Most people forget that an essential ingredient to achieving financial success is to be patient. Unfortunately, we live in a “I want it now” world where the now matters more than anything else. There are times when speed matters the most. In the realm of personal finance, patience matters the most.
These days, we can get everything we want at the touch of a button. You want to date? You don’t need to approach someone. Just swipe and boom, you’ve indicated your interest. You want to shop? Click a few buttons and someone will deliver it to your doorstep. Why be patient when you can have it now?
Convenience has taken over our lives where if we don’t see results today, we question ourselves. That’s not how personal finance works. Of course, you could hit the next GameStop stock and become a millionaire in a month. There is that possibility.
However, what matters is what happens to these people after they’ve hit the lottery of their life. Most of the people who’ve gotten rich from GameStop has a need to feel the rush of investing. From the minority who’ve made immense wealth from it, most will end up putting up more risky bets.
Then from there, some will lose everything and some will gain even more. It’ll continue to filter out until there’s a true number of people who actually end up keeping that money that fell in their laps.
The true number of people who keep their wealth will be less than the high number of people you saw make it today. Even though it is completely possible for you to hit the jackpot by taking risky bets, a better way is to be wealthy for sure. No coin flip bets but a slow and steady building of wealth.
Be Patient, Rome Wasn’t Built in a Day
The problem with taking the riskiest bets is that most people do not stop after hitting the jackpot. If you had actually won once and stopped for the rest of your life, then great. More power to you. However, if you continue and keep taking risky bets and somehow end up losing all of your gains, you’re in trouble.
You don’t end up losing just your gains, you end up losing time. Additionally, you lose potential gains had you just stayed the course in the first place. You lose three things. Money, time, and opportunity cost. That’s very expensive.
Meanwhile if you ignored the noise and kept up with your strategy of saving and investing, you would be in good shape. Warren Buffett acquired 90%+ of his wealth after he turned 60. Isn’t that shocking?
Most people quit too early and don’t want to be patient. They don’t see results after a month or two and think they are doing something wrong. Once they start to think they are doing something wrong, they quit. Why? The effort they had already put in was hard for them to begin with.
They can’t imagine putting in even more effort. For them, it’s too difficult.
Chances are, they were probably doing just fine. All they needed to do was be patient. There’s a reason why buy and hold was recommended 25 years ago, why it’s recommended today, and it will be recommended in the future. It works and few other strategies beat it over the long term.
We as humans love to see interesting things. Unfortunately, personal finance is not interesting at all and is like watching paint dry.
Signs You are Doing Just Fine
One of the biggest signs that you are doing just fine is if you SMASH that share button for the Google algorithm named BERT 😊 . BERT believes in patience just like the next fellow and he appreciates it when the share button is smashed. For all your friends to see and gain value out of articles!
So please, if you could tap that share button for friends to enjoy reaching financial freedom, that would be appreciated.
On a serious note, the signs are apparent that you are doing great and all you need to do is to be patient. You can’t miss these signs. I highlighted how frustrating it was to save 50%+ of my income before by employing a minimalist lifestyle.
I can’t imagine what I would have done had I quit and missed out on all of the sweet returns experienced over the last 4 years. Only to see the bloggers holding onto their gains and leaving me behind in the dust. The only way you lose is if you actually end up giving up. Always stay in the game.
I still kept on going and I scrimped and saved every dime that I could. I do not care about status or pride, what I care about is wealth. Patience is a virtue and I thank my lucky stars that I practiced it. This year was the year when I officially thanked my past self for employing those choices.
There’s countless articles where they say “your future self will thank you for it”. I had never actually thanked myself from ages 20 – 25 until this year. It’s a good feeling when someone FINALLY notices my efforts even if that someone is myself. I kid, I kid.
1) You are Saving and Investing 20%+ Of Your Income
On average, all you really need to save is about $5,000 – $5,500 a year at a 7% return rate. By the end of year 40, you’ll have about a million dollars. If you are saving more than that, then you are on the road to riches. There’s no need for stress or for thinking “what more can I do”?
All you have to do is keep on doing what you’re doing. Automate your investments so you think about them even less. Personally, I invest 20% of my gross income that goes straight from my paycheck to the S&P 500. I don’t even think or need to do anything with it. It automatically goes to buy those shares.
I know that it’s going to work out in the end and by year 40, I will come out ahead. Therefore, I continue to be patient. It’s a long-term play and I rarely give it an ounce of thought after every bi-weekly period. You are doing a good job, you just need to stop thinking about it.
Instead, focus on other aspects of your life that you want to work on. If you save 20% of you income and invest it, personal finance is pretty much taken care of. You are free to do other things!
2) You are Making Progress
It may not be quick progress but it’s still progress and all you need to do is be patient. If your net worth is higher at the end of the month than at the start, then you are doing just fine. Some months, it may actually be lower. Therefore, you can stretch the evaluation period out.
Maybe you look over quarter over quarter growth. Or maybe you look over year over year growth. If the number is positive growth, then you are doing just fine. If you continue to have positive growth over those periods, then one day you will really start to feel the impact.
There are ways to make progress faster. However, you always have to weigh the benefits of getting there faster versus the potential cost of losing faster. Cutting corners doesn’t work so you will have to find a way to increase speed without taking on additional risk.
You could eat fast food every single day to save money on food costs. However, you could have a heart attack faster than if you continued to eat balanced meals. Weigh the benefits of faster growth versus the cost of higher risk.
3) You Have Options
If you wake up and feel that you have no choice but to continue working for your company, then that’s not a good spot. However, if you wake up and feel that if you quit, you have enough money to float you through the river, you are doing just fine.
This doesn’t just apply to jobs and employment, as well. It applies to food, spending choices, romantic partner, and more. Rarely is a choice “either A or B” but there’s most of the time a choice C. Create your way out of a box.
The magic of patience and delayed gratification is under-appreciated in the “give it to me now” society. People overvalue convenience too much and undervalue patience too much. The key is to be in the middle and actually be patient.
The fact that you have options demonstrates that you are doing something right. All you have to do is be patient.
Be Patient or Be Burned
The ones who try to grow quickly are the ones who expose themselves to shrink quickly. GameStop declined from almost $500 a share to $63 as of 2/5/2021. That’s an 88% decline in a week. Sure, there are people who’ve made wealth beyond their wildest dreams in a week.
Those people who’ve held on to the stock have lost wealth beyond their wildest dreams in a week as well. You can limit the volatility to be more contained between +/- 0 to 40% with the average volatility between 0 – 10%. There’s no need to put yourself up to a volatility of -88% – +1000%.
The emotional toll that it will take on you on top of everything you have going on in your life is indescribable. Those people who’ve made 400% on GameStop and bought at $100 lost all their gains and then some. That’s a wild swing. All they will be thinking is about the 400% gains they lost. There’s a chance they will chase the losses and end up losing even more.
Unless you are very good at managing emotions (99% of humans aren’t), you will dig a bigger hole for yourself. The key is to be patient and look for the long haul. Remember that Amazon founder, Jeff Bezos, always stressed for a long term outlook. Not the short term of when he was losing money.
Even when Amazon was nearing bankruptcy, he encouraged investors to look at the long term outlook.
I don’t know how he saw the vision for Amazon to become the behemoth it is today. If he thought it was an important outlook, it’s probably not a bad idea to look at the long term outlook as well.
Be Patient and Things Will Work Out
Have you ever felt that your life was over and that there wasn’t anything you could do about it? I’ve freaked out about my life more times than I wish to admit. In late 2018, equity prices were diving off a cliff. I panicked and felt scared to go into the office because of the emotional toll of seeing my investments decline.
However, one thing I didn’t do is sell my stocks. I just kept automating my contributions and let it ride to success. I am so thankful I did not panic sell. Actually, the only reason I didn’t sell is because I actually don’t know how to sell my stocks in my 401k accounts.
The process is more complicated than I thought. It doesn’t get sold on the time that I send in the order, it gets sold at the end of the day. On top of which, I don’t know when my contributions actually executes the buy order. Sometimes, my contributions showed up a full 3 business days after I received my paycheck.
As a result of the confusion, it really discouraged me to learn how to actually buy and sell stocks through the platform. Therefore, I just kept it in there because it was easier for me to do. Thank goodness for laziness and patience, it worked out in the end!
Even though I lost the $100,000 status for about two months of late 2018, I regained it after another two months. This goes to show that the right choice is to be patient. Time will take care of the rest and make you a wealthy and happy person.
