Once in a while, you’ll hear about investors who made a lot of money in just a short span of time. These stories might make you feel like your strategy is not good enough, especially if you’ve chosen a passive approach.
You may wonder whether you should fast-track your way to wealth by adopting a more aggressive method. The thing is, extraordinary success stories are newsworthy precisely because they don’t happen that often.
Aiming to replicate such wins can sometimes do more harm than good. Instead of trying to keep up with others, it might be better for you to do things at your own pace.
Read on to find out if slow and steady investing is right for you.
Is going slow the way to invest?
Slow and steady investing is all about being patient and giving your chosen investment assets enough time. It requires you to practice discipline and stay committed to your goals.
Here are 3 reasons this approach makes sense:
1. Starting early is better than waiting for the perfect time
Some people may wait for the best conditions before they start investing. They hold off until they have a huge amount to invest or until they’ve found the ideal investments that could increase their money by a great deal with the right timing.
If you don’t mind going low and slow, you can start investing early to give your money more time to grow. Even if you invest little by little, you might still reach your goal after a while through the power of compounding.
Compounding means your money earns money, so reinvesting those earnings gets you more money, and so on. Plus, starting early gives your investments more time to recover in case of market downturns.
As experts would say, time in the market can be better than timing the market.
2. Going slow lets you focus on what you can control
Never be afraid to start slow.
You’ll be better equipped to handle the risks of investing if you take the time to make informed and rational decisions. Following your own pace instead of chasing trends means you’re less likely to react based on impulse or emotions.
Instead of spending a lot of time predicting market movements, you can focus on building a portfolio that can withstand the ups and downs.
You’ll have the opportunity to consider different ways to manage risk such as proper asset allocation.
3. Easy does it when building good habits
Never be afraid to start small.
Overnight success makes for a good story, but it can’t happen for everyone. Or even most.
It might be more realistic to gradually adopt healthy money habits, like setting aside a portion of your income for investments and sticking to your strategy in the long run.
Remember that aiming for quick wins comes with a lot of risks. Short-term earnings are possible if you can put in the time and effort that an active strategy requires.
If you’re fine with a slower but more stable path to your goals, then patience can truly pay off.
