Nearly everyone has heard the glory of compound interest sung—how if we all saved from our first day in the workforce until our last we'd have an enormous nest egg. Get that egg faster by investing your labor, too.
Photo by wili_hybrid.
Over at the aptly named Early Retirement Blog, they argue in favor of not just focusing on investing some of your income for retirement but also investing your time and labor. While they don't argue with the conventional wisdom that you should be socking away some of your income towards your retirement goals, they suggest that in addition to that you should be using your labor and time during your working years to increase your available income:
It is often said a person's earning power, that is, the ability to earn an income, is by far the biggest asset anybody has. This is entirely true, but what this doesn't tell you is that you can magnify your earning potential several times over working for yourself rather than somebody else. This means finding a low-maintenance side gig and banking the earnings. This is what Tim Ferriss refers to as a muse in his book The Four Hour Work Week. If you do it right, you can net an additional $15,000-20,000 per year per muse, each requiring only a few hours per week (or month, if you choose wisely) to maintain.
The goal, by their measure, is to invest not just money in an interest-bearing vehicle, but to invest your time in securing new income opportunities—essentially diversifying your income sources like one diversifies an investment portfolio. You can read their whole take on the process at the link below. Have your own experiences scoring extra cash with side gigs, freelancing, or other kinds of outside-the-9-5 money making? Let's hear about it in the comments.
Set Aside 10% of Your Work for Retirement, Not 10% of Your Income [via GetRichSlowly]