"The stock market is a device to transfer money from the impatient to the patient." — Warren Buffett
Benjamin Graham, known as the “father of value investing,” knew the importance of patience in investing when he said: “In the end, how your investments behave is much less important than how you behave.”
Patience and investing are natural partners. Investing is a long-term prospect, the benefits of which typically come after many years. Patience, too, is a behaviour where the benefits are mostly long-term. To be patient is to endure some short-term hardship for a future reward.
Warren Buffett also considers patience — or lack thereof — a defining trait of success in investing. Why? Because impatient investors let anxiety and emotion rule their decision-making. Their tendency towards “doing something” can lead to detrimental investing behaviours: checking account balances too often, focusing on short-term volatility, selling or buying at the wrong time or abandoning a long-term strategic investment plan. Those bad behaviours could damage investors’ long-term returns.
Autus Private Clients provide investment planning (or financial planning) to more than 600 families and individuals. Over the past 21 years, we have seen quite a few clients with one or more behaviours, as mentioned above. Fortunately, you develop the skill not to take them on as clients or find a very polite way in telling them to move their investments somewhere else.
With the permission of one of our clients, I want to share the following:
On 5 February 2004, Mr E invested R2,388 million at retirement. Since then, his withdrawals amount to R2,748 million – 15% more than the original investment. On 2 July 2021, his investment balance was R4,705 million – or nearly twice the initial investment amount. Since inception, the investment return is R5,072 million, while the annual return of the portfolio was 9,52%. After inception (3 January 2006), the investment was transferred to the Autus Prime Balanced Fund. More than 63% is still invested in that fund while his portfolio was diversified to increase mainly his offshore exposure. Over the past 15 years (until 30 June 2021), the Autus Prime Balanced Fund’s annual return was 9,58% (source: Morningstar). The fund ranked 8 out of 30 funds over that period, outperforming the peer group average and the benchmark by 0,79% and 0,92% per annum. Over many cups of coffee over the years, we discussed my theory to “enjoy life” and leave the Investment Team to continue managing the funds. If my memory serves me well, Mr E and his wife have walked the Camino in Spain more than once, did some travelling and enjoyed life together with children and grandchildren.
We meet once a year to review his income withdrawals, do a “life of capital” calculation and review the asset and fund allocation. If needed, we call each other or communicate via email.
Many of us believe that money is key to enjoying life, but often we have everything we need to enjoy life.
(Additional information regarding the specific financial product discussed above, including key limitations; exclusions; risks and charges, is available on request to any APC Representative.)
Enjoy Life!
On lifehack.org, Hannah Brain’s article listed simple ways to enjoy life more. I have listed a few below, and you can decide which is essential.
- Focus on Yourself – Get off social media, put your phone on silent, and tap into your thoughts and emotions to figure out what your next step should be.
- Make Time to Relax – Reconnect with ourselves leaves us better equipped to deal with more challenging periods in life.
- Avoid the News – Save your energy and spend your time on something more worthwhile than doomscrolling.
- Nurture Your Positive Relationships – Identify the people who uplift you and focus your energy on them.
- Meet New People – Expanding your support system.
- Explore New Places – It doesn’t have to be far to offer you a great experience.
- Keep a Wish List – Keep your dream alive and make sure they don’t just stay as wishes.
- Spend Money on Experiences, Not Possessions, and it will create memories and meaning.
- Cut Down Your Junk – By tidying up around the house, you can increase your focus, productivity, and positive emotions.
- Make Time for Gratitude – Place yourselves at the moment and see just how much good we’ve got going for us.
- Be Deliberate in Your Choices – Be deliberate in your life choices: remember that it’s your life and no one else’s.
- Invest in Yourself – The more self-aware and self-accepting we are, the happier we are.
- Remember That All Feelings Pass – Remember that life is one big cycle of ups and downs but that all feelings pass.
- Celebrate Small Wins -Focus on enjoying the journey rather than the destination.
- Allow Yourself to Feel Happy – Give yourself permission to enjoy a drama-free existence and focus on finding pleasure in your daily experiences.
- Get Outside – Feel the wind on your face, the sun on your skin, and enjoy a good dose of Vitamin D and fresh air.
- Speak Your Mind – When we hold back our thoughts, opinions, and desires out of fear of displeasing others, we’re not true to ourselves. Speak up and feel uncomfortable in the short term, and you’ll enjoy life more in the long term.
- Record Happy Moments – Take photos, journal, draw—whatever you need to do to record happy moments and memories.
- Get Active – a 20-minute walk or a few jumping jacks can do wonders for your mood.
- Keep Learning – Find enjoyment through a sense of purpose, and make time to explore subjects that interest you.
Practice Compassion -When we can feel compassion for ourselves and compassion for others, even tricky situations become rewarding and, ultimately, more enjoyable.
I often get the question: “when do you retire?”. Sometimes, when we face challenges like the present situation in South Africa (unrest and political turmoil), and Worldwide pandemic, I sit down and ask myself: “when do you stop?” then I remind myself of the opportunity to manage a business like Autus, work with the excellent team members and be privileged to have clients and investors supporting us. Writing a report for a client or meeting with them, sitting in on the investment meeting or just doing some investment research fills my life with joy. It gives meaning to my words “enjoy life”, it keeps my brain going, it provides that something to live for every day.
So, if Warren Buffet and Charlie Munger can still work at 90 and 97, I regard myself as a young team member at Autus.
