Understanding Delayed Gratification: The Road To Investment Success
Dear fellow Moneyqueen,
I still remember when I started my agency a couple of years ago and came across the concept of ‘delayed gratification’. It was in the early stages of the company and the first time I fully focused on it - without any other income on the side.
My business partner and I put in hours and hours of work, working long days and weekends, but the hourly rate was less than we had earned before.
From having a comfortable salary and working a 40-hr week to working more and earning less.
I assume most business owners will know this feeling. Building a business is hard. It takes a lot of dedication, hard work, focus, and perseverance.
While I loved building my own business, although in retrospect it was more the idea of being a business owner than that particular business itself, it was hard to keep me motivated at times. Especially when it felt like I was working so much more, but not seeing the immediate results.
One of my morning meditations at the time was about ‘delayed gratification’.
And it hit me: I was frustrated with my situation because I didn’t understand the concept of delayed gratification.
I was still thinking like an employee or freelancer - You put in the work, you get paid. There’s nothing wrong with thinking like that, it just doesn’t work when you have your own business.
When you ask ChatGPT, delayed gratification is "the practice of sacrificing immediate rewards for greater, long-term benefits."
From that moment on, my mindset started to shift. I started to understand that I had to put in the work now, to reap the rewards later.
And I did - The company grew, and I was able to work fewer hours while increasing my monthly salary. In the end, I sold my shares for a decent amount.
Delayed gratification in the investment world
Long-term investors are not so different from business owners.
If you want to be a successful investor, you too need to adapt the mindset of ‘delayed gratification’.
Here is why:
→ Prioritising long-term financial goals over short-term gains: To benefit from the power of compounding, you need to leave your money invested for a significant amount of time.
→ Prioritising saving and investing over short-term desires: Whether it's saving for retirement, taking that sabbatical, or achieving other financial milestones, delayed gratification ensures you stay focused on your financial goals, rather than giving in to short-term desires.
→ Avoiding high-risk investments: Focusing on delayed gratification will help you stay clear of high-risk investments. Rushing into impulsive investment decisions often comes with higher risks. Embracing delayed gratification allows you to conduct thorough research, diversify your portfolio, and make informed choices, ultimately reducing the potential for significant losses.
→ Emotional Discipline: The stock market can be emotionally charged, leading to impulsive actions during market fluctuations. Understanding delayed gratification helps you maintain discipline and stick to your investment strategy, even when faced with volatility.
Strategies to embrace delayed gratification
Set Clear Goals: Define your financial objectives and establish a timeline for achieving them. This will help you stay focused on your long-term vision.
Create an Investment Plan: Develop a well-thought-out investment plan that aligns with your goals, risk tolerance, and time horizon.
Stay Informed: Continuously educate yourself about the financial markets and various investment opportunities. Knowledge is a powerful tool to make informed decisions.
Avoid Emotional Reactions: Resist the urge to react impulsively to market fluctuations. Stick to your investment strategy, even when faced with short-term challenges. This one is a very important one and probably the hardest when starting out!
Understanding delayed gratification as an investor is crucial for achieving financial success, managing risk, and making rational, informed decisions that align with your long-term financial goals.
It helps you resist impulsive actions driven by short-term emotions and instead focus on building a solid financial future.
With that in mind - what can you do today, that involves delaying gratification and building wealth over time?
Happy Sunday,