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Tuesday, 10 May 2016

The Best Investment I Ever Made

The Best Investment I Ever Made
A tree - the go to picture for anything
investment related.
I hope I have got you curious! What ingenious investment has Stealthy Wealth uncovered that we can all copy and change our lives forever? Please tell us - what is the best investment? Could it be an offshore property in London, a small Bio Tech company in the USA or the next big local invention? Well the bad news is I could never reliably pick any of those, but the good news is you can make the exact same investment as I have (if you haven't already) and be smiling all the way to the bank.

We live in a time where we are spoilt for choice when it comes to where to put our hard earned money. We have so many options at our finger tips. We can buy shares, we can invest in property, government bonds are a few clicks away and for the very adventurous we can even participate in crowd funding. But what I have found is better than any of those!

I think, however, that you may be slightly disappointed to discover that after all the hype in the first two paragraphs, the best investment I ever made was to move closer to my work. Boo! You suck! I can hear you shouting at your computer screen (while your colleagues look at you awkwardly). But let me justify myself....

You see a lot of investments can give you a monetary return, but there are only a few that will give you a monetary return as well as a time return.
Moving closer to where you work gives you both a monetary and a time return
The time return:
When I was staying in Sandton and commuting to Centurion an average day went as follows:

Wake up 04:45
Leave the house 05:50
Hop on scooter and arrive at Gautrain station 06:00 (free parking woohoo!)
Train leaves station 06:04
Arrive at Centurion station 06:28
Hop on bus and get off at my work 06:50
Walk from bus stop to my building 06:55 

So from leaving my apartment, to arriving at work = 55 minutes

Then in the afternoon I had a similar ritual:
Leave work 15:55
Walk to bus stop 16:00
Catch bus and arrive at Centurion Station 16:30 (on a good day)
Catch train 16:38
Arrive at Rosebank Station 17:02
Scooter home, arrive at 17:10

So from leaving work to arriving home = 1 hour 15 mins

So in total my daily commute time was 2 hours and 10 mins. In a week I burnt almost 11 hours, and in a month around 45 hours. I worked 40 hours a week, so that means every month I spent more than a weeks worth of office hours just on commuting....That's insane! And the sad thing is, some people are doing even longer commutes than I was. Throwing weeks of their lives away sitting in a car. Sad sad sad. If I didn't pity them so much I would want to whack some sense into them!

After moving to Centurion, I now have a short 10 minute drive in each direction. My daily commute time has been reduced to just 20 minutes.

Now allow me to put this into perspective. On an average weekday, a persons time can be broken up as follows:
  • 8.5 hours at the office A normal work day is 8 hours (although for a lot of people this is more) and you usually get a 30 minute lunch break, sometimes an hour. I got 30 minutes so lets call it 8.5 hours at the office
  • 8 hours sleeping. The picture below from the very official sounding National Sleep Foundation puts the recommended sleeping time for a young adult and an adult (hey why can't 30 year olds also be young adults!) at 7 to 9 hours. On a separate note I wonder if this institute employs full time "sleepers" and where I can get hold of the application forms for the position! I will investigate later... Okay, so they recommend 7-9 hours sleep,  I will go for the middle of the range and call it 8 hours, which is more or less how much sleep I am currently getting (but I am definitely expecting this to drop once Stealthy Junior comes along in September...). Are you sleeping enough? I do suspect that a lot of people are not getting their recommended 8 hours - I would love to hear how much sleep you guys are getting, and the reasons for sleeping less/more than the recommended? Do let me know and I will collate the results and maybe do a future post about it.... Anyways moving on.....
  • So in a 24 hour weekday after your working time and sleeping time, you are left with around 7.5 hours of free time, which if you think about it is actually not a lot!
How much sleep do you need?

So now for some more pictures....
If we put this 8.5 hour work time, 8 hour sleep time, and 7.5 hour free time into a pie chart, it looks like this (roughly a third to each)

Time allocation for an average weekday
Less than a third of your weekday time is actually yours
So on an average weekday you really do not have a lot of time for yourself - and in this time you also need to get certain things done like getting ready for work, preparing food, eating said food, showering, exercise, social engagements, and..........COMMUTING. A lot of the other activities I mentioned can be optimised, but you are not going to score too much. But the commuting thing you can definitely get on top of.

Before my move to Centurion, my 7.5 hours free time was broken up as follows:

How much free time spent on commuting
Commuting stole a large slice out of my free time pie!
Close to 30% of my free time was taken up by commuting. That left me with only 5 hours 20 minutes each weekday for other activities. And I felt it! Not only is your work day effectively longer (commuting is far from enjoyable, and feels the same as being at work to me), but you have less true free time to unwind and recover.

The "after we moved to Centurion picture" is a lot prettier:

How to reduce your commute time - move closer to work
My pie now only has a small sliver missing

Now only 4% of my free time is taken up by commuting. I am scoring an extra 1 hour and 50 minutes each day. Every day. For as long as I work. My true free time has gone from 5 hours and 20 minutes to 7 hours and 10 minutes - that's around 34% more free time, every single weekday!

So I can now use that extra hour and 50 minutes to do something useful! I can go for a training run, do the dishes, and sweep the floor. Or I can cook dinner and do a load of washing. I can work on this blog and do some grocery shopping. If I wanted to I could even use my time to try generate some extra income, thereby converting my time saving into cold hard cash. The options are endless. In addition to this, according to this article there is evidence that the longer your commute, the less worthwhile life feels - and this makes perfect sense to me since a shorter commute means you get to allocate more time to things you enjoy doing. So shortening your commute time is definitely something worth looking into if you want to make more time for yourself and lead a more worthwhile life!

The money return
So the time return of moving closer to my work is quite simply amazing, and that alone would justify my decision, but the added bonus is I get a money return as well - and this money return goes straight into my ultimate end goal of early retirement. Lets run some numbers...

I was spending approximately the following each month on my commute1:
Petrol for scooter: R100/month
Gautrain monthly pass: R1700/month
Bus: R250
(Note: Above figures may be slight out since Gautrain update their train and bus pricing annually, you can find the latest here)

So on an average month it was costing me around R2000 for my commute. And now that I am in Centurion, I am spending about R100/month on petrol for my scooter. 

So my total saving is around R1900/month. This means I have an extra R1900 extra to invest each month. Every month. For as long as I work.

I am in fact looking at optimising further and riding my bicycle to work - this will be a slightly longer commute but will save me even more while having the added benefit of improving my health and fitness - Score!!

But wait, there's more! One other major benefit of staying close to work - we do not need two cars! And in fact I am a strong believer that no household should have more than 1 car (I will write a blog post about this sometime.) I realised this even while I was riding the Gautrain. I sold my car and we kept my wife's car. So now:
I no longer needed insurance - ~R8400/year saving
No more license fees - ~R250/year saving
No more service fees - ~1500/year saving
So that worked out to over R10000/year in savings! 

The total return:
So putting this all together (and excluding the savings because we only had one car, since this was true even while I was riding Gautrain), now that we in Centurion, for every year I get:
  • An extra 2160 hours (assuming a 48 week year allowing for leave and public holidays). That's a full 22 full 24 hour days spare every year!
  • An extra R22800, which I can put towards my early retirement goal.
So in my situation there is nowhere else that could give me R22800 tax free in my pocket as well as 2160 hours each year with no capital outlay - easily the best decision I have ever made, especially now that my wife has a bun in the oven2.

I will be the first to admit that my situation was quite extreme, and I am probably on the worse end of the spectrum. But what I am saying is that if your commute is anywhere longer than 15 minutes to half an hour, then you need to seriously consider asking yourself if it is possible to move closer to your work? I also fully understand that people living together sometimes work at opposite ends of a city or even province, and there may not be a location that will allow both to live close to their jobs. But then you need to consider if either one, or both of you can move jobs? Or at least can one of you be close to your work? It's possibly the best investment you can make!

Till next time, Stay Stealthy!
- ~ - ~

I have excluded the wear and tear and service costs of my scooter since my old commute from my apartment to the Gautrain station and my new commute from Stealthville to work is about the same.

The stork will be landing with our baby boy in September 2016. I strongly believe the best thing you can do for your child is to give them your time - and I now have a whole whack more of it to give!