The myth
Whether you’re just about to start saving, or already investing, you’ll hear that time is an important factor in building wealth. You’ll be told to start investing as early as you can and to give your money plenty of years to grow.
This teaches patience and grit by encouraging you to play the long game and allow time to do its work instead of chasing quick wins.
The reality
Being patient and staying disciplined when investing can help you gradually build wealth over time while steering clear of unnecessary risks.
If you don’t give your investments enough time to grow, you might miss out on benefits such as:
- The power of compounding
Compound growth can allow you to reach your money goals faster. It means that not only do your original investments have the potential to grow, but any profits or interest you earn can also grow if you’ll reinvest them continuously.
The longer you stay invested, the more time your money has to compound and increase in value.
- Smoothing out risks
There is always a risk of losing money when investing, especially if you’ll invest in assets whose prices tend to go up and down a lot.
Many investors experience losses when they panic during a dip and sell their investments without waiting to see if there’s potential for recovery.
If you intend to hold an investment for a long time, you’re less likely to be affected by what’s happening in the short term. You understand that prices can drop from day to day but may still end up climbing over the years.
- Simplifying investing
Trying to predict the best time to buy or sell can be very difficult, and you can make things easier for you by following a simple strategy.
One such strategy is to keep investing a regular amount on a certain schedule for a long time. This is called peso-cost averaging. It can keep you from waiting for the perfect time to invest, save you from bad decisions, and let you start small.
It’s generally great advice to stay invested for as long as you can. However, long-term investing may not be for everyone.
Some people invest for short- or medium-term goals and so they can’t keep their money tucked away for longer.
If you’re in a similar situation, it’s important to choose investments that match your timeline while keeping your risk tolerance in mind.
Verdict: Mostly true.
Growing money is like planting seeds. When you plant seeds today, you don’t expect to wake up tomorrow to a bountiful harvest.
You will need sun, rain, tender loving care, and time to watch a seed grow to a plant, a plant to grow to a tree, and a tree to mature and start bearing fruits.
It's ideal to practice patience and discipline, especially if you're investing for the long term. Time is an important factor, but so are the types of investments you’ll make and the strategy you’ll choose.
If you'll need your money sooner, there are short and medium-term investment products that may suit you better.
Just remember to keep your goal amount realistic and always consider your risk tolerance when making investing choices.
