I am a very impatient person by nature. My mom tells a story that even in Kindergarten I could never sit still. I would stand with one knee on my chair as I did any table work. It’s something that I’ve harnessed rot use for my advantage in life. But I’ve also had to learn to be patient. And as my financial story evolves, I realize just how much patient is a financial superpower.
In fact, I’d argue that patience is one of the most important traits of successful investors. Which is interesting, because the typical picture of a “successful” investor is someone moves 100 miles per minute making trade after trade running around the New York Stock Exchange.
But that is not the case.
So, let’s take a look at just how much patience can be an asset in our journey to financial freedom.
5 important ways patience is a financial superpower
But first a quick aside…
This can be really tough for people in general but especially for doctors. As doctors we are tinkerers.
In most cases, the more we do – intervene in pathologic processes etc – the better things turn out. But in the case of finances, the more we do, the more we can actually impede our own wealth building ability.
So this takes practice. Give yourself grace as you go along. But do be patient! And this is why…
1. Passive investing works better than active investing
Studies have continually shown that over a long period of time, passive investing outperforms active investing 80-85% of the time!
Passive investing is index fund investing. Active investing is stock picking via individual stocks or active mutual funds.
And the investors in these studies are not you and me. They are professional investors. On Wall Street.
If they can’t beat the market average with all of their experience, knowledge, and data, how can we expect to? And why would we trust our local financial advisor to do it? It defies logic. And yet, many still do it. Don’t be like those people.
And don’t throw whatever hand full of active managers have beat the market in a previous year or stretch of years. History is rife with these tail events and outliers. History is also rife with the same managers losing all of these gains in subsequent years…
And what is the absolute key to passive investing?
Patience!
Passive investing, in practice, means buying index funds according to your chosen asset allocation. And then…doing nothing! Until a year later when you rebalance. And then you do nothing again!
You have to ignore the day to day swings in the market with a patient long term view on the overall upward trend of the market as a whole. This is how you succeed as an investor.
2. Market appreciation benefits the on the game longest
Let’s shift gears to real estate. Now remember, there are a bunch of ways to make money from real estate including:
- Cash flow
- Mortgage pay down
- Tax benefits
- Inflation hedge
- And appreciation
There are two types of appreciation: market and forced appreciation. Market appreciation tends to get a lot of attention in terms of how it can grow wealth. And it can. But the problem is that in the short term, it is random.
Market appreciation depends on the state of the real estate market. And in the short term, this is based on numerous and incalculable arbitrary factors.
However, long term real estate prices tend to always rise. So this is very similar to the situation in the stock market. If you want to actually benefit from market appreciation, you have to stay in the game longer.
And that means using more patience as a financial superpower…
3. Paying off debt takes time
I’ll be honest. This is where I struggle the most in terms of being financially patient. Just the other day, I was lamenting to Selenid how frustrated I was that we still were not debt free. And how I wanted to pay it off quicker.
Her advice? Be patient. There’s no gold medal for how quick it happens. Now, you of course don’t want to stay in debt indefinitely. That was one of the worst piece of financial advice that I ever received. Ideally you pay off all student debt within 5 years of finishing training. But we are on track to do that. So why rush more?
Well, for some people like me, the seeming rush can come from the knowledge that each $1 you pay to debt immediately increase your net worth by $1. That’s an amazing, immediate, and guaranteed return. See for yourself and calculate your net worth here.
Then there is the mental drain that bad debt places on anyone who has it. The idea of getting rid of that as quickly as possible is enticing.
And lastly, for most people also including myself, we want to take action, action, action. And paying off debt after a bit can seem boring and like it’s not working as quickly as it should. So taking action by investing our money in some other way becomes much more appealing.
And yes, you want a balanced plan between paying off debt and investing, but paying off debt needs to continue to be a major part of your plan until you are rid of it.
Because when you are in a (financial) hole, you need to stop digging first…then you can get out and start walking and running to financial freedom. So you need – yes, again – patience. Keep paying off your debt according to a set schedule that will get you debt free. And you will reach financial freedom.
Patience is your financial superpower once again…
4. It’s the patient real estate investors who do best
Real estate investing is most commonly depicted within our circles as a rocket ship. You get on and then, all of a sudden, boy does that thing take off. And before you know it you’re among the stars.
What I mean by this is we most commonly hear about doctor investors who got started. And then 1 year later they have 100 units and are financially free. The reason we hear those stories most commonly is because they are exciting and sexy. And while they do happen, in my experience, they are the exception rather than the rule.
Check out my best-selling book, Money Matters in Medicine!
And thats ok. In fact, I argue that it’s better than ok. Because the tortoise beats the hare in real estate investing!
Because what real estate investing is really like is a flywheel. Having said that, I am going to do something that I rarely ask…but if my concept of the real estate flywheel is foreign to you, pause and take 5 minutes to read this post before continuing…
Being a real estate investor means making coordinated, repetitive, small pushes on the flywheel. And it’s really hard at first. But then it starts to gain momentum. And more. And more. Then, that is when things really start to take off!
But, that description isn’t always that sexy. So it’s less talked about.
But, as always, I think full transparency is key and that this can actually be an encouraging thing to talk about. Because then you don’t get discouraged when you hear about others on a perceived rocket ship and you’re only on your first push of the flywheel. In fact, talking about it this way I think is more encouraging!
This post goes through step by step how Selenid and I built our current real estate portfolio to 18 doors and $10,000+ monthly in cash flow.
It wasn’t fast. If we tried to do it fast we would have bought poorly cash flowing properties and committed unforced errors that would have hurt us in the long term.
Patience is the reason for our success and we continue to drive forward with this. And it’s become a core tenet of our new real estate investing company in partnership with Daniel Shin, Cereus Real Estate, which you can join as well!
5. You need to enjoy now as well
Financial freedom and well-being is important for doctors. With it, you can work on your own terms and you will become a better doctor just like I did.
So, you need to have a written financial plan (here is mine) and enact it. One example of a good plan is to simply save 20% of your gross income and invest it in index funds over the long term. Do that and you will reach financial freedom.
But once you do this, once you have a plan and are enacting it, you need to be patient. You now know that you will reach financial freedom. And to do it, you just need to follow this plan. Resist the urge to rush it. There’s no need.
If you become overly frugal or obsessed with accelerating to your future at the expense of the present, that is a mistake too.
Practice intentional spending! Buy experiences and memories! Enjoy your friends and family!
And yes, I’m also talking to myself here!
Practice makes perfect
You can harness patience as a financial superpower to both create your path to achieve financial freedom while also maximizing your present joy with intention.
It’s really the best of all worlds!
And here are some additional resources to help you harness this financial superpower to the max:
- 7 Financial Habits of Highly Successful Physicians
- The Simple Habits That Will Make You Financially Successful
- 7 Small Things Doctors Can Do to Get Their Finances On Track
- Creating My Universal FIRE Equation
What do you think? What is your financial superpower? How do you use it to your advantage? Is patience part of it? Let me know in the comments below!
