There’s no secret formula to building wealth. Just:
- Discipline (spend less than you make)
- Consistency (invest early and often)
- Time (let compounding do the work)
Many people don’t want to think about saving and investment because they believe it is complicated and involves a lot of admin. We all have cans we kick down the road because it is just not something we want to do right now, but at some stage we have to pick up those cans. When it comes to investing, procrastination comes with a hefty price tag. Why we are not taught the basics of investing in school is difficult to understand. As with most things in life, keeping it simple can build a very solid foundation for the wealth we need to create to become financially independent.
Another reason people don’t start investing is their fear of losing money. There is still a universal belief that investing in shares is risky. Hopefully we have debunked this myth for our clients with all our explanations of the longer-term performance of shares and the difference between shorter-term volatility and the inherent risks of different asset classes. We only have to look at the performance of the S&P500 over the first four months of this year (chart) to see how volatile shares can be, but also how futile it is to try and time your entry and exit points. If you thought that shares were too expensive at the end of 2025 and converted all your money into cash, you got what you wished for in March this year with shares falling, but if you didn’t change your mind and started buying shares immediately after the fall started, you would have missed out on the subsequent rise in prices.
The longer-term performance of shares cannot be disputed if we once again look at the performance of the S&P500 over time (chart). As advisors we often see people getting interested in investing at a very late stage in their lives because they realize that they are in trouble. It is never too late to start, but it is so much more work to get your investments sorted out at 60, instead of starting at 20. Building a relationship with a financial advisor from a young age is essential to help you understand your own fears and help you navigate the changes you will encounter throughout your investment journey. It is nice to get the best returns available in the market but it is more important to just be invested.
