Monday, December 11, 2017
Routine is Boring, But it Works
These days everyone is looking for the next big thing. Give me the next Amazon, the next Apple or the next BitCoin. People are always looking for excitement for their money. They want growth, and not over time, they want it fast. One thing many people fail to realize is that with fast growth can come fast loss as well. Younger investor’s I find are the most frustrated with their performance. I always find it funny when someone is confused about receiving a gain of $100 in one year on their $1000 investment. I thought 10% was good? Apparently not. For me, sticking to a solid routine of saving, investing and protecting is what excites me. It is tried, tested and true. It has been done for over 100 years and will be done as long as money exists. Routines might be boring to some, but it is what consistently works. In this post, I will show the benefits of being routine with your savings and investments. While you might not get the immediate, large growth you had planned, you will come out a winner. Let’s see how.
1) Predictability
Seems simple that predictable actions produce predictable outcomes. You go to work every day, you get paid every other week. You take your kids to school, they come home at the same time. You start the car every morning and it turns on. How would you feel if half the time you turn the key you had a beautiful Cadillac and the other half it wouldn’t start at all? Would it be worth it? Would you want to take that chance? When you put your savings and investments in the latest trend it can have the same outcome. When you are in it for the long haul you can count on predictable growth. This all stems from the routine of saving and investing on the regular. To me, it doesn’t matter when and how much you save as long as it is as much as you can afford and as often as you can afford it. When you make predictable moves, your money will as well.
2) Consistency is key
Just like working out, it is not how hard you do it, it is how often. In my past posts, I have spoken to the importance of regular contributions in terms of dollar-cost averaging. You use your consistency to take advantage of up and down markets. Your chart is meant to go up and how that happens is through consistent growth. At first, it will be mostly your contributions that will make your money grow. Once you hit a good amount of principle, you will be amazed at how interest plays a key role in your investment growth. The same goes for being consistent with your philosophies on money. If you routinely stay above budget, don’t go into debt, pay off your credit cards in full, and save for large purchases, you will watch your bank account increase, your stress decrease, and your credit score fly. It is all the small things you do that make your financial life consistent and predictable.
Why Dollar Cost Averaging Is A Smart Investment Strategy – NASDAQ
3) It uses knowns versus unknowns
No one knows what will happen in the future. All we can do is make calculations based on what life is right now and what it has been in the past. When you practice routine in your life, the outcomes are often known or close to it. Blue-chip stocks are popular for a reason. They have a long track record of quality and growth. Fly by night investments are very volatile because there is no history of performance. There is also no history of decision making that one can look back on. You are out on a line trying to predict the future and that is a scary place to be. The truth of the matter is that no one knows where the market will go, even the big dogs like Warren Buffett. He always sticks to what he knows and that is based heavily on the past and present. When it comes to your hard-earned money it is always best to go with what you know, and that includes a steady routine.
4) It’s so much easier
There is nothing easier than opening up an investment account, setting automatic contributions and then going on with your life. It takes all the guesswork out of daily updates, stock tracking, and expert analysis. Believe me, there is a lot of noise in the investment world and the more you listen to it, the cloudier it gets. If you want something simple in your life, go with routine. Watching the business networks have shown me that even the “experts” often don’t know what they are talking about. It fits right in with the predictability piece; we all do much better when we have to think less about something. I don’t know about you, but I don’t want to spend 40 hours a week researching new companies looking for the next big hit. Make your life easy and stick to the routine.
Set It and Forget It Works – Forbes
5) It always wins
As I mentioned in the first part, having a routine will always win out in the end. There are very few people who have saved and invested their whole life in long-term growth investments and have come out in the negative. In previous posts, I have discussed how time can make anyone rich. Someone making only 25K per year will have made 1 million in their lifetime, (Age 25-65). Again, the question is what do you do with it? Being consistent with your spending and savings habits is tried and true. If you make a habit of putting away as much money as you can on a routine basis, it is pretty much impossible for you to lose out in the end. Since it’s inception, the stock market has always increased. There have been a few periods of loss like the great depression and several recessions, but overall the chart keeps moving up. Make a habit of sticking to a routine and you will win as well.
Want To Be An ‘Automatic Millionaire’? David Bach Has Some Tips – Forbes
Routine may be boring, but a routine is the foundation of wealth. The “set it and forget it” method of financial planning is for everyone. Set those investment contributions, mortgage payments, insurance premiums on auto-pilot. Along with not getting into costly debt and maintaining a positive cash flow, it will help you achieve great results. Routine might be the best habit you ever adopt when it comes to your money.
Thanks for tuning in as Habits Week starts here at Budget Boss. Tune in tomorrow as we discuss the deadly habit of comparing your situation to someone else’s. If you wish to discuss your money habits, shoot me a message at joe@budgetboss.ca. Also, don’t forget to sign up for our, Set Your Financial Goals for 2018 Workshop, tomorrow night at 5 PM from Innovation Works in downtown London, Ontario. Have a great week Bosses!
“The secret of your future is hidden in your daily routine.” – Mike Murdock
Email – joe@budgetboss.ca
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