The Philippine Online Chronicles

In previous articles, we discussed the rule of 72 and leverage as allies in our financial goals. In this installment, we will discuss our greatest ally in wealth generation: the power of time.

Time is the most neglected treasure in the world. All of us are equally given 24 hours a day and yet the distribution of wealth is unequal. A lot of people always complain about their financial condition. They just fail to recognize that the state they are in now is the result of what they have done before. They failed to make proper use of time.

Opportunity is oftentimes equated with time. Like time, once it passes by, one can only look back, but never go back. Opportunities lost can never come back again. The only thing one can do is to regret having wasted the time and opportunity that came by. Two perfect examples of people who gained wealth by using time wisely are SM’s Henry Sy and JG Summit’s John Gokongwei. They spotted opportunities and took advantage of time and leverage to create wealth from nothing. If we read through their life stories, we will see that our status is equal to or better than their financial status before. If they were able to make it before, then there is no reason why we can not do it too.  The only hindrance is the negative mindset about wealth building.

People always say that they have no money to invest but the sad fact is that they failed to invest their time the right way. A good way to investing in time is to allot time to learn by attending seminars and reading books. Sometime last year, I lent a friend a book by Bo Sanchez, 8 Secrets of The Truly Rich. We agreed that the book will be returned to me in a week. I got the book after a month, and to my amazement, the book was untouched. The reason: NO TIME TO READ. If one does not invest his time in learning, how can he put into practice something he does not know?

Twenty years ago, all I knew about building wealth was saving money in the bank. I was a disciplined saver ever since I was a child. Luckily, the rate of interest that time was sixteen to twenty percent. I was able to make my money grow with ease. However, as time passed, bank rates started to slide gradually. Fortunately, eight years ago, a good friend of mine introduced me to a seminar about the wonderful world of financial planning. It was love at first sight. I thought to myself: Where have I been and where am I going?

From there on, there was no stopping me in sharpening my knowledge on financial matters as I took advantage of opportunities on my free time after work. I attended various seminars, joined online forums, and bought books to teach me more about managing finance with the objective of practicing it and sharing the knowledge to others. It was a perfect time because I was already an expectant father. I was able to think far into the future and planned ahead. Presently, I do not encounter any financial problems for my responsibilities as a father and good provider. I am free from worries about my kids’ education, my retirement, and my protection in case the inevitable happens.

In wealth building, the real money is time. For this reason, it is essential for one to start early. Every delay translates to loss of money. As a proof that time is money, we use employees as example. We are employed by companies to work for them in order to earn salaries. The truth is that we traded our time to our employers in exchange for money. Isn’t it better if we can trade money in exchange for time? That will be possible if one is financially free (money and time working for him). The table below shows the target freedom at P5 million at age 60.

* Target freedom age: 60
** Target freedom/retirement fund: P5 million

As can be seen from the table above, the earlier one starts investing money, the lesser the amount needed to reach the desired fund. If one can find a good investment vehicle, the amount can be even less, or the time needed will be shortened to reach the goal and let his money work. If one starts later, he has to shell out more to reach the same objective. For example, comparing the age 10 and 20 at 0 percent, we see that one has to add P25,000 yearly for the next 40 years just to reach P5 million. It is as if he lost P1 million in delaying his decision.

Another table illustrates the power of time in wealth building. Person A invests ahead of Person B by ten years. Both invested  P1000 per month. A did it for ten years and B (being late), did it for 30 years. Notice the end result. A multiplied his money 33 times while B did so 5 times.  Also comparing both, evidently, B lost P2 million.

Such is the power of time. A has time on his side while B has time against him. Compared to a racing game, A is already on the fifth gear when B started his engine. Time is something you can't rewind. So it pays to start early.

Allow me to end this article by slightly editing GM Kasparov’s statement on his PCA championship (which he handily won) against GM Short. He quipped “It will be short” and it will be “SHORT.”

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