Working Wealthy – Patience

May 14, 2019

I am not a patient person. Just ask my wife, kids, co-workers, family, pedestrians I’m walking next to and the guy parallel parking in front of me. I think you get the point.

Why is that? Why am I so anxious for certain things to happen in life that I miss all the good stuff in between?

I’m probably not alone in being so excited to get to the next thing that I ignore all the pleasant things that come with taking your time and living more in the moment. Clearly, I still have a lot to learn about enjoying life a bit.

So, what does patience have to do with your finances, planning and how you invest? Absolutely everything. Think of these three examples:

1. Patience with the market

The fourth quarter of 2018 and the first quarter of 2019 are an excellent example of why investors must be patient simply for the sake of their portfolio. If an investor made rash decisions at Christmas, it would have prevented any amount of recovery to their portfolio in January and February.

But December, and really the fourth quarter of 2018, was not an easy time to process. The grip of the market having such a tumble created anxiety and worry for many. Lean on your wealth manager at BDF during those times to understand why being patient will pay-off.

And ask questions. There are no bad questions in a volatile market. It’s our job to talk through the noise and help you feel better about the path ahead.

As investors, we’re anxious to see good returns or even stable returns when the market gets volatile. It’s simply human nature to lose your patience.

2. Patience with factor investing

The BDF equity portfolio is chock full of our four factors—exposure to small caps, value-oriented companies, momentum stocks and profitability screens. Statistically, we’ve experienced very few times when all four factors created excess returns in the same year. They’re not meant to be correlated but rather complementary.

Kind of like a quartet, when the one violinist and cellist are having an off night, the viola and second violinist pick up the slack.

For investors, this means having patience with factor investing. It won’t work in a couple of months or half of a year. But over time we are confident factors bring value to our client portfolios. The strength of the quartet will come through in the overall quality of the music.

3. Patience with your planning

General George Patton is famous for saying something along the lines of “a good plan, executed now, is better than a perfect plan next week.” We’re certainly not planning the Allied invasion of Europe with our clients, but we are planning for some very important life events.

Work with your team at BDF to understand the framework and details of your plan. Don’t worry about it being perfect. Life will change whether we can control it or not. So, our planning will be dynamic and we’ll adjust the plan to fit your life.

For us, the real danger lays in not having a plan. It doesn’t need to be the absolute perfect plan, but there needs to be a plan.

Don’t be like me. Understand the moment you are in and don’t allow the uncertainty of the future to create undue anxiety. Easy for me to say but so much harder to do.