THE POWER OF PATIENCE

Saint Augustine said: “Patience is the companion of wisdom.”

Even though patience has been extolled as a virtue, it seems to be losing relevance in a world that chases instant gratification. Remarkably, nature and even the stock market reward the patient. Take a look at the annual returns of S&P 500 since 1928:

“While it’s interesting to look at S&P 500 returns for individual years, most people don’t invest in index funds for one-year periods; they invest for several decades. This is why it’s more interesting to look at decade-long annualised returns.

The S&P 500 delivered negative annualised returns in 11 out of 81 10-year periods (13.6% of 10-year periods) since 1928. During the best 20-year period (1980-1999), the S&P 500 delivered 13.2% annual returns.

The S&P 500 never delivered negative annualised returns in any 20-year period1.” Needless to say, the returns were even more positive in the 30- and 40-year periods.

Similarly, Unicorn also extolls patience as a virtue in order to derive results from investing over time. Exemplary opportunities to invest often present themselves after waiting for the market to correct significantly, or crash; such as during the last Subprime Crisis, 10 years ago.

This is a portfolio with Unicorn that has doubled its initial investment following our investment calls since 2011. The Client had started with a lump sum in Feb 2009, before the market reached its bottom in Mar 2009. And despite the returns in the past few years being relatively muted, the compound annual growth rate (CAGR) for the portfolio still works out to be 8.75% for the past coming 11 years.

However, not everyone invests near the bottom of the market. So even if the investment had commenced in 5 (Year 2004) or 10 years (Year 1999) before the bottom, the annual returns would still be 5.89% or 4.44% respectively for the above portfolio. It would look like this:

As Mahatma Gandhi had said: “To lose patience is to lose the battle.” Don’t lose the battle.

 

Reference:

1.Four Pillar Freedom: https://fourpillarfreedom.com/heres-how-the-sp-500-has-performed-since-1928/

 

Important Notice

The information herein is published by Unicorn Financial Solutions Pte. Limited. (“Unicorn”) and is for information only. This publication is intended for Unicorn and its clients or prospective clients to whom it has been delivered and may not be reproduced or transmitted to any other person without the prior permission of Unicorn. The information and opinions contained in this publication has been obtained from sources believed to be reliable but Unicorn does not makes any representation or warranty as to its adequacy, completeness, accuracy or timeliness for any particular purpose. Opinions and estimates are subject to change without notice. Any past performance, projection, forecast or simulation of results is not necessarily indicative of the future or likely performance of any investment. Unicorn accepts no liability whatsoever for any direct indirect or consequential losses or damages arising from or in connection with the use or reliance of this publication or its contents. The information herein is not intended for distribution to, or use by, any person or entity in any jurisdiction or country where such distribution or use would be contrary to law or regulation. If this publication has been distributed by electronic transmission, such as e-mail, then such transmission cannot be guaranteed to be secure or error free as information could be intercepted, corrupted, lost, destroyed, arrive late or incomplete, or contain viruses. Unicorn does not accept liability for any errors or omissions in the contents of this publication, which may arise as a result of electronic transmission.

Unicorn Financial Solutions Pte. Limited Reg. No.: 200501540R

PDF Version