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Where's Your Patience?

Posted by Naomi Rosenthal on Friday, January 27, 2012 Under: Investments

Bill Gates once said, “Most people overestimate what they can do in one year and underestimate what they can do in ten years.”

10 years can disappear in a blink of an eye. I was chatting with friends over dinner last week discussing the real estate opportunities we had missed in the early 2000s, all for a variety of reasons and all of those reasons being other than financial.

It is easy to lament the things we didn’t do if we look back on the past with some regret. This point of view comes because we are at today, looking back. We know where we’ve been, we know the history. It is easy to be intelligent, with hindsight.

And it is just as easy to start today. Take up the exercise, learn a new skill, change jobs, obtain sensible investment advice from a qualified financial planner. What’s hard is that there is no crystal ball and you’ve no idea how it will turn out in the future.

What’s hard is taking that very first step and then little steps after that. Successful investing relies on three things:

Patience.

One of my favourite Warren Buffett quotes (which you’ll find on our Facebook Welcome Page) is - “someone's sitting in the shade today because someone planted a tree a long time ago”. If you don’t have the patience to ride the waves of market cycles and stay focused on your long term goals, it is unlikely that you’ll get to where you want to go. Your investment strategy and asset allocation needs to match both your tolerance to risk and your time frame.

Discipline.

Sure, you can invest a lump sum, reinvest the income and wait 30 years. But to get to where you need to go sooner takes a disciplined investment and savings approach. It is the regular contributions to your investments that will make the biggest difference in the long run.

Strength.

Every day I read the financial markets news. Every day the markets are turning bullish (going up) or bearish (going down). Do you have the strength to cut through the noise of the mass media and the short term fluctuations to stay true to your plans?

One minute there’s panic, then next euphoria. Russell Investments has compared the market of cycle emotions to the All Ordinaries Index revealing that at the point of maximum financial risk, that is, when you buy stocks at their most expensive, investors are in a state of euphoria. Yet, at the point of maximum financial opportunity, that is, when you buy stocks at their cheapest, investors struggle with despondency. It is from these emotional states that many people make financial decisions, and they usually turn out poorly!

For your investments to generate returns that’d make you think you’d won the lottery, you need patience, discipline and strength. Before you know it, ten years has flown by. Building a good financial plan and staying focused and disciplined on your goals, will create the wealth you desire.

For investment advice that makes sense, start today with a phone call – 02 9417 6011.



Source: www.russell.com/au

In : Investments 


Tags: patience discipline strength 

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