Patience and the Art of Investing - Page 3
Buying and selling investments (such as shares and bonds) incurs costs and fees, - meaning that the more you 'chop and change' your portfolio, the more it will cost you - and the less your investment fund will increase in value. So the patient investor will aim to 'buy and hold'. This will mean not selling immediately your holding increases or falls by 10 or 20% in value but taking a longer term view on the likely future for your investment. In the 2008 stock market crash, if you had sold out you would have lost a substantial amount of capital; if you stayed invested you would be almost back to the pre-crash level of value.
Finally, I believe, for the patient investor an 'income' bias to their investment strategy will be more satisfying. Inherently this approach is a 'get rich slow' strategy, with much less emphasis on 'value' strategies (with their subtle promise of getting rich quickly) and more on slower, but more reliable investments:
- high-yield money market accounts, particularly those that tie up your money for years, but offer good rates of interest
- high-yield dividends from companies that are likely to continue paying and increasing
- high yield corporate or government bonds
- minimizing exposure to tax (a lot of patience is required here).
And the reward of patience is to sit back and enjoy (for many years, hopefully) the fruits of economy and wise investment - and of course to pass on the lesson to the next generation.