They say that good things come to those who wait. That success doesn’t happen overnight, and that real progress is years in the making. If we know all this to be one hundred per cent true, why then do we think that investing is gonna be any different?
I bet we all have expectations of what investing will actually look like. We tend to underestimate how long it actually takes for our money to compound and overestimate how good we are at it.
But good investing is buying great companies and holding onto them. For a real long time. It’s a game of patience. That’s literally all it is.
But we like to fool ourselves into thinking (more like wishing) that we can make it happen. And make it happen fast. But that’s just not the case!
Unless you were lucky enough to have bought into certain cryptos (ahem, Shiba Inu) or NFTs right before they blew up (and then blew down) then I’m afraid you’re gonna have to wait quite a bit till you hit those returns. But that’s fine by me. Easy come, easy go, right?
#1 You have to take the good with the bad
Picture this. You’re on a plane, let’s say to Hawaii, because all I’m thinking about is taking a vacay to someplace hot. Your journey is rough at parts. What do you do? Do you get up and leave? Okay, yeah, getting out of a plane is no walk in the park but would you be at all tempted to leave? Probably not.
Whether you’re a frequent flyer or not, you know that storms can happen at anytime and you realise that hey, most turbulence is in fact totally normal. And not at all life-threatening!
So why don’t people treat investing like that? Investing is a journey. Just like your Hawaiian trip. And, just like those plane rides, investing won’t always be a smooth ride. This is your one-way ticket to financial freedom & 5 steps on how to get there!
There’ll be times of turbulence (ahem, now!) followed by really calm patches and them bam. Out of nowhere, you find yourself at the edge of your seat reaching for your oxygen mask! But just like that sunny spot, you too, want to get to your investment destination. Trust me, you really want to.
#2 Plan for the worst; hope for the best
Your investment destination is what will allow you to make it through retirement to live a really comfortable life. Because a lot more people than you think actually run out of money. (Here’s why you must think about retirement now not in 20yrs.)
And it’s a scary thought so you gotta plan well. By not only investing earlier but by sticking around. Till the end. No matter what.
See, when March 2020 came around (aka the mother-of-all-crashes) a whole load of folk were gearing toward retirement. Sure, when you’re nearing retirement you’re not going to have many stocks sitting in your portfolio since they’re riskier but perhaps 10 or 20 years before that you’d have had a fair amount.
And what do you when a crash like that happens? Do you pack up and run away? Never to set foot in the investment realm ever again? Or, do you fasten your seatbelts and stay?
Those who stuck around following the March 2020 bombshell and didn’t sell (when markets had already tumbled btw) were rewarded. Big time. Because guess what? Markets recovered.
And this time (unlike post-’08), the recovery was swift. Within a year, markets had not only recovered but were hitting new highs. If there’s one thing all of this has shown me it’s that we really don’t know what markets are going to do.
This makes markets practically impossible to time. So, if you can’t predict nor time them, why not simply stay with them? Use the time you have to ride out the bad times. Hopefully leading you to better times ahead.
You gotta be in it to win it. No one ever won sitting on the sidelines.
#3 For the best results: practice patience
See, all investing is is time + money. Yes, the money bit is important, duh. Because you can have all the time in the world but if you ain’t got a dime, well, investing is gonna be a little tricky!
But time is your best friend. It’s your very greatest asset. And, if used well, it can literally multiply your returns.
Compounding is one of those things that exists yet not many stop to think about its magic.
Compounding is everywhere. And everything compounds. From your healthy eating habits to your money moves. If you leave your money in assets or a very very long time and resist the temptation to fiddle with it, your money will be able to seriously compound.
But if you disrupt the motion. Mid-way. You’ll have lost out on all that compounding power.
Investing is really a game of patience! But it almost sounds too simple that causes many to simply dismiss it. Not really understanding how magical it can be.
If you had forgotten about all the stocks you own and only found them decades later I guarantee you’d be sitting on a fat pile of returns. Now doesn’t that tell you something?
And it’s precisely that which makes owning real estate (and other physical assets) so great. Since they’re so slow to buy and sell (you can’t just click a button on your app), this means you don’t panic-sell when markets take a tumble. Like March 2020.
Or shall I say you don’t have the option of panic-selling even if you wanted to! This means that all those who own real estate won’t be in the habit of buying/selling based on short-term market moves.
They’ll hold onto it. For a lot longer than people hold onto their stocks. If you’re interested – here’s a blog I wrote on rental properties & where the ROI actually come from!
Of course, there’s a price to pay for holding illiquid assets (you can’t sell them in a flash and have access to all that cash) but I see a real gain in that. Because there sure is a price to liquid stocks. They’re just too easy to buy/sell.
Back in the day, when my older relatives wanted to purchase a stock (no naming and shaming here!) they had to actually ring up their broker to make the trade on their behalf.
Now trust me, you aren’t gonna be constantly buying/selling if you had to actually put in some effort to do so. A part of me wishes this was still the case! But as my mum would say me ‘be careful what you wish for!’
So I guess what I should be wishing for instead is to be more patient with my investments and not to trade on emotion. Or fear. Or media noise. Because most of it is simply to fill pages and to scare you a little.
News wouldn’t sell if it weren’t interesting and rattling a few feathers. Think about how often you read positive news and compare that with the negative. That’ll show you just how much fear is sloshing about.
But remember, before you invest, set out your rules. If you are investing for the long-term (10+ years), you don’t need to worry about any of this short-term stuff.
All this overbearing, noisy noise. It’ll just confuse you and fill your head with confusion, worry and anxiety.
Be patient, block out the noise and let compounding take care of the rest.
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.