Many St. Patrick's Day celebrations took place last weekend and more celebrations will happen on Tuesday, March 17th, the actual St. Patrick's Day. There are many ways we celebrate; parades, 5ks with names like "Shamrock Shuffle", pub crawls, green beer and dyeing rivers or canals green. For all the fun that it is, it can also help teach us some serious lessons about money.
The Shamrock: Legend has it that St. Patrick taught the Irish people about the Holy Trinity by showing them a three-leafed plant, the shamrock. The shamrock has since become a main symbol of St. Patrick's Day. The three leaves of the shamrock can remind us of three important virtues with money:
- Patience: Be patient with your investments. Don't chase the latest fads or last years' hot investment. Often investments with good long-term returns go through periods of short-term bad performance. It's normal. If you aren't patient during those short-term poor performance periods you won't benefit from the long-term returns.
- Discipline: Do you have a disciplined investment strategy? Don't let your emotions get the better of you. In this day and age of 24 hour news coverage it can be difficult to look past troubling headlines, market volatility and dropping portfolio values. Do not get caught up in the fear and panic of the moment. This is when mistakes are made that can lead to a permanent loss of capital. Rather, remember the objective of your portfolio and stay disciplined and focus on your long-term goals.
- Pay yourself first: You can have all the discipline in the world but if you don't save money it won't matter. By pay yourself first I mean when you get your paycheck, before you pay any bills or do anything else, put money in your 401(k) or other retirement plan at work and into a savings account if you haven't built up an emergency fund. If you're participating in your employer's 401(k) or other retirement plan then the money comes out of your paycheck before you even see it. If you tell yourself that you'll save whatever's left after you pay your bills and buy the things you need and want, you're fooling yourself and you won't save enough. Start saving early and save as much as you can. Your future you is depending on it!
Banished snakes from Ireland: St. Patrick is said to have banished all snakes from Ireland. You may have a snake in your investing called market timing. Banish it! You should not be asking yourself whether you should be in the market or out of the market. No one can successfully and consistently predict the ups and downs of the stock market. Often trying to time the market ends up being more costly than profitable. By sticking to the three money virtues discussed above you can banish the market timing snake.
Green: St. Patrick's day is synonymous with the color green. Green is synonymous with money. Save more of it and save it earlier. The sooner you start the better. If you start saving $200 per month at age 30 instead of at age 25, assuming an 8% average annual return, it will cost you over $240,000 in lost savings*.
As you celebrate St. Patrick's Day, have fun, wear green and follow these three money tips to have more green in your future!
*Source: ING Special Report: Cost of Waiting. This is a hypothetical example for illustrative purposes only and is not intended to represent any specific investment. This example does not consider any costs associated with investing. Investments involve risk and you may incur a profit or a loss. Seeking higher rates of return involves higher risks.