My competitive advantage is that I am playing the long game with my investment portfolio and not concerned about my annual returns. That alone sets me apart from many professional money managers who think they need to beat the market every year. That long-term mindset allows me to play a different game and structure my portfolio in a way that can beat the professional money managers over the long-term even though I may never beat them in a single year. However, having a long-term mindset and not getting tempted by “FOMO” isn’t easy, especially when my portfolio is up 5% and the professionals are returning 20% in a specific year. Here are a few ways I am able to maintain my long-term mindset when everyone else is chasing the short-term.
Create a strong personal finance foundation.
Creating a strong personal finance foundation is the most important way that I am able to maintain a long-term mindset. I have an emergency fund, automated 401k and invest a total of 15% of my income on a monthly basis. I also have a lifestyle that I can afford within my income. Having that strong foundation allows me to invest with confidence that I can weather the unexpected life events without interfering with my long-term investments.
Recognize everyone is playing a different game
This one is difficult for me. I enjoy reading and watching business news which is often focused on short term trading (vs. Investing for the long-term). I’m sometimes tempted to trade a stock rather than invest, but I remind myself I’m not set up to win the short term. I’m only set up to win the long-term. There are thousands of investment firms that pay a lot of money for talent and research that will always win in the short term. It’s something I remind myself every time I’m invested to chase the short term – my strategic advantage is the long-term. This also goes for comparing investment returns. It’s easy to compare myself on a one-year basis to the “market” but a better comparison for me is the longer term (e.g. 10-year market growth).
Maintain a healthy lifestyle
Maintaining a healthy lifestyle is a secret weapon and extremely under-rated in almost every aspect of my life, including maintaining a long-term mindset on my investment portfolio. Being active, eating healthy and getting enough sleep allow my mind to think as clearly as it can and my body to give me as much energy as it possibly can.
These are the tools that help keep my mind focused on long-term investing, but the same principles will apply to any area in your life that you are playing the long-game. Create a strong foundation, recognize everyone is playing a different game and never underestimate maintaining a healthy lifestyle.
