How Patience is making me money at 31
These 3 quotes are my takeaways from the last 3 decades:
The audacity to quote myself right? Thought I'd slip that last one in there. Yes - very whimsical, but it’s the truth for me. Let me explain how I see patience, and how it is actively making me money at 31 years old (and how it will make you money too).
The world is saying that millennials want everything now but are not willing to put in the time and the work. They say that we want to be Founders, CEOs, achieve meteoric rises in our careers, yet none of us want to put in the 30+ years to get there.
Take it from me, putting in time is worth it.
Patience = Delayed Gratification
I learned patience at a young age. At 6 years old I got a birthday gift from my grandmother, a $20 bill handed directly to my parents. I didn’t need cash at the time, I mean, I was just excited to eat birthday cake.
My parents sat me down and explained that the money was for a gift and that we could either go together that afternoon to pick out a new toy from the mall (yeah Transformers! I grew up in the 90’s) or we could wait until the weekend to pick out 2 toys from the Salvation Army downtown. I obviously picked the two toy option because toys were life when I was six.
And so it went for every birthday over the next few years, I was always asked the same question, given the same options and I always made the same choice, it was a really sweet deal in my book.
What I didn’t realize was that my parents were taking the $20 and depositing the majority of it into a bank account they set up for me, and the 2 toys I always got were actually used toys from the Salvation Army toy bin, where the proceeds went to help people in need. To six year old me I was getting brand new toys (brand-new-to-me), and most importantly I was getting two! What was there NOT to be happy about?
I was really being taught delayed gratification and patience - which are the fundamental keys to investing.
If I would be willing to wait a few days I would receive more value than if I claimed it immediately.
Delayed Gratification = More Money
It’s the fundamental building block of investing and it all boils down to one thing - patience. If I want to win in the long game, I need to be patient and play the long game. Cashing in right now will get me instant results but they will only be short term results (small and short lived).
Fortunately I learned this at a young age, way before I understood the power of investing. When I work with millennials getting into investing, I find that if you can accept this truth then you should also know that every dollar you save today has the potential to grow multiple times its value before you hit retirement age.
Money does grow, sometimes very quickly (just not on trees), you only need to know where and how it works. To see how this works check out this post on compound interest.
How patience is making me money at 31
This is where patience comes in.
Buying assets not liabilities and letting their value grow is making me money in addition to my 9-5 job. On top of assets growing in value (capital gain), they also pay dividends (free money as a reward for investing). Because I'm a disciplined investor I reinvest those dividends to buy more assets (assets produce money which go towards buying more assets, which produce more money etc...). Fellow investors take a different path and use those dividends to offset their cost of living and transition to financial independence early on. Both are great options.
I’ll be honest - I will 100% spend all of my money. I’ll be spending it on big amazing things, but I will let it grow tremendously first.
e.g. I could buy a used car today or invest that money and wait to buy a super car later in life.
The longer I let it grow, the bigger it’ll be and the more of it there will be to eventually spend - again how you spend your money is up to you, I plan to spend it on stuff according to my priorities.
Family, friends and helping others. Of course I'll spend it on myself as well, but that’s not a high priority.
How fast does money Grow?
Slowly at first, which can be discouraging, but don't be. It will gain speed and soon be unstoppable.
Depending on how you invest your money, it can double every 7-10 years. This is math and it is based on the Rule of 72 (Read more on the Rule of 72 here).
My recommended strategy:
(And the default way I live my life)
Invest the money first, cruise along for a few years knowing you will be financially free, and when that nest egg starts to grow uncontrollably, spend and enjoy for the rest of my life. You can then live on your own terms, make financially free decisions etc...
Don’t buy dumb stuff at 26 that you won’t remember later in life.
Those shoes you avoid buying today could equate to a vacation later on.
Instead of leasing a car at 28, you could buy your dream car 10 years later.
Instead of over extending yourself on a mortgage in your 20's and 30's, you could retire early, take luxury vacations every year and provide well for your family.
What do I invest in? Check this post where I outline the blueprint of what I’m doing.
I mostly buy Index ETFs according to the Canadian Couch Potato approach.
TL:DR One of the most important lessons I’ve ever learned is that an investor needs patience to operate effectively. Delayed gratification is a real thing, and it will set you free.
If you found this post interesting - send it to someone who needs it! Their bank account will thank you for it later.