I think about investing as much as I breathe or eat. I think many of my colleagues at The Motley Fool do too. It?s thus not uncommon for us to find investing lessons from all areas of life since we?re so tuned to the idea of investing.
One of the most impactful books I?ve ever read is the autobiography of the late Nelson Mandela. His struggles and the huge sacrifices he had to make, which were documented in the book, were truly inspiring.
The book also spoke volumes about his character given how he had no hint of resentment for the…
I think about investing as much as I breathe or eat. I think many of my colleagues at The Motley Fool do too. It’s thus not uncommon for us to find investing lessons from all areas of life since we’re so tuned to the idea of investing.
One of the most impactful books I’ve ever read is the autobiography of the late Nelson Mandela. His struggles and the huge sacrifices he had to make, which were documented in the book, were truly inspiring.
The book also spoke volumes about his character given how he had no hint of resentment for the people who had him imprisoned for decades in his own country.
Fortunately, the story had a happy ending as South Africa managed to embrace equality in Mandela’s lifetime. He was eventually released from prison and went on to become the first black president of South Africa, helping to move the country toward a better future in the process.
Mandela’s story taught me the importance of determination, perseverance, and above all, patience. In fact, I believe the key to his success was patience; the patience to wait for his country to mature at her own pace; the patience to wait for his release; and the patience to know that those who wait will be rewarded in the end.
Investing looks decidedly trivial when compared with Mandale’s struggles to build a nation. Without belittling Mandela’s accomplishments, I found it amazing that the lessons I learnt from him were wonderfully apt for investing too.
How to be a better investor
One important factor that helps tilt the odds in an investor’s favour is the simple act of staying the course. Investing is not a get-rich-quick scheme; time’s needed to enjoy its fruits. And that’s a pity because there are many who give up halfway before they can really enjoy the benefits of investing.
An investor who invested in the Straits Times Index (SGX: ^STI) through the SPDR STI ETF (SGX: ES3) back in April 2002 would have been able to achieve an annual return that’s a tad more than 8% today simply by staying invested. (For those not counting, an 8% compounded annual return over 13 years turns every $1,000 into more than $2,7000.)
But, the simple act of staying the course is not as easy as it seems. The investor had to deal with things like the ground-shaking boom-and-bust of the Straits Times Index during the Great Financial Crisis of 2007-09 (the index fell by two-thirds from peak-to-trough!) as well as the near 20% decline in the index in the second half of 2011.
Throughout those moments of upheaval, it’s likely that the investor would have to fight off the urge to sell his or her investments.
Perhaps not everyone is meant to be a great investor, just like not everyone is meant to be a skilled painter. But there’s no need to be a Picasso in investing – all one needs to be a good-enough painter is the patience to stay the course. Time is the best ally an investor can have.
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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Stanley Lim doesn’t own shares in any companies mentioned.