Watering can over rolled banknote growing among plants

The number one reason your money isn’t growing!

We are living in a world of instant gratification. Want a new product? You can receive it with same-day delivery. Want to watch a movie? Click the movie link and it will stream in seconds. Want a meal? Order it online and get a 30-minute delivery or your money back.

According to KISSmetrics, consumers want information so quickly that 40% of people will abandon a website if it takes more than three seconds to load.

But, good things often take time and money growth is no exception. Your money may not grow overnight, but this doesn’t mean your money isn’t growing.

Let’s compare two different investors, Tony (impatient) and Sophie (patient), and show their money growth.

Tony and Sophie both invest $10,000 into a term deposit with a return of 5% interest. Each year, Tony leaves the principal in the term deposit, but takes his $500 return (5% of $10,000) out and spends it. Sophie, on the other hand, does not touch her term deposit and lets her interest compound.

Graph showing advantage of letting interest compound over 30 years
Assumptions: Initial amount = $10,000; Interest rate = 5%; Inflation = 2%

After 30 years, Tony only has $25,000 ($500 x 30 years plus the initial $10,000 deposited). As shown in the graph, Sophie has increased her amount to $43,000. That means patience has resulted in Sophie having $18,000 more than Tony.

It is also important to have patience with the market trends. It is not uncommon for investors to follow the trend of the market. When the market is performing well, investors want to capture more growth by buying more securities. When the market is performing badly, they want to sell their securities (Preston, 2017). However, this is the opposite of Warren Buffett (one of the world’s most successful investors)'s advice, as he suggests to “be fearful when others are greedy and greedy when others are fearful”.

Depending on what you are investing in, short-term market fluctuations may have minimal effect on your long-term investment. Long-term financial success is based on your personal goals. Get in touch with an Authorised Financial Adviser for a plan to achieve financial success and financial growth.