It Takes Time

Building your own business is a process of self-reflection. You not only put in a lot of money, energy and sweat, eventually you spend a lot time – not just working, but also doubting your own effort.

Am I taking my business in the right direction?

Am I working hard enough?

Am I doing the right thing?

Am I really helping my clients?

Most of all, the main question is,

“Am I accomplishing what I set out to do?”

Amid all the self-questioning, recently I received the same message from all around me through different sources. They all say, “It takes time.” Just like it takes time for a crop to grow, and a child to mature, so it takes time for my business to develop and flourish.

As a financial planner who helps people plan for the long-term, I am more than familiar with the concept of patience, not panicking when things go bad, and taking life one step at a time. However, it doesn’t stop me from constantly wanting to see results, to see progress, and feeling sorry for myself for falling behind.

In other words, I am like any human being. I am biased toward the short-term. It’s an innate urge for us to be able to see cause and effect. The longer the time frame, the more difficult it is for us to make the connection, and the easier it is for us to forget the beginning. We all want to do one thing and be able to see the result immediately. Nevertheless, most important things in life take sowing, watering, and waiting before we can harvest. The WAITING part can be pretty long, and it sometimes deceives our brain into thinking nothing we have done mattered.

The nomad lifestyle perhaps also amplifies the short-term bias. Since our transient lives require us to reinvent our habits or even identity from one place to the next, there is a more pressing need to see things work – whether it’s making friends, finding jobs, or becoming part of the local community. It frustrates us more if things don’t work out immediately because we simply don’t have the time to see the fruition of our efforts.

As I’m writing this, I am preparing to move again for the 5^th time in the last 5 years. I can testify that the emotions from facing changes in short periods of time do make it difficult for me to focus on the big picture. So to benefit all of us in this situation, I would like to refocus on the things that take time and are related to your financial picture. Don’t lose sight of what is important as you transition from one state (location or being) to the next.

#1: Investing takes time.

There are plenty of professional traders trying to make a profit from split second buying and selling. While it might be tempting to time the market to reap large returns in a short amount of time, prudent investing takes time, because it is supposed to benefit you for the long-term.

Imagine that you got lucky and made one million dollars from day trading stocks. So now you have one million dollar of cash sitting in the bank. You are still making a good salary and don’t really need the money. What would you do now?

It’s likely you will have to end up reinvesting this money somehow, unless you spend it. The longer you keep the money in cash, the more the value gets eaten away by an increasing cost of living. If you only live by the short-term investment strategy, you need to constantly figure out how to continue your luck and find the next great opportunity. In the meantime, you are incurring all the trading costs and higher short-term capital gain taxes.

Or you can choose to invest in something with great long-term growth potential, whether the stock market, real estate, or bonds. The market price of what you invest in may go up and down in any given time, or even lose 20-30% in value on paper. But as long as you can sell the investment at a price you need in 10 or even 30 years, what’s so bad about the volatility? As an added bonus, you don’t have to waste energy chasing returns on a daily basis. Invest once and you are done.

Another two benefits you probably know about from long-term investing are the power of compounding and dollar-cost averaging. For people who keep their investment in the market even at a bad time, the future return will compound on top of the past return to make your investment grow faster. On the other hand, if you continue to invest a set amount monthly, quarterly, or annually, you mitigate the risk of buying investments all at the height of the market.

In summary, if you expand your investment timeframe, which you can do easily when you are young, you will eventually see that your money WAS working for you, no matter what the market pundits say on any given day or before any given global event. (Read more about long-term investment returns.)

#2: Accumulating Human Capital takes time.

We all know the importance of education for children. News for you – it’s as important for you as an adult for the rest of your life.

The education doesn’t have to come from a school. It can be from a school program, but it can also come from on the job training, reading, volunteering, really anything that allows you to keep building on what you already know and have done.

Why is this important? Education helps you accumulate Human Capital, and Human Capital increases your earning potential. Your income is probably the least emphasized part of your personal finance picture. We can all be good at budgeting, saving, paying down debt, but not at thinking about how to increase our earning potential. Not just for a raise for doing the same job, but actually elevating yourself to a position that you really enjoy and being compensated reasonably.

And this takes time. It also takes courage to try new things and stick with it even if you don’t see an immediate change in income. Not seeing an immediate benefit from education is a huge reason why people don’t invest in their Human Capital after graduating from college. Don’t be fooled by your own bias. Investing in yourself is always the best bet, because it’s one of the few things you can control in this world.

Whether you are fresh out of college, a stay at home parent, or a near retiree, don’t ever let go of the chance to continue to learn more. You never know what opportunity it may bring you.

As mentioned, sometimes reasoning is not enough to turn us back from feeling aimless if we don’t see results of our effort. So what can we do to trick ourselves away from those moments? Here are a few tips:

#1: Snowball your effort

If our brain wants to see progress, let it see progress! Sometimes we are trying to achieve so many things at once, we forget it’s more motivating to see small victories than huge success.

For example, if you are paying down multiple credit cards or saving for multiple things, conventional wisdom says you should pay down the highest cost cards first, or don’t cut your retirement savings to save for other things. However, by trying to do multiple things at once, it may take even longer to reach any of your goals. No wonder you are frustrated.

If you are more prone to the short-term bias, give yourself some achievements so you are more likely to keep going. You may try accelerating payments on the credit card with the lowest balance, or cut all other savings for a few months to get to a good emergency fund. Hitting that one important benchmark will likely make you more positive about hitting goal two and three. This “snowballing” effect may well be worth the slightly higher cost you paid in the meantime.

#2: Get an objective view

Sometimes there is progress, it’s just that we are so focused on the future, we forgot about the past. It’s really important that you are not alone in the progress that you are trying to make, so you can always get a different perspective.

In fact, that’s exactly the job of a financial planner. She will help you see the big picture when you get bogged down by your steps backwards, and remind you how far you’ve come. You can also share with a trusted long-time friend who can detail your progress. Know when not to trust yourself and bring in fresh pair of eyes.

#3: Write it down

Even if you don’t have a companion to share your journey, a journal is a good tool to help you achieve the same result. Write down what you are doing, what you wish to achieve, and what changes you’ve actually seen. Go back to read it whenever you feel stuck and feel like giving up, and you will see that time was your friend, not your enemy.

Or maybe you are a numbers person. Keep a spreadsheet of your net worth over time, or utilize tools like Mint.com. In my practice I also use tools to help my clients visualize their progress over time. Your memory might trick you, but a written record doesn’t. They will help you remember how far you’ve come.

#4: Expand the time horizon

Since you know it takes time to achieve your goals, lengthen the time horizon that you use to evaluate your progress. As a global nomad, I do feel that I tend to see my experience in small chunks of time based on where my home is. But, life is a continuous journey. Even if you feel like you have not accomplished what you set out to do in the brief time frame, look back further to see where you started, and connect all the stops in between. You will see that you have made progress and continue to look forward to the next phase in your life.