delayed gratification

Slow and Steady
photo shows blue, partly cloudy sky and brown stalks of rice plants

I’ve got something to say—about rice.

I know. I’m not a foodie. This is not a food blog. But hear me out. A retired client and amateur nutritionist opened my eyes about rice.

I’ve always had issues with white rice: I generally want to eat the whole pot. It’s handy, it cooks up so quickly, but to get full from it, I keep eating and eating.

“That’s not what you need,” the client told me. “They take the good stuff out so it will cook faster.”

Brown rice isn’t “minute rice”: it’s 45-minute rice. But the slow route preserves the stuff we really need. We don’t throw out the good stuff for immediate gratification. And if you want to think about the big picture, remember that this grain has been a food staple across the world for thousands of years. No wonder. It packs a punch, if only we handle it responsibly.

We are not nutritionists (although when you and I visit, you may still hear me talking about brown rice!). But this lesson is still paying off in other ways. Did anything sound familiar as I relayed all this?

In their rush to get in on the action, some new investors head for day-trading. It scratches an itch, but it’s focused on the smallest time frame. Investing for the long haul? That’s where the good stuff is, we believe. (No guarantees.)

There are benefits in the waiting. Preservation, patience—sometimes we need a dash of each.

Clients, email or call to talk about this or anything else.

Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual.

All investing involves risk including loss of principal. No strategy assures success or protects against loss.

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Slow and Steady – 228Main.com Presents: The Best of Leibman Financial Services

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Slow and Steady

photo shows blue, partly cloudy sky and brown stalks of rice plants

I’ve got something to say—about rice.

I know. I’m not a foodie. This is not a food blog. But hear me out. Recently, a retired client and amateur nutritionist opened my eyes about rice.

I’ve always had issues with white rice: I generally want to eat the whole pot. It’s handy, it cooks up so quickly, but to get full from it, I keep eating and eating.

“That’s not what you need,” the client told me. “They take the good stuff out so it will cook faster.”

Brown rice isn’t “minute rice.” It’s 45-minute rice, but the slow route preserves the stuff we really need. We don’t throw out the good stuff for immediate gratification. And if you want to think about the big picture, remember that this grain has been a food staple across the world for thousands of years. No wonder. It packs a punch, if only we handle it responsibly.

We are not nutritionists (although when you and I visit, you may still hear me talking about brown rice!). But this lesson is still paying off in other ways. Did anything sound familiar as I relayed all this?

In their rush to get in on the action, some new investors head for day trading. It scratches an itch, but it’s focused on the smallest time frame. Investing for the long haul? That’s where the good stuff is, we believe. (No guarantees.)

There are benefits in the waiting. Preservation, patience—sometimes we need a dash of each.

Clients, email or call to talk about this or anything else.

Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual.

All investing involves risk including loss of principal. No strategy assures success or protects against loss.

 

Sacrifice or Joy?

canstockphoto17054356.jpg

The ability to delay gratification is supposed by some to be the key to reaching our goals. And it seems to make sense.

If one can spend less and save more day by day, greater wealth results over time. Skipping dessert and taking the stairs instead of the elevator over the weeks and months may improve our health over the years and decades.

This framework casts our future welfare as something that contends with current enjoyment of life. “Sacrifice today for a brighter tomorrow,” and all that. It takes willpower to struggle against today’s desires for distant benefits, somewhere down the road.

We believe there is a more productive way to think about this.

The key is to find the immediate gratification hiding inside deferred gratification. If you are broke but begin saving a little bit of money every payday in a systematic way, you have the immediate gratification of changing your trajectory, of moving in the right direction.

Imagine the gratification of getting your act together in the way that most needs it. You have known it needs attention, and its neglect nags at you. Embarking on a plan gives you the immediate gratification of taking action to improve your life.

In short, you can struggle and sacrifice today for benefits in the misty future, or reframe it so that reaching for your goals brings you immediate joy. It’s a matter of the narrative you choose to tell yourself, the framing in your mind.

Clients, if you would like to talk about your goals or anything else, please email us or call.

Screaming Toddlers and the Federal Reserve

© Can Stock Photo Inc. / kondrytskyi

How many times have you read how easy it is to lose weight or build wealth or improve your health simply by developing your capacity for delayed gratification? Relax, we aren’t here to hector you or lecture you. Instead, we would like to explain how and why defective but popular policies are going to cost our future selves.

Resisting the temptation for a smaller but immediate reward in order to gain a larger or more enduring reward later—that is the concept of delayed gratification. The ability to exercise it has been linked to improvements in physical health, mental health, social networks, and wealth. In an economic sense, deferred spending (or saving) is positive because it builds capital that can make us more productive, with potentially higher income and net worth in the future.

Toddlers generally lack a firm concept of “later.” When one decides that a lollipop is needed, talk of waiting until after dinner or tomorrow doesn’t really fly. If you know why they call toddlerhood the “Terrible Twos,” you understand that tantrums work against the idea of delayed gratification.

Our Federal Reserve and other central banks around the world are impatient with the pace of economic growth. One of the supposed “problems” they’ve identified is that we are not spending enough. The savings rate—the part of our incomes that we do not spend—is higher than it has been for quite a while. The Fed knows we could spend more money if we wanted to, but we are stubbornly saving it.

Our economy will be stronger in the future because collectively we are exercising delayed gratification with our money. But the immediate gratification of faster economic growth right now is being sacrificed so that you and I can have stronger balance sheets, less debt, and more money on hand.

You may have noticed that the Zero Interest Rate Policy has drastically reduced the return on savings. And now, in the next step, some central banks are fostering negative interest rates. It is hard to think about, so let’s look at an example. At negative interest rates, you might buy a $10,000 CD and get back only $9,900 at maturity.

Why would the “experts” inflict this upon us? In order to make us spend money instead of saving it. It is like the Zero Interest Rate Policy, only worse. In other words, the central banks are like toddlers who have seen the lollipop and want the lollipop and it better happen NOW!

The Federal Reserve Board has members of varying opinions: some are like toddlers, some behave as adults. Thankfully nobody has begun to institute negative interest rates in the United States.

Our slipping national capacity for delayed gratification is a problem at the leadership level. We want you to know how this might affect you. We are also paying attention and working hard to figure out what we should own, and why, in our investments.

As always, please write or call if you would like to discuss this or other pertinent issues.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

The economic forecasts set forth in the presentation may not develop as predicted and there can be no guarantee that strategies promoted will be successful.