Procrastination: A Quiet Enemy
Procrastination is a quiet yet effective enemy to all of our ambitions - especially our most meaningful and rewarding ambitions that require a long period of sustained thought, discipline, and effort to convert from pure mental desires into physical realities. Furthermore, it is essentially impossible to avoid procrastinating on the necessary actions/decisions that contribute to accomplishing a pleasant desire while lacking awareness of the cause-effect relationships that enable the realization of the desire. Although someone may not be seemingly procrastinating in the general sense while engaging in unnecessary (unproductive) actions to achieve a desire - they are unknowingly procrastinating on the necessary (productive) actions by lacking awareness of such actions (causes) involved in the cause-effect relationships.
While intentional procrastination is harmful to our ambitions, accidental procrastination enabled by ignorance is potentially more malicious, considering it can prevent us from experiencing the most honorable and pleasant possibilities offered by life without providing awareness of such loss. Accidental procrastination from ignorance does not only steal from us some of our most honorable and pleasant experiences, but it may also contribute to causing the most humiliating and painful possibilities without providing awareness of such possible prevention.
To avoid accidental procrastination is to seek and discover the requirements and mechanics enabling the most honorable and pleasant possibilities and the requirements and mechanics enabling (for the purpose of preventing) the most humiliating and painful possibilities. To avoid accidental procrastination is not only to ultimately act but to proactively and consistently learn.
We are emotional and logical creatures, controlled by robust reasoning and short-sighted, often sacrificial emotions. Of course, it is our nature to consistently seek the most pleasant experiences, excluding the activities required to ensure our survival. Still, it is in our best interest to prioritize productive activities and decisions guided by logic rather than emotion to balance the immediate quality of our short-term experiences with the anticipated quality of our long-term experiences.
Interestingly, it is the prioritization of productive activities and decisions - the activities and decisions that frequently demand our energy and attention and provide considerably less positive emotion than the most emotionally-appealing activities and decisions - that ultimately allow us to achieve sustainable satisfaction and avoid the relatively more difficult emotional experiences than those associated with the seemingly-difficult productive activities and decisions. Beyond life's inevitable difficulties, this is a very powerful truth - easy decisions produce a difficult life; difficult decisions produce an easy life.
The easy (temporarily pleasant) decisions seem harmless and beneficial to our current emotional state, while the difficult decisions (temporarily challenging) seem costly and deterring because of their sacrificial nature. Yet, similar to the yin and yang, there are negatives found within the seemingly positive and positives found within the seemingly negative.
Although the effort and sacrifice associated with productive activities and decisions may seem less emotionally appealing and may quite literally be experienced as such, it is the sacrifice of pleasant experiences for productive activities that produce superior and more sustainable experiences than those sacrificed.
So, the question becomes, “can we multiply the compensation from our economic contributions to intelligently derive from life a greater amount of pleasure than the pleasure we sacrificed while being productive without directly harming others to derive such pleasure?”
What mechanism is concealed by our ignorance, or if not concealed, is misunderstood and/or misappreciated for its ability to transform our lives? Public financial markets.
Sometimes, to properly engineer a pleasant future, it is beneficial to reverse engineer and illuminate the desired result to comprehend the urgency, requirements, and mechanics associated with engineering the desired result.
The S&P 500, from 1928 to 2021, on an annual basis, including dividends, has provided a 9.98% annual return when calculating the nominal annualized growth rate (rather than calculating the average in any random year during the 1928-2021 period that actually amounts to 11.82%) (Damodaran).
For the sake of supplying a simple example to communicate what is lost by failing to prioritize investing rather than an ultra-precise example with tax and transaction cost assumptions, we assume an 8% annualized return, including dividends which is almost 20% less than the historical 9.98% annualized return generated during the 1928-2021 period.
If, at the start of a 40-year forward period, an individual had invested $500 monthly consecutively for 40 years at an 8% annualized rate compounded monthly to correspond to their monthly investments and realized no taxable gains and incurred no transaction costs, they would essentially convert $240,000 in accumulated savings into more than $1.7 million dollars. The individual would have effectively multiplied the saved portion of their compensation from their economic contributions by more than 700% or seven times their savings.
By delaying five years and only benefiting from a 35-year forward period with a $500 monthly investment, the individual would reduce their portfolio value by nearly 34%, from approximately $1.75 million to $1.15 million. The individual would have multiplied their savings by slightly less than five times, which is still attractive, but would have lost approximately $600,000 in potential wealth.
By delaying ten years and only benefiting from a 30-year forward period with a $500 monthly investment, the individual would reduce their portfolio value by nearly 57%, from approximately $1.75 million to $745,000. The individual would have multiplied their savings by slightly more than three times but would have lost approximately $1,000,000 in potential wealth by delaying ten years in prioritizing investing.
It quickly becomes obvious that what is seemingly an inconsequential monthly decision enabled by intentional procrastination from a lack of care or accidental procrastination from ignorance, is an extremely influential decision regarding its long-term implications on quality of life.
Money is not everything, but it is a powerful resource. A resource that provides freedom and control over our daily experience.
Money is also a resource that, if employed empathetically, may provide cascading benefits to those we love, those we have not met who need assistance in their pursuit to become productive and empathetic members of society, and those less fortunate citizens simply deserving of care.
Money does not guarantee constant satisfaction or prevent all painful experiences, but it undeniably contributes to satisfaction in the form of freedom, access to certain experiences, and control of our fleeting time while also contributing to a reduction in the common painful experiences resulting from a lack of financial resources.
The older we become, the more we realize our time is the most precious resource.
The wiser we become, the more we realize that public financial markets allow us to purchase time (financial freedom) through the process of multiplying the economic value of our labor and therefore diminish the amount of time we would otherwise need to sacrifice to accumulate a sufficient amount of financial resources necessary to support a sustainable, financially-independent, honorable, healthy, and pleasant lifestyle.
The quicker we convert our compensation earned from providing the resource of labor (recognizing money cannot inherently produce any additional economic value) into the ownership of productive assets, the quicker we can escape the necessity of supplying sacrificial labor for survival and the greater the frequency and magnitude of pleasant experiences we can access or provide to others from possessing exceptional financial resources.
Often the most persuasive or valuable ideas, objects, systems, or opportunities do not require any intentional persuasion or promotion to attract interest because their mere existence is sufficient to reveal their exceptional value to those with observant and considerate minds.
Public financial markets are one of those systems offering exceptional value.
Public financial markets are transformative. Our wildest desires may be realized through financial markets, and our most frightening fears may be minimized through financial markets.
Although the benefits from accumulating financial resources may remain attainable beyond an ideal retirement age, considerably more than just “money” is lost to procrastination when someone delays prioritizing investing early in their life.
Financial security is lost.
Independence is lost.
Control is lost.
Time is lost.
Memories are lost.
Many fragments of life are lost.
The disciplined will prevail.
The careless will lose.
The wiser of the two, I hope you choose.
For the best for others.
For the best for you.
Sources:
Damodaran, Aswath. “Historical Returns on Stocks, Bonds, and Bills: 1928-2021.”
2022, https://people.stern.nyu.edu/adamodar/pc/datasets/histretSP.xls.
Accessed June 2022.
This commentary on this website reflects the personal opinions, viewpoints, and analyses of the Financial Strategies Group, Inc employees providing such comments, and should not be regarded as a description of advisory services provided by Financial Strategies Group, Inc or performance returns of any Financial Strategies Group, Inc Investments client. The views reflected in the commentary are subject to change at any time without notice. Nothing on this website constitutes investment advice, performance data, or any recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. Financial Strategies Group, Inc manages its clients’ accounts using a variety of investment techniques and strategies, which are not necessarily discussed in the commentary. Investments in securities involve the risk of loss. Past performance is no guarantee of future results.
Written by: Hunter Biggs