Last week we talked about how consistency is the key to success.
Success usually doesn’t come from one massive accomplishment. Rather, it comes from many small accomplishments made day after day after day.
All the little accomplishments accrete. That is, they build upon one another. Then one day you wake up and realize they have compounded into something truly impressive.
The same principle applies to investing. It’s a simple thing – but I don’t think this is well understood today.
When I was a young professional, I thought investing was about hitting it big. So I was obsessed with trying to time the stock market. And I primarily invested in the riskiest stocks I could. When I found one with a good story, I would put a big chunk of my investable money into it.
Then I would start counting my gains prematurely. I would think to myself – if it doubles, I’ll turn my $10,000 into $20,000. If it triples, I’ll have $30,000. But what if it’s a ten-bagger? Then I’ll have $100,000!
Of course, it never worked out as well as I had mapped out in my head. Because that approach isn’t investing… it’s speculating.
An investor doesn’t think in terms of hitting it big. He (or she) thinks in terms of compounding money over long periods of time. That’s Einstein’s secret to wealth.
Continue reading “Consistent Wealth”