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Investing Is a Marathon, Not a Sprint

Singaporeans live hurried lives, and many may end up feeling frazzled, stressed, and burned out.

The race to the top in everything, coupled with fierce competition from all sides, has left us feeling tired and exhausted. It’s no surprise that investors bring that same attitude to investing — looking for shortcuts, quick profits, and instant gratification.

The problem with living in a time when answers are always a quick search or click away is that everyone wants to achieve something great in a hurry. However, as we all know, “Rome was not built in a day,” and even Warren Buffett has been quoted as saying, “You can’t get a baby in one month by getting nine women pregnant!” Some things in life just take time and patience, and investing is one of those things.

Sprints are too short-term

Sprinters in track and field events require short bursts of energy in order to run a short distance (usually 100 or 200 metres) in order to win a race. In investing, though, thinking about things in the short term is not a good way to determine investment performance because it doesn’t allow enough time for companies to implement and execute their growth strategies.

When investors buy and sell shares frenetically, it’s akin to treating shares as inventory, rather than as assets to generate cash flow. Short-term thinking also typifies a “gambling” mindset, as such investors are prone to look for hot tips or short cuts in order to enjoy quick profits and feel instantly gratified. Over time, such actions lead to higher brokerage fees and trading losses since share prices are inherently unpredictable in the short term.

Gearing yourself up for the marathon

Investors need to understand that investing is a marathon, and we need to prepare ourselves for a long journey ahead in order to achieve our financial goals. Compounding works best over the long term and will become more evident as we grow our portfolios through cash injections and dividend re-investments. Investment performance also needs to be measured over multiyear periods in order to smooth out the effects of business cycles.

Having the right mindset is key

It’s important that investors have the right mindset when it comes to investing — that investing is for the long haul and requires patience and psychological fortitude. The journey is not always easy as investors may encounter numerous obstacles and stumbling blocks along the way, but through grit and perseverance, they can succeed.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice.