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Over the weekend, I had an epiphany.
It was when I was chasing MiniFrugalSamurai as he wandered off by himself (AGAIN).
That boy really has something going on in his head.
When he starts to feel bored, or decides to move onto the next task – he just ups and does it.
Which is great in a classroom environment, not so great when he’s in a packed shopping centre and his parents can’t find him.
One of these days I swear, he’ll go on a walk-about and FFS MrsFrugalSamurai and I will make front page news as negligent parents.
Anyway, when I finally caught up to him, I asked him what got into his head this time.
“I just wanted to put my shoes on Daddy, I was in a hurry” (we were at one of those indoor playgrounds – shoes off to play kinda thing).
“The shoes are back here buddy, why are you always in a hurry MiniFrugalSamurai?” I said, (please take note that I don’t call him MiniFrugalSamurai to his face).
“Because you’re too slow”.
Zing.
To be fair – it’s kinda my fault that he’s like this, always in a hurry to do something or be somewhere.
I can’t really sit still and just let the clouds roll on by either.
Gotta always tick things off the list y’see – if it’s not being ticked, it ain’t being done.
Then I thought about investing.
How many people are ALWAYS IN A HURRY TO GET RICH.
Weaving in and out of multiple investments (trading), pushing the speed limit (ALL IN), taking every shortcut (leverage) to get to the destination.
Then I thought about the opposite, the slow and steady type (patience), driving just below the limit (HODL) and valuing safety above all else (survival).
Both methods have the same goal – to arrive from point A to point B, but the approach couldn’t be more different.
The first type has very little room for error – he just doesn’t WANT to arrive ASAP, he NEEDS to arrive ASAP.
Every second counts, every hesitation a lost opportunity, risk? YOLO, JUST DO IT.
I can see my son like this when he starts off investing for sure – chucking all in’s willy nilly hoping something sticks.
BRO I ONLY NEED A TEN X ON A TEN X AND THAT’S A HUNDRED X BRO.
And then you have the other type, someone who’s a bit more controlled, who’s a bit more wiser, and usually much older.
He’s not in a rush because he doesn’t need to be.
He understands that speed is only one variable – control, managing risk and survival matters too.
This investor typically has a more solid asset base compared to the first type.
He doesn’t need a “10X”, he just wants to protect his money and see it grow. Steadily.
Risk is there, but he’ll try to manage (diversify) it.
Quality is appreciated, and he’d rather buy a wonderful asset at a fair price than a fair asset at a wonderful price kind of thing.
The first guy takes risks because, coming from a limited capital base – he thinks he’s forced to play an all out offensive game, often at the cost of his defence (risk).
The second guy has more capital, and can afford to play defensive (patience, discipline, strategy) and choose when to shift gears.
This is the fundamental difference between the two players.
Of course, not everyone can afford to be the second guy.
And I get it – you ain’t gonna get to where you wanna go buying term deposits or investing in CBA shares.
But if you can play it smart, be strategic and manage your risk – then you’ll be able to reach that magical level where instead of constantly chasing returns, you are now focused on preservation of capital.
From YOLO bets to calculated investments.
Because in the end, investing isn’t about who gets there first, it’s about getting there in one piece.
Something I’ll need to teach my son.
Sponsor’s Note:
Following on from above, as a residential and commercial mortgage broker – I work with a fair few self-employed customers.
The most successful customers are those who have taken a long term approach with their business, diligently saving profits, making loan repayments, investing where needed and just plugging away year after year.
The most unsuccessful customers are those who are (usually) in a hurry to get big, take on too much debt, have a couple of bad years, and find themselves in a hole they can’t really dig out of.
It’s important to always maintain a disciplined and patient view, especially when it comes to money.
Anywho – this morning I got an email from a lender saying their variable home loan is now starting from 5.6%!
This just goes to show that in light of the recent RBA rate cut – some sharp pricing really is available out there.
So if you haven’t yet, speak to your existing broker/lender or contact me for a confidential discussion anytime.
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P.S. Every post is the personal opinion of yours truly, please seek your own personal financial advice regarding your own personal circumstances.
