While trying to boil down the many reasons for Warren Buffett’s long-term success, Alan Greenspan once told the Oracle, “Warren, it strikes me that if you did nothing else you never sell. That is, if you can grit your teeth through and just disregard short-term declines in the market or even long-term declines in the market, you will come out well.”
Buffett has shown the ability to stick with his investment strategy for decades on end.
Cliff Asness once tweeted, “Having, and sticking to, a true long term perspective is the closest you can come to possessing an investing superpower.”
Here are some other financial superpowers:
The ability to delay gratification. The whole process of investing involves putting off consumption now for consumption later. The ability to wait when it comes to spending money can help keep you out of credit card debt, compound your money for future use, and give you a margin of safety when things inevitably go wrong.
I’m also a believer that patience with your finances can make that future gratification feel even better when it finally happens. The feeling of anticipation becomes even more worthwhile when it doesn’t come with a debt hangover.
The ability to witness your neighbor getting rich or buying stuff without getting FOMO. Money is almost always relative when we think about our position in life. This clip explains this better than I ever could:
When we see other people getting stuff it triggers all sorts of thoughts and emotions.
Wow, they must be rich!
I deserve to have the same toys they do!
You made how much on that crapshoot investment?!
The majority of the keeping up with the Joneses mentality is driven by the fear of missing out. The problem with trying to keep up is you never know the exact financial circumstances of your peers, friends, family or co-workers.
Plus there’s a huge difference between buying stuff and generating wealth. True wealth is technically the absence of spending money on too much stuff.
The ability to further your career. The secret most personal finance experts don’t tell you is the best way to save and get ahead is not about being frugal but about making more money. A higher income does not solve all of your financial problems nor does it guarantee your happiness, but it sure makes life a whole lot easier.
This is an obvious but often overlooked aspect of personal finance. The ability to improve your career prospects and therefore your earnings potential offers a huge advantage.
The ability to avoid lifestyle creep. Making more money makes your life easier but the ability to keep your wants relatively constant is how you supercharge your savings.
The ability to stop comparing yourself to other people’s earnings or jobs. Jealously can be a killer when it comes to your finances but also life in general. It’s hard to find contentment when you’re constantly trying to copy the career path of other people or worrying how much others make.
An addiction to learning. Being smart can get you places in life but intelligence has its limits. An insatiable curiosity is far more helpful because the world is constantly changing. If you’re not consistently learning you’re going to be left behind.
An ability to set realistic expectations. Mistakes are bourne out of a misalignment between expectations and reality. When it comes to money decisions, those expectations are always changing depending on how things are going at the moment.
Setting a reasonable range of outcomes in financial matters can reduce the onset of mistakes with your money by avoiding the overreactions that tend to accompany life’s frequent curveballs.
An ability to be uncomfortable. If you’re not a tad uncomfortable every month with your finances you’re probably not saving enough. If it’s not a little painful you’re probably not moving the needle.
If you want to get ahead in your career you’re going to have to have difficult conversations, with either yourself or your employer, to figure out how to maximize your earnings and job growth.
Investors are rarely comfortable with their current positions because we live in an uncertain world and there are always other investments that are performing better than our own.
Being uncomfortable is a prerequisite when trying to get ahead financially.
An ability to be satisfied with what you have. Everyone says their main goal in life is to be happy but happiness is just a feeling that comes and goes. Contentment and satisfaction with what you have in life may be a more worthy goal than happiness.
Find me someone who is content with their life and I’ll show you a person who is truly wealthy.
The 3 Levels of Wealth