How much alpha do you have to generate to break even on the time spent to achieve it?
https://mebfaber.com/2017/07/06/best-wa ... portfolio/
The analysis depends on your salary (i.e. what your time is worth) and the size of your portfolio. There is a chart with several permutations, but to me, the 2 most realistic scenarios are someone who makes 100K and has either a 500K or 1M portfolio: with a 500K portfolio, you need to returns 4% above market average to justify the effort; with a 1M portfolio, you need returns 2% above average.Lots of people study markets in the hopes of beating the market. What a lot of people don’t factor into their equation is the time spent to achieve that goal.
So, instead of figuring out how much extra juice we can squeeze out of that portfolio, let’s flip the equation around.
How much alpha do you HAVE to generate to break even on the time spent to achieve it?
Below, we take a look at a handful of scenarios for investors making between $50,000 to $500,000 per year, with portfolios ranging from $100k, to $10,000,000. We examine an investor who spends eight hours a week studying markets in hopes of beating a basic portfolio allocation. We chose eight hours at that was the responses to a poll of mine with over 500 votes on Twitter.
In nearly every case, it is a more realistic scenario to spend zero hours on investing, and simply work a few more hours and achieve a much higher yield on your entire portfolio.