While enjoying our backyard over the recent holiday weekend, my wife and I noticed the immense growth of two trees we planted 20 years ago. From a scant four feet of height decades ago, they have quietly been thriving and are now nearly 18 feet tall. Their progress was quiet, nearly unnoticed and consistent. Compounding growth, whether in nature or finance, is similar: enough time can bring impressive results.
Seemingly every few years, a familiar story is published. A quiet person from a forgotten town, typically with little or no education and a low paying job, accomplishes the unusual. Over time, they’ve quietly compounded their money, sometimes to the tune of millions of dollars. (See our April 2024 article “Generosity Brings Joy.”)
The story always seems to rhyme; someone quietly saved and invested for decades while avoiding the trappings of comparison, bragging or flaunting. They seemingly never worried about what others thought of them — disregarding performance benchmarks, hot stocks, or even the macro economy. Their money just quietly compounded. Most often, their entire financial focus was inside the walls of their home, permitting them to “play their own game” without influence from others’ motives or goals. What was their superpower?
Think about it like this. Imagine you’re on a first date that’s livestreamed on YouTube. Everyone sees every bit of your conversation splashed onto social media. The audience is quick and unrelenting with their advice — telling you that you’re saying/doing too much (or too little) of this or that. No marriage, let alone first date, could withstand such bombardment.
Our relationship with money is similar. We put value in others’ opinions of how we manage our money, lifestyle, decisions and values. But how you choose to spend — or invest — your money is up to you. Comparison is simply irrelevant. Strategies that might work for someone else may not work for you. Recently, a client told me of a pickleball buddy who had invested in a well-known chip company with astronomical appreciation. Our client was not a shareholder and felt a bit left out. I reminded this client of the most important thing: keep your eye on what’s right for you and your wife. As in pickleball, keep your eyes on your game, not your neighbors’.
Comparison is a dangerous investor behavior. Keeping up with the Joneses is a foolish game people play with themselves. Wanting to buy something that has increased nearly 100-fold in the last two years could be dangerous. That’s why the most valuable service we offer as financial advisors is helping to protect people from their own bad investment behavior. When it comes to chasing yesterday or desiring what someone else has, “Don’t do that,” can be very valuable advice.
Some believe there are only two uses for money: to improve life, and to measure yourself against someone else. The first is quiet and personal; the second is loud and performative. I believe the first leads to a happier life, and the second brings self-inflicted frustration and anxiety.
If you fall into the second category — constantly comparing and then despairing — here are four things to keep in mind.
First, accept that what works for you might not work for someone else. Don’t compare your results to someone else’s; it’s impossible to win the “biggest fish in the sea” game. Decide what you value about money, and disregard other people’s priorities. Envy is dangerous, a poison that results in bad investor behavior. Ask yourself: Would I be happy with the result if no one other than my family could see what I did?
Second, be quiet. Be humble. Play your own game. It’s your game; you make up the rules. Since people are different, there’s really only one ideal: to approach life in your own way. A lot of financial mistakes come from trying to copy other people. To that end, be careful from whom you seek advice. Be careful who you admire and include in your social network. Acting quietly will make you less susceptible to a barrage of opinions from personalities with different goals.
Third, focus on financial independence over performative status. When you operate quietly, you can use your money to improve your life, not to show off, influence people or create an illusion for others to admire and envy. I’d rather wake up with freedom to pursue my interests, with whom I want for as long as I want, than impress a stranger with a nice car. Focus on endurance over short-term comparison.
Finally, focus on the long-term. Many claim to be long-term investors, but few succeed. One reason is they get caught up with comparison, peer pressure, benchmarks, chasing, etc. Long-term investing requires that you absorb fluctuation. If you can stomach the wiggles, you will experience more success than if you react to fluctuations. Build the strength to survive volatility, and don’t worry about looking misguided over a short time period. Instead of trying to look smart, make the calm and quiet bet that things will slowly get better over time.
Like the trees in our backyard, you don’t need to hurry. Your goals will be accomplished with fortitude and consistency over time.
Steve Booren is the founder of Prosperion Financial Advisors in Greenwood Village. He is the author of “Blind Spots: The Mental Mistakes Investors Make” and “Intelligent Investing: Your Guide to a Growing Retirement Income.” He was named by Forbes as a 2021 Best-in-State Wealth Advisor, and a Barron’s 2021 Top Advisor by State. This column is not intended to provide specific investment advice or recommendations.
