184. Why Staying Invested Beats Perfect Timing

What do you do when your investment goes down?

Do you panic, make changes and move your money somewhere that feels safer? Or do you trust the plan and stay the course?

In Episode 184 of Know Your Money, Bronwyn and Craig revisit one of their favourite books, The Psychology of Money by Morgan Housel, and unpack the chapter “Tails, You Win.”

The idea is simple but powerful: you do not need every investment period, business decision or opportunity to be successful. The wins and losses are part of the same journey. What matters is being able to stay in the game long enough for the wins to make a meaningful difference.

Bronwyn and Craig discuss why investors often want to make changes when markets fall, even after enjoying strong returns in previous years. They compare three investors who approached difficult market periods differently and show how fear, hesitation and trying to predict the perfect time to invest can significantly affect long-term outcomes.

They also explore why every investment needs a clear purpose and timeline.

Money you may need soon should not be invested in the same way as money you are growing for the long term. When you understand what you are keeping, what you are saving and what you are growing, it becomes easier to ride the waves without reacting emotionally to every market movement.

This episode is a reminder that investing successfully is often less about doing something clever and more about continuing to do the right thing when everyone around you is panicking.

Sometimes the best action is patience.

And sometimes, when your long-term money is invested correctly, the best thing you can do is stop looking.

Transcript

Welcome To Know Your Money

SPEAKER_00 0:12

Hello everybody. Welcome to Know Your Money. I'm Bronwan Wayner.

SPEAKER_02 0:16

And I'm Craig Finch, and we are from Growth Financial Planning. We hope you enjoy our podcast.

Why We Revisit This Book

SPEAKER_02 0:22

Hi Bron, I see we've got the book on the table again. We do. One of our favorite books by Morgan Housell. Amongst the same other six million people around the world who also enjoyed this book, but yeah, we really enjoy it. And when you pick it up again, some insightful programs and thoughts and ways to invest money or look at money and have a relationship with money. So

Tails You Win Mindset

SPEAKER_02 0:46

now we're looking at chapter six, I think it is, which is heads and tails or tails and heads.

SPEAKER_01 0:52

Tails and the win. Win, I think. Let's just have a look quick. Tells you win.

SPEAKER_02 0:58

Tells you win.

SPEAKER_01 0:59

Yes.

SPEAKER_02 1:00

Interesting concept.

SPEAKER_01 1:02

Really interesting concept, and I think the essence of that chapter to me is you've got to have the losses with the wins because you it's teaching you that you can't give up and you can't pull out when there's a loss. Like in the chapter it talks about Disney, um, Walt Disney, and how many um animations they did before they actually did well. I'm not sure on the specific number, but it was a lot. And then Snow White was the one that put them on the map and made them win. So they had to go with all the losses until that good one came along.

Market Winters And Patience

SPEAKER_01 1:45

And I think it's the same with investing, don't you think?

SPEAKER_02 1:47

Yeah, so and that was a credible story because in 1938 they the film made $8 million, which was incredible amounts of money and paid out all paid back all their debts and got them back on the map. Because that was can you imagine how many months Walt Disney and his team must have thought it was a failure, they're never going to come right. So it's like winter, I suppose. You've got to go through a winter to have a beautiful summer, and you while winter's happening, you don't think it's ever going to be a summer. And that's the same with investing. You look at the what's happened over all the since 1900, how often the stock market has dipped and done badly, and people have lost money. But people who stay the whole course make the most money, and you just got to be patient through, as you say, when things are bad. So there's things in that book of nights since 1900, right up until 2000 and can't remember the date. Six is like 1,400 months of investing. I think you've got the numbers there.

SPEAKER_01 2:49

I do. And it's and it's just about that, I think. And as a financial planner, I think often we manage conversations where the markets are down. You know, the month before someone got a seven, uh the year before someone got a 17 or a 20% return, and then the next year it's not that good, and then they want to adjust and make changes, and it's about riding the wave. And what we've always said is being intentional about what the timeline is for that money, because that's how long the journey is or the wave. So

Sue Jim And Tom Compared

SPEAKER_01 3:23

just to your point with those numbers, um, it was if a person invested one dollar every month, so the amount we've used that in Rands is 16 Rand. So if someone invested 16 Rand a month from 1990 to 2019, what would they have? So in the book he talks about investor Sue, and Sue invests that 16 Rand every single month religiously, not missing a month. By the end of it, she would have 6.9 million Rand. Okay. Then Morgan talks about Jim, who is invests as well, that's 16 Rand a month, but he doesn't do it during recession. So when it's recession, he sells it and he puts that money into cash. And as soon as the recessions end, he takes that cash, he puts it back in, and he starts that um so he continues the 16 um a month, but sometimes in cash. For him, instead of the 6.9 million that Sue had, he would have 4.1 million. So a two more than two million rand difference. And then the last investor is Tom. Tom does basically what Jim does. So when there's a recession, he doesn't invest it in the market, he invested in his bank account, but he takes a little bit longer to put the money back because he's worried about this recession. And for him, he gets 3.7 million. So I think the essence of what Morgan is trying to say in this chapter is you've got to ride the waves. If you pull out too soon, you're going to miss it. And in his book, there's a quote by Napoleon, and it says, the man who can do the average thing when all those things around him are going, when all those around him are going crazy.

SPEAKER_02 5:24

Yeah.

SPEAKER_01 5:24

And that's what we try and encourage our clients to do. Just ride it, right?

SPEAKER_02 5:30

Correct. And I

What To Do When It’s Down

SPEAKER_02 5:31

think the the numbers were 1900 until 2019, which was 1,428 months. And of those 1,428 months, 22% of them were bad.

SPEAKER_00 5:45

Sure.

SPEAKER_02 5:46

So it's quite a lot, almost a quarter were bad. But if you rode that bad cycle, that's the kind of numbers you would have got.

SPEAKER_01 5:53

Yeah. And I mean, what is your one thing that you try and encourage clients when they do say, okay, it's bad now and I want to get out? How do you Well you don't. But how do you tell them?

SPEAKER_02 6:09

It's difficult because people look at their statements quarterly and they've gone down and then they want to get out. You just try and con just look at the bigger picture. As you say, the timing and how long you need the money is important. And if you if you've allocated that money correctly, you won't really worry about it. And don't look.

SPEAKER_01 6:28

Yeah.

SPEAKER_02 6:28

Just don't look.

SPEAKER_01 6:29

And that's also, I think, one of the biggest things. And I think the tip for our audience is ride the wave, but also be intentional of what that money is for. Because if you are putting the money that you need for an emergency in something that's up and down, you can't not look because maybe you need it next month. And I think that's why we are so um intentional about saying what are you keeping, what are you saving, what are you growing? And the growing you don't look.

SPEAKER_02 6:57

Exactly.

SPEAKER_01 6:58

You know, the keeping you can look at, but you'd put that in the bank account because you're going to need that closer to time.

SPEAKER_02 7:04

Good.

SPEAKER_01 7:05

Anything else from that chapter?

SPEAKER_02 7:07

Good chapter, good learnings.

SPEAKER_01 7:09

Yeah, hope that helps. Thanks.

SPEAKER_02 7:10

Thank you. Bye. Bye. Thank

Subscribe And Important Disclaimer

SPEAKER_02 7:13

you for listening. If you have enjoyed this podcast, would like to subscribe, please visit our website www.growthfp.co.za. The information we have provided in this podcast is our personal opinion. For more detailed information, please discuss your financial situation with a financial planner.