No matter the age of your children, whether they are toddlers or even adults themselves, being a parent is not easy. Neither is being an investor. Ironically, the rules for succeeding at both – parenting and investing – are quite similar.
Patience is Critical and Eventually, It Pays Off
First off, you don’t need me to tell you that children are oftentimes not rationale, they can be stubborn and extremely unpredictable. In order to maintain your sanity as a parent, patience is critical.
The same is true when it comes to investing. As an investor, you probably have had plenty of “those days” when you wonder whether your money is ever going to grow up. It doesn’t do as you hoped for. It misbehaves. It runs with the wrong crowd. It ignores your best efforts to protect it from harm.
But then there are those other days. Suddenly, your money hits a growth spurt, exceeding all expectations! It’s then that you realize that many of the greatest challenges you and your investments faced along the way are the same ones that are contributing to their strength and shaping their character over time.
There is no Normal – “Unusual” Is Business as Usual
As much as we would prefer our wealth (and our children) to grow in a calm, orderly, predictable way, there is solid evidence to demonstrate that growth is far more likely to occur in anxiety-generating fits and starts.
You may recall that January 2016 was an unsettling time in the market. At the time, many blamed China and oil prices as the culprits, but in retrospect, there was no incredibly obvious reason; it was just in one of those moods. On the flip side, in the wake of the June 23 Brexit referendum, when we might have expected the market to remain in a funk for a while, it took a dive but then mostly continued upward, especially in the U.S., where stock market indexes experienced a number of record highs in July.
No Favorite Child
Spreading your risks among multiple kinds of holdings around the world can be compared to raising several children, without choosing a favorite. Each is expected to contribute in its own special way. The same can be said about the holdings in your investment portfolio – each is there for a reason with a vital role to play in your overall strategy.
The Importance of Being There
What parents don’t have days when they wish they could bypass some of the drama and skip straight to the good stuff? And yet we know that child-rearing requires us to be there for our kids 24×7, through thick and thin, on good days and bad.
We also know that, even though we give it our all, there are no guarantees. If patience is our greatest virtue, consistence and persistence are the power tools to maximize it.
So it should be with investing. Markets aren’t always going to do what we want them to, especially in the short-term, and we know that they may never even deliver as hoped for. But all you can do is position your portfolio for the outcome you have in mind by stacking the probability of success in your favor…and then you must be patient.
The Power of Patience
By thinking of your wealth from this perspective, it might help you take a deep breath and carry on whenever you face difficult decisions on how to best care for your precious holdings. By sticking with a disciplined plan, day in and day out, you stand the best odds for raising wealth that you’ll be proud to call your own in the end.
Core Wealth Management is a fee-only wealth management firm located in Jupiter, FL. Our CFP® professionals provide investment management, financial planning and advisory services, while always strictly abiding by the highest fiduciary standards. For more information, contact us today at 561-491-0231.
Jackie Goldstick, CFP® is the Director of Financial Planning at Core Wealth Management. She is a member of the National Association of Personal Financial Advisors (NAPFA) as well as the Financial Planning Association (FPA).