.
We’ll method this from two views:
- The Retiree, who’s already residing off investments and different revenue like Social Safety.
- The Employee, who’s nonetheless on the trail to monetary independence.
For The Retiree: How A lot Extra Can You Spend?
We all know from a long time of analysis (e.g., the Trinity Examine, Invoice Bengen, and so on) {that a} 4% withdrawal price has traditionally allowed retirees to maintain their portfolios for 30+ years with out operating out of cash. For those who earn any supplemental revenue (Social Safety, pension, part-time work), your protected withdrawal price (SWR) can rise to five% and even greater.
However let’s simplify. Suppose you’ve retired and also you’re residing solely off your investments. You’ve budgeted to withdraw 4% per yr. What occurs when markets surge?
Let’s run some numbers.
| Annual Portfolio Return | Secure Withdrawal Price | “Additional Years” of Retirement Gained |
|---|---|---|
| 8% | 4% | 1 yr |
| 12% | 4% | 2 years |
| 16% | 4% | 3 years |
| 20% | 4% | 4 years |
In case your portfolio returns 8% and also you’re solely withdrawing 4%, your investments successfully grew by one yr’s value of spending. A 12% return offers you two further years of retirement funding, and so forth.
Extra optimistically, you possibly can say that an 8%, 12%, 16%, or 20% portfolio return successfully buys you two, three, 4, or 5 years of annual residing bills, respectively.
In case you are an energetic investor making an attempt to outperform the S&P 500, as I’m, it’s also possible to calculate how a lot extra time you will have gained by means of outperformance. For instance, I famous in my 2025 evaluate that by outperforming the S&P 500 by roughly 5%. The outperformance share shouldn’t be large, however the time saved is. I successfully purchased a bit multiple yr of standard residing bills for my household of 4.
This can be a highly effective psychological mannequin as a result of it turns summary returns into one thing deeply tangible: time.
What To Do With The “Time Surplus” (Funding Outperformance)
Now that you just’ve “purchased” extra years of retirement, you will have a number of choices:
1) Spend extra within the coming yr.
Enhance your withdrawal price barely – say, from 4% to five% – and benefit from the fruits of your self-discipline. Perhaps you lastly transform that kitchen or take a household journey to Cambodia and Vietnam.
For these of you on the FIRE path, being intentional about budgeting for enjoyable and occasional splurges is vital. In case you are all the time disciplined about saving and investing for the longer term, you could by no means go away sufficient house for enjoyment within the current. Finally, you’ll possible die with a surplus of capital, thereby losing a lot of the time and stress you spent accumulating that capital while you have been youthful.
Most retirees err on the aspect of being too conservative. Regardless of the “4% rule,” many retirees solely withdraw 2–3% as a result of they’re afraid of operating out. I’m a kind of early retirees who instituted a 0% withdrawal price since 2012 due to scars from the world monetary disaster and a need to develop my household. However by actively quantifying your surplus years, you acquire the emotional permission to truly spend and revel in life.
2) Construct a bigger monetary buffer.
Preserve your withdrawal price the identical and roll that surplus right into a buffer for future bear markets. You’ll thank your self when a down yr comes alongside and you’ll proceed spending confidently with out promoting property at a loss.
Nonetheless, all for the sake of whole monetary safety, you would possibly get hooked on constructing buffers to your monetary buffers. For those who by no means cease constructing buffers, then you should have failed at consumption smoothing.
One signal of intelligence is with the ability to craft your preferrred life. There are many individuals on the market who’ve sufficient, however who nonetheless cannot break away from a suboptimal job or life because of the yet another yr syndrome that by no means ends.
3) Reinvest for legacy objectives.
For those who already really feel content material, contemplate reinvesting any surplus to your kids or your favourite causes. You could possibly construct a custodial funding account, match your kids’s Roth IRAs, or arrange a donor suggested fund for charitable giving. Compounding time for future generations is among the most beneficiant presents you may go away.
To hedge in opposition to an unsure future, I invested $198,000 of my house sale proceeds into Fundrise Enterprise to achieve publicity to the AI growth for my kids. If AI performs effectively over the following decade, my personal AI investments will possible do effectively too, and assist my youngsters launch. And if AI seems to be overhyped, not less than my kids should still profit from higher job alternatives in a world formed by AI.
Adjusting for Market Cycles
When returns decline or flip adverse, the framework works in reverse.
Suppose your portfolio grows solely 4% in a given yr. For those who withdraw 4%, you might be primarily flat. In case your portfolio declines 4%, you will have successfully misplaced a yr of time. However it’s truly worse than that, since you nonetheless have to fund the present yr’s bills, which means you will have successfully misplaced two years. In different phrases, you will have borrowed time out of your future.
Though this sounds discouraging, it is usually regular. Down years are baked into long run market averages. Each the 4% Rule and the extra versatile 5% Rule already account for corrections and bear markets. What issues most is monitoring your cumulative surplus or deficit over time.
A easy spreadsheet can assist you visualize how a lot time cushion you will have constructed through the years and whether or not you might be forward or not on time. Alternatively, you should utilize a number of glorious retirement planning instruments, equivalent to Boldin and ProjectionLab.
For The Employee: Measuring How A lot Time You’ve Saved
Now let’s flip to the accumulation part, for these of you continue to working towards monetary independence.
Roughly 70% of staff report being disengaged from their jobs, which means most would retire sooner if given the selection. If that’s you, then your main mission is to transform as a lot of your revenue and funding beneficial properties into saved time from working as doable.
Let’s use the traditional 60/40 portfolio because the inventory / bond asset allocation retirement portfolio benchmark. That is the asset allocation Invoice Bengen used for retirees to provide you with the 4% Rule within the first place. The extra you may beat the common historic return of 8% for a balanced 60/40 portfolio, the sooner you may exit the rat race.
Right here’s measure your progress.
Step 1: Evaluate Your Returns to the 8% Benchmark
Begin by evaluating your portfolio’s annual return to an 8% long-term benchmark.
In case your investments earn 12% in a yr, subtract the 8% benchmark and also you’re left with a 4% surplus. Assuming a 4% withdrawal price, that surplus represents one full yr of residing bills. In different phrases, you’ve successfully purchased your self one further yr of freedom or one yr much less you must work.
In case your portfolio returns 16%, that’s an 8% surplus, which interprets into two years of residing bills saved. You didn’t simply develop wealth, you meaningfully compressed your working timeline by 24 months.
On the flip aspect, in case your portfolio solely returns 4%, you’re operating a 4% deficit relative to expectations. That shortfall represents one yr of misplaced time, as your portfolio did not develop sufficient to assist each future spending and progress towards monetary independence.
Step 2: Translate Surplus (or Deficit) Into Time
Right here’s the straightforward rule of thumb: Each 4 share factors of surplus equals one yr of residing bills saved.
When you assume in time as a substitute of percentages, the maths turns into intuitive:
- 4% surplus = 1 yr saved
- 2% surplus = 6 months saved
- 1% surplus = 3 months saved
- 8% surplus = 2 years saved
Likewise, deficits work the identical method in reverse.
This framework helps you respect the worth of even modest outperformance. Just a few further share factors in yr don’t simply pad returns, they’ll translate into complete years of reclaimed life, particularly when compounded over time.
Simply remember the first rule of monetary independence: do not lose tons of cash. For those who surrender your beneficial properties and lose numerous cash, you’ll in the end sacrifice super time to get again to even.
Step 3: Modify Threat and Technique Based mostly on Your Want to Work
Your portfolio shouldn’t exist in isolation. It ought to mirror your power degree, threat tolerance, and how for much longer you truly need to work.
For those who’re burned out and near your monetary independence quantity, contemplate dialing down threat. Locking in freedom issues greater than squeezing out further returns. After you have sufficient, the aim shifts from maximizing wealth to preserving time.
For those who’re nonetheless energized and revel in what you do, sustaining, or selectively growing, threat for a number of extra years can increase your security margin and purchase much more optionality.
For those who’re behind, essentially the most dependable lever isn’t taking extra funding threat, it’s growing revenue. Job-hopping, negotiating raises, or constructing aspect revenue will virtually all the time transfer the needle sooner than making an attempt to constantly beat the market.
Keep away from the gambler’s mindset of “doubling right down to catch up.” That method typically destroys capital and prices much more time. You possibly can’t reclaim freedom by taking reckless dangers by means of margin buying and selling and so on. In the long term, self-discipline, not desperation, is what buys your life again.
Constructing A Private “Time Ledger”
To make this extra concrete, construct a Time Ledger spreadsheet that tracks:
- Beginning portfolio worth
- Annual return (%)
- Surplus or deficit vs. 8% benchmark
- Equal years (or months) of time saved or spent
- Cumulative time steadiness
For instance:
| 12 months | Return | Surplus vs. 8% | Time Gained/Misplaced | Cumulative Time Saved |
|---|---|---|---|---|
| 2025 | 12% | +4% | +0.5 years | +0.5 years |
| 2026 | 16% | +8% | +1 yr | +1.5 years |
| 2027 | 5% | -3% | -0.375 years | +1.125 years |
Seeing your “time account” compound over time gives super motivation. It transforms investing from an summary numbers recreation into one thing deeply human: gaining management over your life.
Saving Time Is The Final Goal
Everybody’s FI journey is totally different. Life throws fixed curveballs – well being points, household additions, job loss, pandemics, market crashes. It’s unimaginable to foretell all of them. However constantly operating the numbers and considering in time offers you readability and management amid uncertainty.
Most individuals don’t measure progress in time. They don’t have a plan for when to dial again threat or translate returns into way of life enhancements. They simply maintain accumulating, typically with out realizing they’ve already “gained the sport” or in the end will at a a lot sooner tempo than anticipated.
However in case you’re studying this, you’re not common. You’re deliberate about your funds, interested by optimization, and keen to assume in another way. Understanding your true threat tolerance can also be about estimating how a lot time you are keen to lose to grind again your losses.
I’ve been jotting down my ideas on Monetary Samurai since 2009, however I began fascinated about escaping company America a decade earlier in 1999. The 5:30 a.m. – 7 p.m. work hours have been brutal, and I knew I could not survive for 20+ years. The only largest difference-maker was shifting from a cash mindset to a time mindset. As soon as I started seeing investments as time purchased, not cash earned, my braveness to reclaim my life by leaving work grew.
Don’t simply maintain accumulating for accumulation’s sake. Use your monetary beneficial properties to purchase again extra time with household, extra time for creativity, and extra time to reside life in your phrases.
At some point, the bull market will finish. It all the time does. When that occurs, you’ll be glad you transformed not less than a few of your paper beneficial properties into actual freedom. Time you may by no means lose is the perfect asset of all of them.
Reader Questions
- How a lot time have your latest funding returns purchased you?
- Are you spending sufficient of your “time surplus” or hoarding it out of concern?
- What steps might you’re taking at present to speed up your journey towards time freedom?
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