NEXT LEVEL money
There’s no such thing as overnight success (how to achieve your financial goals)
As humans, we’d like to think that success is linear. But it’s not. Like growth in the stock market, it’s exponential. And it takes time and effort (a.k.a. sacrifice). If time and effort have a linear trajectory, then success over time will be exponential as illustrated below:
You can put in a lot of effort into attaining a goal (mastering a certain skill, writing a book, starting a business, etc.) and not seeing any results right away despite putting in plenty of effort. It can be years of seemingly nothing, but then almost as if something just clicks into place, the results start flowing in. And growing your net worth though investing takes the same process.
You have to be willing to keep at it even when you don’t see immediate results. Which psychologically can be disheartening to put in a ton of effort into something only to be met with (perceived) failure. But it’s not failure if you can keep learning from your mistakes, get back up off the ground, dust yourself off and keep at it. Overnight successes are never actually overnight. It’s usually a story that is years in the making. But we don’t hear about it in the news until it’s a big, newsworthy success.
Here’s a chart of Apple’s stock over the years. Sure it’s a little more bumpy, but it looks awfully like the time vs. success chart shown above. Because that’s how exponential growth works.
Just like growth in the stock market, success is more of a bumpy ride rather than smooth sailing. Looking over period of years (or decades), success is exponential, but as soon as you zoom into the day to day or month to month, the journey has plenty of ups and downs.
Don’t invest in the stock market expecting an overnight success. Because success over one day can be met by failure the next day. But over the long term, success will compound on itself and given enough time and consistency, the results will be extraordinary. Of course, saying that with consistent effort, success will growth exponentially over time is a bit oversimplified. In reality the journey looks a bit more like this:
Set a goal > take the steps to work towards it > learn from failures > aim towards a better goal if needed > be consistent in your effort, be patient and don’t give up => success over time
It’s important to set a goal at first. Set a goal to know where you are going, but also know where you currently are. That gives you a road map for the future.
Presumably you are here because you want to take your money to the NEXT LEVEL. But how do you define what the next level is? If you are working towards a personal financial goal, you get to define what it is for you. Here’s one example of how I previously defined it for me.
When I was 20 years old, I set a goal of having a net worth of $10 million by age 60. But it wasn’t just one goal. I also set benchmarks or in-between goals to make sure I was on a realistic path. So the goals I set actually looked like this:
Level 1: $100k by age 25
Level 2: $250k by age 30
Level 3: $500k by age 35
Level 4: $1M by age 40
Level 5: $2M by age 45
Level 6: $4M by age 50
Level 7: $10M by age 60
So that’s roughly a doubling of my expected net worth every 5 years, although it was more ambitious from age 25 to 30 and less ambitious from age 50 to 60. Which makes sense because I could take more risk when I was younger and will take less risk when I’m older. In order to double your portfolio in 5 years, you’d need a 14.8% return on investment. If you could attain that ROI, then you wouldn’t need to save any more money. But I expected that I would have to save money as well, which I have done.
In the first decade, from age 20 to 30, I successfully hit my Level 1 goal and the my Level 2 goal. But then something curious happened. I actually decided that my original goal of $10M by age 60 was not actually what I wanted to aim towards. But aiming towards that original goal gave me sufficient progress and now I have the flexibility to aim towards another goal. A goal that’s better for what I actually want. Because at age 20 I didn’t actually know what I wanted decades into the future. Now at age 30 I have a better understanding. But I still expect that my goal will continue to evolve with time as I learn more about myself and my desires and life in general. But I’m sure glad that I set an ambitious goal when I was young and naive because it will make whatever future goal that I define easier to attain. How I define financial success for me will change with time, but I long as I consistently put in the effort, I will get there with time. And I encourage you to do the same!