Sustainable Investing: How Consistent Average Performance Leads to Extraordinary Long-Term Growth

I am for firm believer that average performance sustained for an above-average period of time leads to extraordinary performance. This concept, although simple, could be your guide to financial success.

Power of Average

Idea of average performance often has negative connotations, especially in a world where everyone is striving for exceptionalism. However, when it comes to investing, average doesn't mean mediocre. It refers to consistent, steady, and disciplined investing. It's about following tried-and-tested strategies, avoiding the temptation of market fads, and sticking to a well-thought-out investment plan.

Consider index funds - they aim to deliver average market performance and have outperformed a significant portion of actively managed funds over time. This isn't due to some secret strategy or luck. It's about steady, consistent performance and low costs. It's the principle of being average and staying the course, not for just a few years, but for decades.

Above-Average

Now, let's talk about the second part of our principle: the "above-average period of time." Investing is not a get-rich-quick scheme. It's a marathon, not a sprint. Successful investors understand this and commit to their strategies for the long haul.

Patience, as we've discussed before, is more than a virtue in investing; it's a necessity. This doesn't mean waiting idly for returns to materialize. It involves monitoring your investments, staying informed about market changes, and adjusting your strategies when necessary. Yet, through all these activities, the underlying commitment to your investment remains the same.

Extraordinary Performance

So, how does average performance sustained for an above-average period lead to extraordinary performance? The answer lies in the power of compounding. As Albert Einstein famously said, "Compound interest is the eighth wonder of the world. He who understands it, earns it; he who doesn't, pays it."

In other words, when you let your average returns compound over a long period, the growth is not linear but exponential. A consistent 7% return may seem ordinary annually, but over thirty years, it can turn a modest sum into a substantial nest egg.

Takeaway

Embracing this principle of sustained average performance over an extended period is fundamental to successful investing. It calls for discipline, patience, and a solid understanding of your financial goals.

The best part? This strategy is accessible to all - no extraordinary intelligence, luck, or insider information required. All it takes is an average strategy, an above-average commitment to the long-term, and a willingness to let the extraordinary power of compounding do its work.

So, remember: in investing, slow and steady doesn't just win the race — it redefines it.

Thanks for reading. Keep investing, stay patient, and trust the process. Your extraordinary performance is within reach.