A farmer was digging a well in his field. He had already started eight other wells that were not finished. People saw that he would start digging a new well when he hadn’t found water after a few feet. This kept happening, and he ended up digging up more than half of his field without finding any water.
When a wise person saw this, he said, “If he had put all of his efforts into just one well, he would have had water a long time ago.”
“But if he keeps going like this, he’ll never find water. “By doing it this way, he’s only hurting his own land,” the wise man said.
As we saw in the story, the farmer didn’t dig the well deep enough to get water because he didn’t want to wait.
Like the farmer, many investors try to time the market and don’t let the long-term power of compounding work.
Here are three reasons why investors should be patient.
- Trying to time the market doesn’t work.
- The equity asset class is based on short-term volatility.
- The magic of compounding only works over a long period of time.
Investing small amounts regularly over a long period of time, no matter how the market is doing, is the way to get rich.