The Long-Term Key to Wealth Accumulation
Investing is what I specialise in as a Wealth Adviser. I meet many clients eager to enter financial markets but held back by fear. Negative news like inflation, Ukraine’s war, failing banks, and the recent pandemic often reinforces their market fears. Known as confirmation bias in psychology, this leads them to maintain their wealth in low-yielding cash, fixed bank deposits, and money market tools.
This article targets such clients, aiming to guide them through their genuine fears. As a Wealth Adviser, I collaborate with global investment firms that pay billions of dollars for data processing to extract actionable investment insights that is shared with me. As a certified data scientist and certified financial planner, I employ machine learning tools to guide my client’s investment decisions.
Investing can seem risky.
Yet, with a long-term perspective and financial acumen, it becomes a powerful tool for wealth accumulation. Let’s explore this, backed by analysis of rolling stock portfolio returns.
“The stock market is a device for transferring money from the impatient to the patient.” – Warren Buffett
Short-term market fluctuations often steal our focus. Daily news dramatizes market crashes or record highs. One potential client cited the de-dollarisation as a source of fear not to invest. However, investing is a long-term game.
Consider rolling returns. They measure ongoing investment performance over a specific period. Rather than fixating on variable annual returns, rolling returns give a comprehensive performance view.
Data from Lazy Portfolio ETF shows the U.S. Stock Market’s rolling returns. The loss probability in any given 5-year term is almost zero. If you hold investments for at least five years, you’re unlikely to lose money.
“Time in the market is more important than timing the market.” – @virtualadviserteam
Average Annual Returns
Average annual returns may be lower over 5-year terms. Yet, compound interest can lead to substantial wealth growth over time. A $10,000 investment with a 7% annual return grows to over $19,000 in just 10 years, without extra contributions. That’s long-term investing and compound interest power.
“In investing, what is comfortable is rarely profitable.” – Robert Arnott
Investing carries risk. There are no guarantees.
But if you’re not investing, you’re missing out on potential gains and likely losing money to inflation.
Investing isn’t just about making money. It’s about preserving and growing purchasing power over time. So, investing might feel uncomfortable. But, consider the alternative. Without investing, your wealth doesn’t stand still – it slowly erodes.
In short, investing can significantly accumulate wealth. It requires patience, a long-term outlook, and financial knowledge. But, those willing to learn and apply these principles can reap substantial rewards.
Investing isn’t about getting rich quick. It’s about slow, steady wealth growth over time. So, don’t let short-term fluctuations or temporary losses discourage you. Stick to your path and focus on the long-term goal. The greatest wealth comes from contentment with little, and the best investment is in financial education.
“Investing should be more like watching paint dry or watching grass grow. If you want excitement, take $800 and go to Las Vegas.” – Paul Samuelson
My name is Jitesh Jairam. I am a multi-skilled finanicial advisor. Click on my name and learn more about me. Chat with me on WhatsApp for professional investment advice. I am based in Umhlanga but do travel to all major cities.
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