“Waiting helps you as an investor and a lot of people just can’t stand to wait. If you didn’t get the deferred-gratification gene, you’ve got to work very hard to overcome that.”-Charlie Munger
If you, like me, are enthralled by the wonders of science, then you too must believe that our Universe is guided by a set of immutable rules. These principles apply equally to the grand celestial bodies like planets and solar systems and to the minuscule particles like protons, defying any preconceived notions of size or scale.
Quantum mechanics, a branch of science dedicated to the study of the extremely small, endeavors to unravel the behavior of these tiniest particles. Unlike the laws that govern the movements of larger objects, as first proposed by Isaac Newton, quantum mechanics operates on an entirely different set of principles. These particles exhibit behaviors that defy our everyday understanding, such as the ability to exist in multiple states at once (superposition) and to instantaneously influence one another regardless of the distance separating them (entanglement).
The remarkable aspect of these rules is that they apply universally, leaving no corner of the Universe untouched. From the grand cosmic dance of planets and stars to the intricate interactions of subatomic particles, everything is subject to these fundamental principles. The ability of scientists to calculate with absolute accuracy the movements of both celestial bodies and microscopic particles is a testament to the precision and elegance of these laws.
The Principle of Getting Wealthy
Indeed, accumulating substantial wealth often involves adhering to a specific set of principles and strategies. By closely observing individuals who have amassed wealth, both in my immediate surroundings and on a global scale, I have come to believe that there is a distinct set of rules that contribute to their financial success.
If you have been to New Hampshire, USA, you may have heard of this Connecticut River town called Hinsdale sandwiched between Vermont and Massachusetts. Nothing is fascinating about this town and most probably as a tourist, you have no compelling reason to visit it, moreover, it has only 4200 residents.
But this small town made headlines in November 2023 because of this man, Geoffrey Holt, because he donated USD3.8 million to the town after his death to benefit the community in the areas of education, health, recreation and culture.
For those who knew Geoffrey Holt, there wasn’t anything worth mentioning about him. He was unassuming as the caretaker of a mobile home park in Hinsdale and he did odd jobs for others after retiring as a production manager at a grain mill.
He lived a simple and frugal life but he invested his money consistently in mutual funds. He just waited for the money to grow and he died at the age of 82, he amassed a wealth of USD 3.8 million.
That’s it and it is so simple to be wealthy.
Patience is the Key
A study from Fidelity, a leading financial service company, analysed the performance of accounts to determine which type of investors received the best returns. Over a ten-year period, the clients that did the best were the ones who were dead and the second-best group were clients who had forgotten they had investments.
Over the past three decades, the S&P 500, a stock market index that tracks the performance of 500 of the largest publicly traded companies in the United States, has delivered an impressive annual total return of 10.48 percent. This remarkable growth has established the S&P 500 as one of the most effective vehicles for wealth creation, offering investors the potential to accumulate substantial wealth over the long term. However, as with any investment, patience is paramount.
The story of Geoffrey Holt, who became a millionaire through diligent saving and investing, serves as a prime example of the transformative power of patience. Holt, through his dedication and persistence, was able to accumulate a portfolio worth over USD 3 million, demonstrating the profound impact of time and compound interest.
Furthermore, the findings of Fidelity, underscore the significance of patience in wealth building. Fidelity’s research indicates that investors who maintain their investments in the stock market for at least 10 years have a much higher probability of achieving positive returns compared to those who frequently buy and sell their investments. This underscores the importance of adopting a long-term investment horizon and resisting the temptation to make rash decisions based on short-term market fluctuations.
Patience is a cornerstone of successful investing. It enables investors to ride out market volatility and capture the potential gains that arise over extended periods. While it may be tempting to chase quick profits, history has shown that patience, combined with a well-diversified portfolio and a disciplined investment approach, is the key to building lasting wealth.
Conclusion
Patience helps investors weather market volatility. Stock markets experience ups and downs, but over the long term, they tend to trend upward. By staying invested during periods of volatility, investors can avoid selling at a loss and capture potential gains when the market eventually recovers. Remember, the first principle of getting wealthy is patience!
