In my vocation, it is inevitable that clients are thinking ahead, planning for the “golden years” and preparing for the future. It’s what we do! We teach and we learn about strategies and processes that help us to secure our future. The understanding of retirement plans, 401(k)’s, pensions, Thrift Savings Plans and the stock market itself are all necessary to help us make wise decisions.
The list is endless depending on each client’s situation, all the things we teach so clients can learn. By doing so we hope to achieve the valuable SWAN effect, that is the ability to Sleep Well At Night.
Over the years I have learned a far more useful thing to teach is the value of patience.
These three short stories might help explain what I mean, they are stories about The Patient Investor, The Patient Employee and The Patient Spouse.
When it comes to investing, the story of the Patient Investor is the simplest. It’s just math and statistics.
When one has overwhelming odds of success in a venture it is easy decide it is a good choice. Let’s say the odds are 93% that investing in a diversified portfolio over a 20-year period will provide a return that exceeds bank savings rates and provides a good hedge against the rising costs of living. The truth is that the S&P 500 has posted a positive 20 year return 100 percent of the time.
Patience is learning to deal with the headlines and factors that do not matter when compared to reality.
From 1950 to 2021, the S&P 500 has yielded an annualized average return of 11.53 percent.
The worst 20 year rolling period return delivered a return of 6.4 percent a year, which occurred over the twenty years ending in May 1979.
The Patient Employee is a story that has reappeared more often than I would have wished in the last two decades. It is important to strive and to evaluate often in regard to our career and what our goals are. Sometimes, it seems a change is due and often that is the case. However, the value of patience is in taking the time to consider the benefits being provided by one’s current employment situation.
I have seen too often that making a change based on income or “a boss that gets it” or other single factors alone might not take into account important benefit considerations like location, work hours, opportunities for lateral moves and retirement account options. Once a client quit and “retired early” because he got into a disagreement with his boss. He had not contributed to his 401(k) because the firm provided excellent pension benefits. However, his decision did not take into account that he was about six months away from qualifying for the full pension. Unfortunately, he also died relatively young, and his widow now lives on Social Security and a small savings account.
Finally, the Patient Spouse. This is a story for which no one needs an explanation. It is one that most of us intuitively know but find hard in practice. Whether you are married or thinking in terms of everyday relationships, patience creates the kind of memories we look back and long for when they are no longer possible. I’m a math person, so my two cents on this one is that counting to 10 before action or speech pays the biggest dividends.
Tracy Ann Miller says patience creates the kind of memories we look back and long for when they are no longer possible.
