Sit still and build wealth
Yes, it's simple, but it ain't always easy
I remember when I was in elementary school, my teachers would sometimes often tell me to sit still and be quiet.
I was a restless, fidgety kid.
And I didn’t know it then, but “sit still and be quiet” has become a big part of how I think about money.
Especially investing.
Being quiet is pretty straightforward, but today I want to talk about “sitting still” and why it can help you build more wealth.
Think of money like a bar of soap… the more you handle it, the smaller it gets. That’s why leaving your money alone and letting it grow over time is often the best strategy.
But this is hard because our brains are wired to look for and react to danger.
If we’re worried about running out of money or see the stock market dropping, we often feel like we need to do something.
Anything.
Like, right this very minute!
Our instincts tell us to fight or run, just like in an actual life-threatening emergency.
The truth is, the best thing to do with your money is often nothing at all.
Or as Dr. Daniel Crosby, says, “Do less than you think you should.”
Which reminds me of this:
Think about this…
When a soccer match ends in a draw, penalty kicks in a shoot-out format sometimes decide the victor.
If you’re not familiar with penalty shoot-outs, here’s a quick explainer from Atlanta’s own Tophat Soccer Club.
Since penalty kicks are taken from 12 yards in front of the goal, the ball often moves so quickly that the goalkeeper has little time to react.
So most goalkeepers will dive to their left or right, attempting to guess where the shot is going.
But statistics show that they might have a better chance of stopping the penalty kick if they just stand still in the middle of the goal.
And you know what?
It’s much the same with your money.
Be wary of guessing where the market is going.
No one knows, and it can be costly to guess.
If you leave your investments alone and don’t react to every move - big or small - in the market, you’ll likely do much better in the long run.
Of course, that’s easier said than done.
It’s tough to watch your portfolio balance go up and down and hear folks talking about selling and sitting things out on the sideline.
The secret is that the most money is typically made not when everything is going great, but when times are tough.
And you stay patient.
Despite the urge to DO SOMETHING!
The most important part of growing your wealth isn’t picking the perfect investment.
Or “diving” in and out of the market at the right time.
It’s having the right mindset.
Can you stick to your plan when everyone else is panicking?
Can you keep investing even when the market is dropping?
Many of us do this without thinking twice in our 401(k) plans because the money comes out of our paycheck automatically.
But when we see scary headlines, we want to stop and change things up, even though staying the course is usually your best move.
Fear makes people react, but good financial decisions take patience.
And time.
The best strategy is to have a plan (and portfolio) that fits your life.
And then trust your plan.
You don’t build wealth by doing what everyone else is doing.
If that worked, everyone would be rich.
Instead, you need to build and maintain a plan you trust, ignore the noise, and remember—sometimes the best thing you can do is just sit still and be quiet.
And I’m not suggesting that “sitting still” is the same as “set it and forget it.”
You’ll still need to rebalance your portfolio to manage its risk.
And there may be some tax-loss harvesting opportunities along the way as well.
But it’s not the time to change things up or take action just because you’re worried.
Or, as I wrote way back in 2008,
And while you’re sitting still and leaving your investments alone, there’s plenty of other things you can be doing in other areas of your financial plan:
Tax planning
Estate planning / review
Insurance planning / review
Retirement income planning
Making sure your money is aligned with the life you want to live
and more
Because your investment portfolio - while important - is only a small part of your financial plan.
I’ll leave you with a quote that seems to go well with what I shared above…
“You make enough mistakes by mistake, don’t make one on purpose.”
- Maxwell Maltz
Thanks for reading.
Until next Wednesday,
Russ