I love deadlines. I love the whooshing sound they make as they go by...
-- Douglas Adams

How much time do you have?

If you are like most people, the answer is probably "very little to spare." You spend most of your day earning a living. You then spend what little time remains trying to enjoy it with friends and family.

Now let me ask you a slightly different question: How much time do you spend planning for, and managing, your investments?

For too many people I've encountered over the years, the answer is "not nearly enough." Too many investors do not put a commensurate amount of time into keeping what's taken them so much time and energy to earn. Some studies have found people spend more time planning a week's vacation than they do their retirement.

It's somewhat ironic: The average American works longer hours than anyone else in the industrialized world. Yet we are lackadaisical in the amount of time we are willing to commit to handling those same dollars when they become investments.

This leads to all sorts of problems.

The good news is, however, it's a relatively easy problem to fix.

Investment Style Determines Time Requirements

Taking on a project the demands of which are beyond your abilities to meet is a guaranteed set of headaches. It leads to compromises, short cuts and losses. Yet some investors undertake a trading regimen that requires far more time than they have available.

The obvious example is daytrading. If you have a demanding job, trying to trade intraday -- while trying to juggle clients, subordinates and the boss -- is sheer folly.

Less obvious, however, are the investors who have longer time horizons -- holding positions for weeks or months -- on a few minutes a month. These are the position or swing traders, and the right amount of time required to do this, or at least do it well, is much longer than what many people have available.

As we mentioned previously, you are competing against some of the smartest and best-equipped traders in the world. They work 24/7 to uncover an edge. These are people who are at their trading turrets at 5:30 a.m., who work 12-hour days doing the same homework that you might be spending a few hours a week on.

If the guy on the other side of the trade -- the sell to your buy -- is spending far more time investigating a given company, sector or market, that stacks the odds against you.

A key question all investors must ask themselves is, "Does my investing style match my available time?"

If you find yourself somewhat harried when it comes to your investments, the likelihood is that you have too little time for your adopted style. Your options are simple: find more time or adapt a style more suited to your time available. For most people, that means shifting to an investing style that is less time-consuming.

Many find this adjustment to be uncomfortable. That is often because they are trading for the buzz, and not the long-term return. The solution to this is to turn 5% of your assets into your mad money (pun intended). Put them into a separate account at a different broker. Manage this for fun; manage the main account with a deadly serious purpose.

Matching Your Investing Style to Your Time

To determine how much time you should spend managing your own financial affairs, ask yourself the following questions:

  • "How much time and energy do I have to follow the markets?
  • "Can I do all the requisite research needed to dig up and follow companies?"
  • "How committed am I to managing my own financial affairs?"
  • The answers to these questions may point you in the right direction when it comes to managing your financial affairs.

    Investors sometimes forget that there is a spectrum of investor commitment: At one endpoint is someone who hires a professional to do it for them. At the other end of the spectrum is someone who spends every waking moment thinking about the market, looking for opportunities, doing massive amounts of research, watching every tick. You are most likely somewhere in between these two extremes. Matching your place on this spectrum to your time is the key to stress-free investing.

    Even the investor who chooses the least time commitment strategy -- hiring a money manager -- often fails to realize the time this requires. First, you must find the appropriate person. Then, you need to ensure your investment goals are met.

    I always suggest working through multiple personal references to find a money manager. Talk to several of their clients. Really understand their investing philosophy and risk management approach. If you hire someone, you will then need to explain to them your investing goals and risk tolerances in order to help them craft an investment strategy that meets your needs.

    After all that is done, you need to manage your advisor as if he or she were a high-level employee. Make sure you read your monthly statement carefully. Are your investments consistent with the plan you first laid out?

    This is the investment approach with the least time requirements, and yet many investors put too little time into even this. It requires at least an hour per month to review your statements and present holdings, a quarterly discussion to review the markets, and an annual meeting to update your plans.

    Got the Time?
    Estimating time requirements for the most common investor styles.
    Spectrum of Investors Time Required Success Depends
    Buy & Hold Minimal Cycle driven (bull or bear mkt)
    Hiring Money Manager 1 hour per month Varies by mgr, plus quarterly updates and annual reviews
    Mutual Funds Holder 5 hours per month plus quarterly reviews Market driven, plus mgr's skill level
    Indices/Sector Funds 10 hours per month Market driven, plus timing
    Individual Stocks (long-term holders) 20 hours per month On stock selection and trade management
    Individual Stocks (med-term trading) 10 hours per week On trade entries and exits, and position sizing
    Short-term Trading 20-40 hours per week Cash management
    Source: Barry Ritholtz

    The table above shows my estimation of how much time is required for the most common investor styles. It includes finding investments and reviewing them on a regular basis. Note: The time involved is strictly for asset management. It does not include becoming a more educated investor, reading books, or financial publications such as this one. Nor does it include the time necessary to create your investment plan in the first place. It's simply my educated approximation as to the minimum amount of time required to make a given style work.

    Adopting an investment strategy that requires more time than you can commit to is a surefire path to disappointment. Find a strategy and style that you can live with -- both intellectually and scheduling-wise. Make an "honest self assessment" of your resources.

    This is one of the easiest mistakes in investing to make -- and to avoid.

    1. Expect to Be Wrong 2. Your Fault, Reader
    3. The Wrong Crowd 4. Bull or Bear? Neither
    5. Know Thyself 6. Prepare for Battle
    7. Bite Your Tongue 8. Don't Speak, Part 2
    9. The Zen of Trading 10. The Folly of Forecasting
    11. Lose the News 12. Tracking Elephants, Pt 1
    13. Tracking Elephants, Pt 2 14. Nothing Doing
    15. Surviving Silly Season 16. The Zen of Trading
    17. Curb Your Enthusiasm 18. Six Stocks
    19. Bended Knee 20. Time Waits for No One
    Check back for more of Barry Ritholtz's
    Apprenticed Investor series

    Barry Ritholtz is chief market strategist for Maxim Group, where his research and market analysis are used by the firm's portfolio managers and clients in the U.S., Europe and Japan. He also publishes The Big Picture, his macro perspectives on the economy and geopolitics, entertainment and technology industries, and is a member of the board of directors of Burst.com, a streaming media software company. At the time of publication, Ritholtz had no position in any securities mentioned in this column, although holdings can change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Ritholtz appreciates your feedback; click here to send him an email.

    More from Opinion

    3 Warren Buffett Stock Picks That Could Be Perfect for Your Retirement Portfolio

    3 Warren Buffett Stock Picks That Could Be Perfect for Your Retirement Portfolio

    Wednesday Wrap-Up: GE and Facebook

    Wednesday Wrap-Up: GE and Facebook

    PayPal Strikes Again, Facebook, and AT&T -- 3 Tech Stories You Must Know

    PayPal Strikes Again, Facebook, and AT&T -- 3 Tech Stories You Must Know

    How to Invest Like Warren Buffett

    How to Invest Like Warren Buffett

    50 Stocks That Could Be Shredded If a U.S. Trade War With China Ignites

    50 Stocks That Could Be Shredded If a U.S. Trade War With China Ignites