2017 was a year of extraordinary returns. 2018 is a year of staying extraordinarily cautious. Does this mean that you need to stay away from the market and wait patiently for the 2019 Elections Results outcome? Preferably not.
You may think that you’ll be able to avoid short-term losses arising due to volatility. But you won’t be able to ignore the Millions you could lose. The sole reason behind this rational thought is your irrational decision of delaying your investments for a few months.
Few of the long-term investors I interact with have a belief that a few months delay can’t make any difference in an investment horizon of 25-30 years. What they actually forget is that in the compounding engine, what you feed initially, becomes a huge mammoth lately. Early you start, better the time it gets to compound.
The best time to invest was several years ago. The second best time to invest is now ~Warren Buffett
If you believe that just a few months delay won’t impact your end result much then you are highly mistaken. This approach can make a huge dent in your final corpus. Most importantly, more is your monthly SIP amount, massive will be the impairment in your final corpus.
Even a delay of just 6 months in a monthly SIP of 10K per month for 30 Years @12% results in a loss of around 17.55L in the final corpus.
And if you choose to defer your investments till the outcome of 2019 Elections, which is 11 months away, be ready to accumulate a loss of around 31.44L.
These are the Millions which you can take possession of without any brisk effort. The only effort you need to put in is to start now and continue the process for years without interrupting the compounding engine. After all, it’s the discipline that matters in the investment process, not the IQ.
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I really admire Charlie Munger’s philosophy that instead of trying to be intelligent, one can avoid stupidity by taking advantage of the long-term approach. Rather than trying to win the short-term volatility by delaying the investment process, one should stay the course and avoid losing the extra millions which you can grab without an iota of stress.
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PS: The cover image has been taken from Walls Cover
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