Every Percent Counts

This post is geared more towards the younger investors who think they know it all and want to get rich right away, because they’ve been fooled into believing once they attain money they’ll receive happiness. But what they fail to realize is that if they fail via their retarded HODLer gambits, they could quite possibly ruin themselves and/or set themselves back a decade + in their goals to achieve financial independence. I know this because I too was once retarded and took insane risks in order to “get rich” so that I too could become Jay Gatsby.

But investing well is more about discipline than skill and it takes a system to create an environment that is conducive with excellence. If the single biggest contributor to getting rich via investments is compounding returns (earning a return on your investments over a number of years) then the enemy of that dynamic is drawdowns. Think of it like a footrace, with a goal of taking 100 steps. Some years you’ll take 2 or 3 steps and others 10. The worst case scenario is for you to have taken 50 or 60 steps only to fuck up and take 25 steps backwards, ruining years of returns and progress due to lack of discipline and/or greed.

Some of these drawdowns are due to lack to good advice or acumen, such as the market collapse of 2022. We saw the Russian/Ukraine crisis forming in slow motion coupled with the inflation scare and the effects it had on confidence. A responsive investor would’ve taken some gains off the table and moved to defensive areas and/or applied hedges to his portfolio. Only the slothful took the hits and permitted years of gains being washed away under the auspices of “stocks always go up.” This is largely true, but it’s predicated over a long period of time and there are years when the markets are so bad it sets back portfolios for a decade plus, such as the 2000 dot com implosion or the 1973, 74 recession years.

To my point. Every percent counts when compounding returns over a long period of time so fight for each basis point. Below is an example of someone investing $5,000 per year for 20 years and the subsequent results with different percentage gains.

Annual investment: $5,000 over a 20 year time period

Avg returns:
5%: $165,329
10%: $286,375
15%: $512,217
20%: $933,440
25%: 1,712,723
35%: 5,761,051

Strive for greatness and not fast money.