Golf & Finance: Patience
One of the greatest gifts I’ve ever received was a set of golf clubs when I just 4 or 5 years old. The U.S. Kids Golf set had 5 clubs and I remember they had gold shafts because if you angled them in the sun just right, they would glow. It wasn’t so much about the clubs themselves though, it was about the time I was able to spend with my father on the golf course and the lessons I picked up playing this frustratingly beautiful game. In this blog and future posts, I want to share some of those lessons with you and how they’ve helped me become a better investor.
Lesson 1: Patience.
Golf is an unforgiving game. When I was learning how to play, I would get incredibly frustrated when the bounces didn’t go my way. “But I did the right thing!” I would yell. “Why did it have to bounce off the cart path, hit a tree, and go into the creek!?” I would complain to my Dad as I tried to hack out of the hazard. I remember he’d stand there holding back laughter, and simply say, “That’s golf.” It would make me so mad. What I didn’t realize in the moment was that I was getting better at the game. I was in that creek because I was hitting the ball farther. I’d still get mad when I’d get a bad kick, but instead of wanting to break 100, I was trying to break 90, then 80, now my current goal is breaking 70. I learned from those bad kicks, became a better player, stayed patient and my scores dropped.
Investing is much the same way. A simple example of this is dollar cost averaging. Let’s say you save $1,000 each month and invest in a simple target date fund with a 5% average rate of return. By the end of year 1, you would have an account balance of $12,273, picking up $273 in earnings. There might be a down day in the market, maybe a down week, heck even a month. But these “bad days” give you an opportunity to buy low. It doesn’t mean you should just quit and give up. If you’re patient and invest for the long term, you will be better off for it. If we take the same parameters above, $1,000/month at a 5% rate of return, and let this process go for as long as I’ve been playing golf (23 years), you would have invested $276,000, earned $232,459, and end with a total account balance of $508,459!
What I didn’t realize while playing golf growing up was the bad kicks were making me better at the game. Just like with dollar cost averaging, I was improving during the good and bad rounds. My chipping improved, I learned how to hit punch shots, and my recovery from bad shots was better. I was patient. I kept going back to the course, being persistent, and now I’m a much better golfer than when I was 6. I look back now and laugh just like my dad would when I remember trying to do something incredibly risky (stupid) like hit a ball that was half in the water and failing miserably. I learned that day that playing it out of the water might not always pay off. At Rembert Pendleton Jackson, we don’t invest to make money each day, we invest to make money over the long-term. Whatever “long-term” means to you is a discussion you should have with a financial advisor. Stay patient – we believe that if you trust in the history of the stock market, you will be rewarded.
The information presented herein represents the opinion of Rembert Pendleton Jackson, and is intended to be general in nature and is not intended to be tax, legal, or investment advice. Readers interested in the presented subject matter should consult with their personal financial and tax professionals, as there is no substitute for personalized advice. This material includes projections based on various assumptions and are therefore hypothetical in nature and not guarantees of future investment results.