Is this the supreme investment for time-poor working people who want to retire early?

If you are working, the demands on your time could be heavy. Perhaps you earn a decent wage and have considered investing to finance your retirement. You could even have your heart set on building up a pot of money to help you to retire from your career early. But how can you find the time to invest when you are so busy?

Picking the next big winner

Perhaps you dream of unearthing the next big winner such as a fledgeling Amazon, Google, Microsoft, Apple, or Arm Holdings. But there’s risk in searching through the ranks of small-cap firms with small earnings and big potential. The reality is that you need to get in early to get those multi-bagging investment outcomes. And there are no guarantees. Perhaps the firms you pick will fail to achieve their ambitions. You could even lose all your money if they go bust.

The only way to give yourself a chance in the small-cap arena is to do a lot of research before investing. But you can’t do that because you don’t have the time.

Growth investing

You could go for established growth companies that already generate solid, growing earnings. The problem with such an approach is that valuations can be high, and any slip-up causing the firm to miss its earnings forecasts could drive the share price down.

Another challenge is that a firm’s growth phase can run out of steam and it’s common for a multi-year climb in the share price to unwind – you could end up right back where you started with your investment, which means you could have lost years of your investing potential. The only way to make sure your investing strategy in growth shares delivers for you is to put lots of time into following the underlying businesses closely. You can’t do that, because you are busy.

Dividend hunting

You could go for harvesting income from firms paying big dividends. You’ve probably heard that a lot of the overall return available from the stock market comes from the dividends firms pay. So, you’ll collect the dividends and reinvest them to compound your money.

It’s a good plan, but it takes work – lots of it. Not all big dividends are sustainable. If you skim the financial pages and pick out the firms paying high dividends you’ll end up with a clutch of cyclical companies at the peak of their cycles, a few falling stars heading for a dividend cut, and maybe one or two decent, out-of-favour companies that could serve you well. If you don’t put the time into your research, I think this strategy is risky.

Simple but effective

Instead, I reckon the supreme investment opportunity for time-poor working people who want to retire early is to regularly invest in a passive, low-cost index tracker that automatically reinvests dividends. Your options are many, but I’m bullish on the FTSE 100 (INDEXFTSE: UKX).

By automatically ploughing the dividend income from the fund back in, you are likely to compound your money over time. And if you drip money into your investment regularly, such as each month, you’ll iron out some of the ups and downs of the index. Over time, you could do well, and it will take almost none of your time to maintain.

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Kevin Godbold has no position in any of the shares mentioned. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool's board of directors. The Motley Fool UK owns shares of and has recommended Alphabet (A shares) and Amazon. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.