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Here on Reel From The Real, i write what i’ve learned in investing x personal finance.
My goal is to:
share optimistic and positive energy - because the hustle is real x rough enough
personalise personal finance that bit more.
😎 To your wealth,
Aila Obiocha
Saving. Is. Boring.
Yes, I said it. halas.
If you know this, congratulations. If you didn’t know 👀, now you do.
Saving is boring.
For something that has transformed my financial life, it is an unenviably dull task. I wonder why I have never seen this as one of the top reasons why we find it hard to save. The internet is full of answers on why people struggle to save, how to build better savings habits, etc.
But one reason why most of us struggle to save may just be the sheer boredom of it.
Unless managing your budget on Excel gives you endorphins, or you get excitement out of being thrifty, for most of us, saving is a dull, thankless task. If saving is done well, it requires very little of your time each month. If it is done really well, it can be automated, so that you don’t have to do it at all. You don’t have to be there. You don’t have to be present in the act of saving.
You know what else we humans love to automate? Other dull, thankless tasks. Like book-keeping, filing taxes, and renewing insurance.
I think deep down financial companies know this, so they try to make their products seem fun and exciting, to help us save more and save better. They understand that saving is … boring.
“The habit of saving is an education;
it fosters every virtue, teaches self-denial,
cultivates the sense of order, trains to forethought,
and so broadens the mind.”
- T.T. Munger
Saving is the most powerful financial habit any individual, family, company, country, or community can ever develop. But it is a habit of the shadows. Most times, there is no one to watch you save, or congratulate you for saving - except your accountant or your savings app or Excel budget - and none of them care that you are saving.
In fact, if you automate your savings, even you are not there to observe you saving. That is how dull and thankless it is.
Maybe this explains why we find it easier to spend rather than save. Spending is … visible. Think about it. You are present in the act of spending. People can see what you have spent money on. You can show off what you have spent, video yourself spending, have people observe you spending, and receive their congratulations. Spending is … exciting.
Investing, especially great investing, is the mirror opposite. It is unexciting. Investing is literally the business of money. It is instructive, rewarding, and potentially fulfilling - but it is not exciting.
“If investing is entertaining, if you're having fun,
you're probably not making any money.
Good investing is boring.”
- George Soros
Investing is filled with periods of disappointment, misguided expectations, winning, losing, and frustrated outcomes - but not excitement.
You do it for the Cause, not the Passion.
“Investing should be more like watching paint dry or watching grass grow.
If you want excitement, take $800 and go to Las Vegas.”
- Paul Samuelson
I think this is why many investors are drawn to day trading, options trading, etc. These are exciting.
Just like spending is exciting relative to saving, trading is exciting relative to investing.
Investing is similar to farming:
You identify a fertile piece of land (industry or company),
Prepare the land for sowing (research the company, analyse the management, markets, products, potential),
Sow seeds in the ground (allocate capital, invest, buy equity or debt in the asset or company),
And (mostly) wait (add value as an investor, do nothing)
The seeds germinate + grow (management execution, customer satisfaction, community awareness, share price appreciation),
You fertilise + trim + prune + eliminate pests (portfolio management, sizing, selling losers, buying winners, scaling the company, raising more funds),
And if the plant bears fruit, the harvest is multiples of the seed (the investment delivers profits of 15X, 32X, 56X, or the very, very delicious 100X)
Which farmer do you know who describes farming as exciting? 🙄 🙄 🙄