The desire for instant gratification, Now!, is rampant in our world. This desire weighs down all endeavors, like a punitive tax on long term goals and accomplishments.
Fear
The shortsightedness of desiring instant gratification created FOMO (Fear Of Missing Out), previously known as “Everyone’s Getting Rich But Me!” (July 5, 1999 cover of Newsweek magazine.) So we see that this urge to not be “left behind” is born out of fear.
Slower?
If I look at my investing expectations like I look at my garden, then my attitude is clear. I plant seeds and wait. Some seeds germinate, some do not. Some trees fruit, some do not; that’s life. I cannot hurry Mother Nature.
So what does this have to with investing and with financial security?
I avoid volatile and risky investments. This is immediate: all those things one would not buy when sane, are not bought.
My perspective becomes longer. I shun excessive trading. i buy after I consider the investment.
I don’t follow a crowd. I don’t buy to brag about it, I don’t buy to show off. Following the crowd is simply a form of momentum trading, detrimental to long term success.
What
So what kind of investment is long-term, incremental, and sure-footed? For me, it is dividend investing: Buying stocks in large, stable, companies with long-term records of paying increasing dividends. People will generally always need various kinds of foods, toothpaste, medicines, insurance, and so on. Since I usually have my dividends reinvest, I am buying more shares or parts of shares every time a dividend is issued.
There are companies that pay dividends, and there are companies that don’t. Since the returns from dividends are much more predictable and reliable than returns from capital gains, focusing on dividends is the way to go, in my view.
When Markets Decline
We all know that prices of stocks are volatile. They go up, they go down. Some times things move dramatically. To me, a dramatic jump upwards is a warning to be wary. A dramatic decline does not overly concern me. It is the dividend where my attention is. In fact, a price decline, assuming no cut in dividends, is a positive event, as my dividends now buy more shares. All in all, a dividend investor with reinvested dividends, like myself, accumulates more shares during a market decline than when prices increase. This is the opposite of a capital gains investor.
Another Benefit
A dividend investor like myself can easily ignore most day to day market news if we choose. What a relief! I need not get excited about today being better or worse than yesterday. I focus on the fundamentals, as that is all that counts. Most of all, I avoid the need to panic when others are losing their heads. As previously mentioned, to assess stock market volatility, we need to consider Who Causes Market Volatility?
What’s your volatility story? Let me know here.
The illustration of Alexander the Great descending into the ocean in a vessel, is from a French manuscript from ca. 1470-1475 “Roman d’Alexandre” currently housed at Musée Condé (The Condé Museum) in Chantilly, France.
The post The Antidote to the Desire for Instant Gratification appeared first in Smile If You Dare.