When we think of investing, we think of buying and holding stuff for the very long run (or at least that’s what we should be thinking!) and yet the cost of doing so is not always visible in the price tag. It’s the hidden price of investing that you’ve gotta be weary of and most of us aren’t aware of it let alone be fully willing to pay for it!
In life, we’re always on the lookout for shortcuts. It’s no wonder “how to lose weight fast” is one of the most searched things on the googleverse. In fact, since Jan 2021, there have been 1.4 million google searches for it! That’s basically 3 searches every minute.
But no one is busy googling ‘how to lose weight slow and sustainably’? Nah. That’s way too boring. Same thing applies to our money. We’re always on the lookout for get-rich-quick schemes but they should have a warning sign that reads ‘get poor just as quick’. (Read here the secret to becoming a great investor – and it’s not what you think!)
We want results. And we want them ASAP.
It’s for this reason that fad diets and get-rich-quick schemes take off. It’s the same reason so many people buy lottery tickets – read here the psychology behind it. We’re all looking to get something (those big bucks) or lose something (our stubborn fat!) for nothing. Hate to break it to ya, that’s not how the world is wired.
And that’s not because the world is wired wrong. The more you work for something, the more you’ll appreciate it. What’s the point of being dumped with $10000000 if you hadn’t moved your butt to get it. It’ll make you feel like a cheater. The longer you work for something, the likelier it is to stick around.
But we really don’t like taking the hard way out. The long way to our goal. We’re so impatient and we lack consistency. So, we move onto the next diet promising weight loss, super quick. Or that crypto coin we think (more like wish and pray) will blow up and become bitcoin numero deux. We’re so captivated by making it quick that we lose sight of what it really means to work at something. To stick at your goal even when you aren’t feeling like it.
And investing is no different. When we invest, we want to try and squeeze out as much return as we possibly can while paying the least amount of dollar for it! This is literally like walking into a Michelin star restaurant, asking to have a table, and expecting to get the food for the price of a Maccie. They’ll laugh you out the door.
So why is it that when we invest, we want the juice without the squeeze?
We want those $$$ without accepting the downside of lost buck
And this in part comes from the fact that we don’t know the price we’re paying when we invest. We look at its physical price tag but fail to see the invisible one. The hidden price we’ve gotta pay for investing is. Volatility. That comes from uncertainty. (fear) If you’re comfortable with all that, then – and only then will you truly be able to reap the rewards of investing.
Investing requires you to hold on for dear life. Even when you’re hands are getting all sweaty and you can barely hold on. Investing requires strength. Emotional and mental resilience. To be able to stay the course, month after month after month, no matter what’s going on around you is one of the simplest yet hardest things to do.
Volatility makes us wanna ditch our holdings. Selling on the way down and buying on the way up. It makes us question absolutely everything. In 2022, markets went down ~20%. I say markets because bonds lost just as much as equities! It was a nasty year. Most investors’ portfolios were down 40%. My portfolio wasn’t far off at one point but it’s thankfully recovered quite a bit. It’s one thing telling yourself you can handle the stock market’s volatility but it’s quite another to live through 2020 or 2022 and come out the other side! Still holding your stocks!
But volatility is the price we must pay to get those long-term returns I bet we’re all after. If there was zero risk (zero volatility) I promise you there’d be little to no reward. Everyone would be in that trade that the gains would be competed away till you’re left with nada. Volatility is investing hidden’s price tag.
The best thing to do to overcome the volatility (more like the paralysis that comes with it!) is to drip feed money into the market. Day by day watering that pot of money that will one day finance your future dreams. Water it consistently and you don’t need to worry about the weather conditions.
Come rain or shine, your pot will get its water. That’s all it needs. Oh, and time (its oxygen). Compounding = Time + Money. That’s literally it. Sounds too simple though. Its simplicity fools people. It’s way so many were so bedazzled by Bernie Madoff’s (ponzi scheme) because he sounded cool and complex. Full of jargon and whatnot. Read about that here!
You will be rewarded for your patience
If you can handle that, you can handle anything. And Mr Market will reward you with returns. Just don’t quit too early. You don’t wanna interrupt the process.
When stock markets zig and zag, it comes from uncertainty. No one knows what the future holds. There’s no such thing as a free meal (except for diversification!). If you want something, you’ve gotta work for it.
And returns do not go up in a straight line. Unless of course you’re Madoff’s fund in which case, RUN! They zig and zag all over the place. Shaking impatient and weak investors at every next hurdle. Hold on and you’ll be rewarded.
And trust me, you’re gonna wanna work for this one!
Just don’t think you’ll get something for nothing or that something will cost you more than you had bargained for.
Disclaimer: This blog is not investment or financial advice. It is my opinion only. This blog is not a personal recommendation to buy/sell any security, or to adopt any such investment strategy. Always do your own research before you commit to any investment