Slow and Steady Wins the Race: How Patience Pays the Highest Dividends
With Mark Zukerberg’s recent pledge to donate 99% of his wealth to different causes, many onlookers have and will continue to ride the coattails of the YouTube dream, and contemplate the wondrous pleasure derived from a speedy, multi-billion dollar acquisition that would provide that coveted golden grail known as complete financial freedom.
Minus all of the hard work, of course!
But oh, how sweet it would be to have all that money, be able to donate almost all of it, and still remain in the very highest social echelon on a global economic scale.
But wealth very rarely grows overnight, and almost never without hard work and discipline.
Speaking of software companies, start-ups, and growth in value, the Waterloo, Ontario-based chat app, Kik, was valued at $1 Billion this year. But that’s after 6 years of hard work, and the company’s founder, Ted Livingston, only decided to drop out of school and dedicate himself full-time to the venture once he had an investor committed to provide the first $1 Million.
Patience. Strategy. Mitigated risk.
And so it is with our personal wealth. Almost every single wealthy person that you see, meet, or hear of, is wealthy as the result of patience and hard work. In fact, most people who go from poverty to riches by winning the lottery end up poor quite soon thereafter, precisely because they never learned how to manage their money.
And so we come to Dr. Crosby’s third rule that governs all investor behaviour: “Start now. Start again tomorrow.”
He writes: “Compound interest is the secret to getting rich slowly. The way to maximize the power of compounding is to start today and stay consistent. If you hope to reach $2 million in retirement savings and start investing at age 22, you can hit your target by saving less than $6,000 a year. Wait until you turn 40 and things have gotten much tougher, requiring roughly $26,500 in savings per year. (Assumes an investment return of 8% and retirement at age 65)”
These numbers can be daunting for some, as it has become quite difficult for 22 year-olds to save $6,000 every year, but as I’ve mentioned time and time again: the amount saved is secondary. That disciplined habit of saving is always primal.
For personal financial projections to determine how much you should be saving by now in order to reach your goals, I recommend you take a glimpse at Snap Projections.