We like to have things right here right now. In the good ol’ days we’d have to schlep to an actual store to pick up our stuff. We couldn’t be lazy bums staying home all-day clicking a bunch of buttons and watching the magic happen when you hear that doorbell of yours.
The dizzying rise of the Amazon’s of the world lit the fire of our impatience. Then came social media making us into snapping, ticking, tweeting things! We get likes and messages within the split of a second. We could order a (virtual) home while slouching in our actual one; meet our friends and even workout. All without going anywhere. Everything is now at our fingertips. What could be better?!
But this (seemingly innocent) immediacy will come back to haunt us. It’ll stunt our growth and make reaching our full potential that much harder. See, all this now stuff trains our mind into wanting results. ASAP. Just like we don’t fancy waiting more than 10mins for our takeouts (my mouth starts to salivate as soon as I click ‘order’) we don’t like waiting for progress. It’s no wonder we quit stuff after a few straight days.
Our inability to simply wait for change to happen means we interrupt the cycle. Yet again. Yanking whatever kind of roots were trying to grow there. All to start over. And over. And over.
You might not see it (yet) but that doesn’t mean it’s not happening
Compounding (aka the real magic) happens way beneath the surface. For a while you won’t be able to see, well, anything. But one day something somewhere will have changed. And you’ll see that after all your blood, sweat and tears, it worked. It actually worked! But most people turn their backs, giving up on themselves, and their futures, way too soon. But nothing worthwhile ever comes easily. (Read here why Boring and Slow is the winning investment formula!)
The best things in life are the product of effort, patience and consistency. That relationship you’re in? It didn’t happen on its own. It happened because you both put in the effort to make it work. Life isn’t a fairy tale. You have to work at it. But that’s what makes it last. That’s what makes it real.
Being patient and seeing things through is one of the best things you can do for your future and for your finances. Patience is like a muscle. Work at it and it’ll work for you. And what better place do it than in the land of investing. A land where most inhabitants are pretty impatient! The time we hold onto our stocks for has been falling. And falling. We’re getting more impatient by the minute. Now, the average holding period is just 5 days!! Talk about being a long-term investor.
So you being just that tad bit more patient (though anything less than 5 years is short-term in my opinion) you’ll already have a nice advantage over the rest.
Hold on, it’ll be great…in the end!
In this past decade alone, there have been some incredible investments. First up: bitcion. What’s funny and interesting about bitcoin is that in the short-term it’s ridiculously volatile. One day you’re up 10%, the next your down 20%. Up down, up down. But in the long-term, that volatility seriously works in your favour.
Since its inception, it’s gone up more than 7,476%! Over the past 5 years, it’s up ~116%. Yet in the past year it’s down 33.8%. So holding onto it for a year ain’t gonna cut it. Those who managed to hold on, to stay patient and ride the (many, many) waves, will be looking at some stunning gains.
Microsoft is another example of how being patient seriously works in your favour. Its share price practically went sideways for the best part of 15 years after the dotcom bust. But boy had you held on! Returns really don’t happen overnight.
I know with all this meme stock and coin drama during the craze of 2021 made it seem like everyone was making it big. Overnight. Not to mention the hype around some NFTs (pixelated images anyone?).
But this is only a teeny tiny proportion of people. Most people actually lost money on this stuff. Since we don’t really read about it, we think the other side just doesn’t exist. Nothing worthwhile comes easily. You’ve gotta keep pushing and forget about what everyone is (or isn’t) up to.
When investing in the stock market, returns don’t happen overnight (yeah, unless it’s a meme stock of course) and compounding is literally like watching the grass grow. It’s that slow.
When I started investing last year, I would check on all my holdings. Every day. And when I lost money, I started getting itchy. But I soon saw that as part of the game, and I learnt to appreciate the lows as well as the highs. The lows give you a chance to buy things quality stuff on the cheap and they make you appreciate all those highs. Read here the huge mistake I made when I started investing but do I regret it?
When it comes to investing, the joy of making money has gotta be greater than the fear of losing it. Otherwise, you’ll forever live in fear. And fear ain’t no wealth builder. Psst: read here how if you wanna make money you’ve gotta be prepared to give it up first.
More risk = More reward
Growing up, I had a very interesting neighbour. He was a FTSE100 CEO and a serial venture capitalist. Oh, and in case you were wondering – no, I did not live in a fancy neighbourhood! Not even close. He honestly could’ve chosen to live at 1 Hyde Park yet he chose to live on an unassuming, run-of-the-mill street.
He didn’t feel compelled to buy a multi-million-pound house just to show his worth. He impressed himself, not others. While he does have a chauffeur and dines at the Ritz on a weekly basis, he still does his own grocery shopping (he tells me that what keeps him young) and picks up his laundry from the laundrette up the road!
When I got older and started investing, I would ask him about his money moves. After all, what better way to learn about wealth building than from someone who’s actually done it! Turns out that he had invested quite a bit of money in a bunch of private companies (via crowdfunding rounds) when he was in his 40s.
Alternative assets can give alternative rewards!
When he told me how long he had to wait for his money I couldn’t believe it. 17 and 25 years respectively! He literally had to wait a quarter of a century to get his money back (plus his juicy returns).
Locking up your money in such areas is illiquid. You literally cannot take your money out until the business is either bought out by another one or goes public via an IPO. Yet he took the risk and was rewarded. Big time.
With risk comes reward. Except most of us probably wouldn’t be able to stick around that long, nor would want to!
These sorts of investments also happen to be very tax advantageous (you don’t pay capital gains on SEIS/EIS investments, and you can claim 30% income tax relief) so you get to keep your fruit. The whole bang lot.
And if it all goes belly-up, you get 65% back. If our government hadn’t introduced these tax schemes, I guarantee you that too few people would take the plunge to invest in such risky ventures.
After all, 90% of start-ups fail. But that’s where the reward lies.
A couple years back, Revolut (a British unicorn!) listed on crowdcube trying to raise money from investors. Anyone brave enough to invest just £1,000 back in 2016 will be looking at a £600,000 pay-out.
So, dear reader, dare to play the long game.
Patience will reward you, in the end.
Only if you’re there, that is!
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.