Why Flipping Burgers at McDonald’s Beats Trading the Markets

One of the biggest and most dangerous mistakes in investing is one that most people never even realize.

I’ve seen many lives disrupted because people didn’t know about this, and to make matters worse, it’s rarely discussed in the investing world.

The Investing Metric You NEED to Understand

You’re probably familiar with the term Return on Investment (ROI). It’s one of the most important metrics in the investing world. In simple terms, ROI measures how much money was made on an investment as a percentage of the initial amount invested.

For example, let’s say you invest $1,000 in shares of company ABC. After some time, the stock price increases, and you sell your shares for $1,150.

What’s your ROI?

To calculate it, you take the return on your investment ($150) and divide it by your initial investment ($1,000). Multiply that result by 100 to get a percentage.

In this case, $150 divided by $1,000 equals 0.15. Multiplied by 100, that gives you 15%.

Your ROI is 15%.

It seems simple and straightforward. Every investing book and website will teach you this.

But what if I told you that this ROI calculation is misleading?

You might think I’ve lost my mind.

My Embarrassing Investing Blunder

But bear with me for a moment. Early in my investing journey, I attended a seminar where a speaker was selling a stock-trading course. His claims about the potential ROI from his system were bold, but he made it sound so easy that I started to believe him. Despite the $2,500 price tag, I bought the course.

Now, I won’t get into the embarrassing details about how I lost a lot of money and nearly had a breakdown as a result of following the course. Instead, let’s look at the story of an “average Joe” who might attend such a seminar.

When Joe signs up for the course, he quickly learns that he’ll need special software to implement the strategies. The cost? $450 per month. But who cares, right? Isn’t financial freedom worth $450 a month?

Next, Joe realizes he needs to analyze numerous stocks using the software every day. This means sitting in front of his computer for hours, poring over charts. But again, Joe’s goal is financial freedom—surely it’s worth a few hours a day, right?

After a couple of years of learning and trial and error, Joe finally becomes profitable. Despite losing money in the first two years, he manages to turn a profit in the third year. He starts with $20,000 in his trading account and ends the year with $24,000—an ROI of 20%. Joe is ecstatic! He tells everyone about his success, feeling on top of the world.

But wait—did we forget something in Joe’s ROI calculation?

Of course! We forgot the cost of the course and the ongoing software fees.

But there’s an even bigger cost that most people overlook—Joe’s time.

And this is where the ROI calculation becomes misleading and incomplete.

The REAL ROI Formula

If you’re spending 10 hours a week managing your investments, that’s a cost. And from my experience, almost nobody accounts for their time when calculating ROI.

So, what does the real ROI look like?

Let’s break it down.

If you spend a lot of time investing, your real ROI is likely much lower than you think.

To calculate the real ROI, we need to know the value of Joe’s time. You can figure this out by dividing your personal income by the number of hours you work each year.

Let’s say Joe earns $50,000 per year and works 1,800 hours (the U.S. average according to the OECD).

When we divide $50,000 by 1,800, we get approximately $28 per hour. So, if Joe spends 2 hours a day, 200 days per year, on investing, he’s spending 400 hours per year on it.

Multiply those 400 hours by Joe’s hourly rate of $28, and you get $11,200—the value of Joe’s time spent investing over the year.

Now, let’s put that into the real ROI equation. First, we need to deduct the

Now, let’s factor that into the real ROI calculation.

Joe’s total return for the year is $4,000. But when we deduct the value of his time ($11,200), we’re left with a negative return of -$7,200.

And now we can finalize the equation by dividing that negative number by $20,000.

That means Joe’s real return is -36%.

Joe thought he was earning a 20% ROI, but in reality, he lost 36%.

In the time Joe spent trading, he could have earned money working part-time or starting a business. Even flipping burgers at McDonald’s would have been more profitable!

That’s why failing to account for the cost of your time is one of the most dangerous mistakes in investing.

Don’t let it fool you.

Special invitation

I’m Robert Rolih, the international bestselling author of ‘The Million Dollar Decision,’ which has been translated into multiple languages. I’ve been featured on Bloomberg TV, Business Insider, Newsmax TV, and in over 50 other media outlets. Notably, one of my investing quotes was acclaimed as the best in the world by Yahoo Finance.

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