It’s been a memorable Olympic Games thus far, in more ways than one.
Already delayed by one year due to the onset of the pandemic, this year’s Tokyo 2020 games saw Singapore fielding a diverse slate of sportsmen and women.
The island nation fielded its first-ever diver, Freida Lim.
Notably, paddler Yu Mengyu just fell short of winning a bronze medal for table tennis.
To some, that may feel like a missed opportunity.
But it is all about setting the right expectations.
After all, there is nothing to be ashamed about coming in fourth-best, coming ahead of another 82 participants in the Olympics.
Setting the right expectations
Likewise, before you start investing, it’s important to have the right expectations.
It will be foolhardy to expect an outsized return unless you are good as Warren Buffett.
According to the SPDR STI ETF (SGX: ES3), the annual returns of the Straits Times Index is around 6.6%, measured from its inception in April 2002 to the end of June 2020.
You should gun for a fair return for the effort you put in, rather than reaching for higher returns that may entail a correspondingly higher level of risk.
A recent example of inflated expectations concerned national swimmer Joseph Schooling.
Unfortunately, the Olympic gold medallist failed to qualify for the semi-finals in his pet event, the 100m butterfly, clocking a time that was nearly three seconds slower than his national record back in 2016.
Expectations were naturally high as he had snagged the coveted gold medal during his previous Olympic outing.
However, it’s unrealistic to expect anyone to be in top form all of the time.
If you leave too little room for error, you may fall short of what you set out to achieve for your financial goals.
Training to be the best
Similar to the athletes participating in the Olympic Games, you also need to train hard to ensure you can perform your best.
What we witness on TV is mere minutes of the athlete’s performance.
But what we don’t see is the many years of rigorous training and discipline that led to that moment.
The same can be said for investing, too.
There is a tendency to idolise investors who achieve stellar returns without recognising the enormous amount of study and effort they put in.
Long-term investors who purchased technology companies such as Apple (NASDAQ: AAPL) and Amazon (NASDAQ: AMZN) a decade ago would be sitting on a pretty pile of profits now.
What’s in the background often goes unnoticed, leading us to believe that success is easily achieved.
It takes foresight and mental fortitude to hold an investment through numerous ups and downs.
Just as the athletes have had to train hard just to qualify to participate in the Olympics, you also need to train yourself in investing so you can give your best.
Without the required skillset and understanding, an investor will end up floundering and struggling without any clear direction.
Having the right mindset
Setbacks are part and parcel of life and should not hinder your investment journey.
In the case of Schooling, he has vowed to continue trying and will not allow his performance to end his swimming career.
You should have that same mindset when investing for financial freedom.
It’s natural to make mistakes and stumble as no one is perfect.
But, it’s how we react to these mistakes that determine if we succeed or not.
Schooling has displayed exemplary courage by taking defeat in his stride and learning from this humbling experience.
When you lose money in investing, you should also take it in stride and see what lessons you can glean.
By not giving up easily, you can improve your investment process over time and get ever closer to your retirement goals.
Crossing the finish line
Eventually, you will build up sufficient skill and capital to cross that finishing line.
Make no mistake about it — the journey will take time, and is not for the faint-hearted.
The rewards, though, are well worth the effort.
Recall Schooling basking in the glory of Singapore’s first-ever gold medal, and you get a taste of what to expect.
Whether it is compounding your money through a long-term investment in DBS Group (SGX: D05) or enjoying an increasing dividend from owning Parkway Life REIT (SGX: C2PU), you can select your own version of success.
And when you win these financial medals, you set yourself up for a lifetime of certainty and peace of mind.
And that’s definitely a goal worth fighting for.
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Disclaimer: Royston Yang owns shares in Apple and DBS Group.