Time and Patience is key to Successful Investing
There’s no doubt that time seems to be a commodity that we all think is in short supply. This almost seems absurd when you consider how we’ve progressed as a society that enjoys virtually limitless access to so many time-saving services and products. Unfortunately, the disadvantage of all this is that we’ve perhaps become less patient, demand more and have high expectations in all matter of things. The same behaviours occur with investors.
I find it interesting when we come across people who have held shares for decades – usually well before the advent of online services – that they’ve not been enticed to buy and sell but have sat on their holdings. I can’t think of any of these people who’ve spoken about bad decisions or regrets with their investments. I’m sure that if we researched their investment portfolios that we’d find that some of the investments may have not performed well or even lost value over the short to medium term yet, years later, this is forgotten and they reap the rewards of long-term capital growth and regular income. They’ve used time as their ally. This success factor isn’t limited to shares and it’s easy to find evidence in other investment categories such as property or operating a business.
From our experience, one of the most important roles a financial adviser provides is to demonstrate the benefit of time and patience on an investment portfolio and how this relates to client’s objective. A vital part of this advice process is to investigate a client’s objectives and how these relate to the time frame of matching capital and income requirements. This allows the adviser to construct a purpose-built investment portfolio tailored to what clients want to achieve. This approach takes the pressure off a client’s expectation of short-term market performance and provides an appreciation that the investment strategy has a specific purpose. It is a marathon, not a sprint.