“It turns out that your brain is much more aroused by $1 today than by $1 tomorrow. And $1 six months from now barely registers,” according to “new discoveries in neuroscience labs.” Oh, come on, I could have told you that, and I’m no scientist.
Basically, for your brain to accept waiting for interest to accrue, it has to accrue at some impossible rates.
“For your brain to be willing to wait a mere three weeks for a higher payout, that $20 would have to grow at an annualized rate of roughly 4,800%.”
I’m glad that I’m accepting saving, and potential interest on my savings, is a long-term investment. I don’t even let myself accept that I’ve made the money I will be investing. If I for a moment acknowledge that I could be spending that money now, it would be much harder to lock it up in savings until I’m old and gray.
One interesting tidbit I found in the article is that “the average holding period for a stock, among individual and professional investors alike, is just over 11 months.”
Whoa. I’m doing pretty good, then. I don’t mind holding, even when I’m losing money. It’s easy to do this because, again, I haven’t accepted that I’ve earned that money. I’d like to save for a house or grad school, or some other large-ticket item, but at the moment all of those purchases seem so impossible to me, it doesn’t matter much if I lose money. As long as I can keep making money, I know I’ll be fine. I just need my rent payment for my studio and food money and I can deal. All the extras is just that – extra.
I can see why later in life, investing might get more complicated. Instead of extra income from investments being a luxury, when (/if) I have kids, it might become a necessity. But then I’d think my investing would become even more risk-averse.
Anyway, the brilliant scientists “found out” that we’re bad at waiting for reward. We all have a little Veruca Salt “Daddy I want it now” in us. Is that so bad?
“…the temptation to buy dotcom stocks in 1999, energy stocks in 2005, real estate in 2006, emerging markets in 2007 or gold right now – what’s hot when it’s hot – is overpowering for many people, no matter how often they’ve been burned before.“
I wonder if Gold will be like dotcom/energy/real estate. Hopefully not, as I’m investing somewhat heavily in the GLD ETF (although not that heavily just because I haven’t really invested much money in my sharebuilder account yet versus my Vanguard Roth.