In our childhood we were told many stories which taught us that patience is a virtue. But unfortunately with age we tend to forget these lessons and always rush to get things done quickly. We see many common instances around us on how people run out of patience whether it is jumping a queue or honking in traffic or while disembarking a train/ plane. The same also extends to our investments wherein we search for instruments which offer high returns in a short time. Below is a story on patience which may refresh some of our childhood memories and also tell us how investing is similar.

There was a king who was known for his wisdom. He once wanted to find a new minister for his cabinet. He therefore spread the word that a contest would be held to choose the minister for which people from all over the kingdom poured in. For the contest, the King announced that contestants would be given a brass pot with a hole and they had to empty a small pond. The catch was, the pot was to have a hole. On hearing this most people withdrew thinking the King was merely jesting and he had already selected someone for the post. Only five men remained and they began their efforts, but soon one by one four of them quit realising it was a hopeless task. Only one young man continued to fill the brass pot and emptying it diligently on the banks. He continued doing so for three days and three nights till he finally managed to empty the whole pool. Not only that, he found a diamond ring at the base of the pool. Very pleased with his efforts, the King made him his minister as well as rewarded him with the diamond ring he had found in the pool as he displayed the virtues of patience.

How do we now apply the principles of patience to our investments? Like in the story if we want to reach the diamond at the bottom of the pond, it is certainly important to practice patience. Many of us want to invest in market linked investments like stocks and mutual funds for their potential to generate high returns but are wary to invest owing to the chances of a decline which may impact their principal as well. However, history has proved that the potential for higher returns from such investments is more consistent in the long run than in the short run. But who has the patience to wait?

Paul Samuelson, America’s first Nobel laureate has rightly said that “Investing should be like watching paint dry or watching grass grow”. While some may find this difficult to digest, it is still one of the key ingredients to create wealth. One can use enablers like perpetual SIPs or Systematic Investment Plans to invest in mutual funds on a recurring basis so that there is a compulsory saving. The question of market decline will remain even with SIPs but they help you to ride over this volatility by buying more units when the markets are low and lesser units when markets are high (known as rupee cost averaging). This is further supplemented by the power of compounding which helps to make money grow faster in the later years. Just like the hole in the brass pot from where the water leaked, market volatility may negatively impact your wealth in the short term. You, however, need to remain focussed in your long term investment horizon and keep the faith just like the young man did. So the next time you jump a queue or honk in traffic, think about this virtue called patience.

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Information contained in this article is not a complete representation of every material fact and is for informational purposes only. The recipient is advised to consult its advisor/ tax consultant prior to arriving at any investment decision.