Patience Makes You Rich, Successful and Happy
Starting from the time we are very young we are asked to be patient. We are asked to wait for dessert, wait for class to get out, wait to take time off. We have spent so much time and energy waiting for what we want that we’re desperate to do anything but be patient. We’ve even invented countless devices and software to give us more instant gratification than ever before. Now, once we realized we could get anything we wanted with the press of a button, we lost control and lost our discipline. When it comes to investing and financial goals, it’s important to remember what mom taught us about the cookie jar– patience is a virtue.
There are a lot of people out there who swear that they can make you more money now or give you the tools to make more money without ever having to leave your home. Paired with this is a temptation to spend your money now and plan to make more later in life. Why not have fun while you can? Together these two sentiments are catastrophic and neither will serve you in the long run. This is your reminder that your portfolio is not a fast food joint. You have to wait for quality food, you should wait for quality investments.
We have to get rid of this notion that making money is fast and easy–if it was, everyone would be rich. So, when it comes to our money how do we stay patient while still actively working towards our goals?
Reverse engineering is the process of visualizing your end goal and working backwards. You can apply it to any long or short term goal. The most important part of this process is understanding what it is that you want and why you want it so bad. You will be working toward this goal for quite some time so it is vital you decide what you REALLY want from life/business. Don’t just accept the standard goals other people have set for you. Spend time with a notebook writing and revising your goals. Where do you want to be in 30, maybe even 40 years? What does that look like? Once you have it, you’re ready to take a step back and strategize how you need to get there.
To get our feet wet with the concept of reverse engineering, we’re going to first start with a very short term goal. We will use the example of weight lifting because fitness buffs have been using a form of reverse engineering, they call it progressive overload, for years. In this example, your definitive goal is to increase your bench press from 30kg to 90kg within the year. That is a 60kg difference you need to make up for 12 months. 60kg/12 months = 5kg a month, so you really only need to increase your bench press by 5kgs every month. You can continue to break time down to make the goal even more manageable. If you divide a month into 4 weeks, then you’ll only need to increase your weight by 1.25kgs every week to reach your goal. See how much more manageable 1.25kgs a week is than 60kgs in a year?
Working within a time frame and breaking that time frame down into smaller, bite-sized pieces is a simple process to get measured results and can be used for virtually any goal you have in your life. Most goals can be measured and any goal can be reverse engineered. You just need to visualize your goal, believe that it is attainable, and then come up with the action plan that will actually get you to that goal. Increasing your bench press by 60kg in a year seems daunting at first but now that we’ve broken it down, it’s much more manageable. Reverse engineering financial goals works just the same as it did for our bench press example above. Start with the end and work your way back.
Reverse engineering your goals takes a lot of time and effort. Patience is paramount for success and you’ll find that discipline, when managed correctly, is freedom. Time is the key to everything. Just ask Warren Buffett. It’s a little known fact that Buffett made the majority of his money after the age of 60. This is because he strongly believes in the process of compound interest, which is the process of allowing a smaller amount of money to grow over long lengths of time. The inverse of Buffett’s tried and true method is investing a large amount of money for a short period of time.
“Successful entrepreneurs have been using the principle of gaining compound interest” – Richard Branson
Whether you are starting a retirement fund or investing outright, allowing yourself more time to let your money grow (think 5 years instead of 6 months), the more money you will have in the end. You will be building interest on your interest and increasing your money in large percentages. Simply, by keeping your hand out of the cookie jar, you’re letting cookie after cookie stack up.
With this idea in mind, imagine that you are currently 30 years old and want to have a million dollars (or £) by the time you retire…
Did you know that you could put away $700 per month and retire a millionaire?
If you aren’t making enough to save this amount outright, you can use this same reverse engineering process to invest a chunk of your money and have rate of return goals for every month and every year. As long as you hit your savings goal and rate of return every month, you will have a million dollars by retirement. This is where working with your money becomes fun. Never believe that you need money to make money, you just need to take a longer term approach and work hard.
If you’re age 20 and you manage to negotiate a 10% return rate on a fund, you only have to put away $95 every month to become a millionaire when you retire.
Compound interest is well worth investing in once you have a stable income.
The principals also work for losing weight or starting a business.
Though reverse engineering seems easy, it’s important to remember that there will be outside sources of stress, error, complication, defeat, and judgement. You will always be surrounded by external energy that you have no control over. Remember that you can get more done when you don’t care what other people think. If someone says that trading is not for you, instead of doubting your path, keep your head down, study, stick to your values and remember why you are doing this. You can’t stop people from trying to hold you back, but you can stop their opinions from affecting you so negatively.
Getting rid of mental blocks, like caring about what others think, is a challenge and a constant process. You very may well never have to stop working at this. But if you keep your focus and let go of whatever pain or regret is holding you back, you will succeed. Once you trust yourself you can in trust in your goals, in reverse engineering those goals, and in the time it takes to achieve them. Begin tracking your habits now to see your strengths and weaknesses. Which of your weaknesses is holding you back from your ultimate goal? An addiction to cookies, though a hindrance, does not directly affect your investment goals. An addiction to cookies, however, does negatively and directly impact your fitness goals. Find the weaknesses holding you back from your big goal and make a plan to knock them down. In this way, dieting and saving are really the same process– you’re denying yourself something in the now so you can have what you truly want later (healthier body/more money for retirement.)
Again we find that time is our closest ally on our journey to our goals. To change your bad habits, you simply need time and discipline. Start small– only have one cookie a day instead of three– and progressively work up to one cookie a month or no cookies at all, whatever it is you are setting out to do. Remember, if you get thrown off or make a mistake, do not let them hold you back. Often we see mistakes as failures but they’re really just small roadblocks. Learn from them and move on, do not make the same mistakes twice.
As you can see, the journey to greatness is a long one, but if we remember what our parents taught us, our patience with the process will see us through. Visualize your goals, work backwards from those goals to determine your timeline of success, break bad habits by changing a little at a time, and never let someone make you feel like you can’t achieve what you’re setting out to do. Whenever you are feeling overwhelmed, like you don’t have enough time, remember that a year is really just 12 Months, which is just 52 Weeks, or 365 Days, or 8765 Hours, or 31.6 MILLION seconds. Seize each of those very precious seconds to chase your goal.