Why short-term thinking won’t build long-lasting wealth

“How do I avoid losing money?” At the beginning of my investing journey, that’s the question I focused on.

As I learnt more, my focus shifted to “What will give me a good return?” Then it became “What’s the most sustainable investment strategy for me, long-term?”

The biggest shift on your wealth journey is not what you do, it’s how you think about money.

Changing how you think about money can make a huge difference on your long-term wealth.Credit: Simon Letch

You stop hustling after scarcity tactics and start building systems that scale. You stop worrying about losing money and start seeing opportunities to make it. You stop worrying about $100 problems and start solving $5000, $10,000, $50,000 problems.

A new level of action is preceded by a new level of thinking.

This is the hardest part of the work I do with my students – yet also the most crucial. It’s easy to explain what an ETF is. It’s harder to help someone build the self-trust and resilience required to ride the ups and downs of the market with ease.

It’s easy to explain how superannuation works, but it’s harder to get someone to shift from short-term thinking to the long-term thinking required to take superannuation seriously.

No short-term quick wins will pay off as much as stretching your ability to think long-term in your financial decision-making.

This isn’t about what strategy or tool to use. It’s about changing the lens through which you make financial decisions altogether – which creates bigger, more sustainable results long-term.

Here are a few examples of what that looks like.

Short-term v long-term thinking

One of the most underrated financial skills is the ability to think long-term. I’m not talking in months or even years, but decades. Here’s the difference in what that sounds like:

Short-term: “I need to get on the property ladder as soon as possible.” Long-term: “I want to buy a property I’m happy to hang onto for a couple of decades.”

Short-term: “What can I invest in that will give me X per cent return in one to two years?” Long-term: “What can I invest in that will still be a quality investment five, 10, 20 years from now?”

Long-term thinking is harder – it takes more patience and delivers less instant gratification. You have to move away from wanting fast results to wanting results that last.

Taking the time to create a streamlined savings system won’t deliver the quick wins that chasing after savings hacks will, but it will deliver bigger, more sustainable results long-term.

Building wealth is a long-term game.Credit: Getty Images

Taking the time to buy a property with your long-term goals in mind won’t satisfy the urgent desire to ‘get on the property ladder’ now, but it will pay off big-time in a few decades.

Fundamentally, wealth is a long-term game. No short-term quick wins will pay off as much as stretching your ability to think long-term in your financial decision-making.

Security v opportunity

Are you acquiring wealth for security or for opportunity? For most, the drive to earn more, save more and invest more is rooted in a desire for security.

This can be a lifelong journey that doesn’t end until you have a fully paid-off house and enough assets to retire. Even then you can still be worried about running out of money.

Instead, what if you started asking, “What are the opportunities that wealth can make available to me?” This takes you on a totally different journey to “How do I create financial security?”

One takes you on a cautious journey where the acquisition of wealth is the end goal. The other opens up possibilities, with wealth being a resource for creating a richer experience of life.

‘Right decision’ v ‘right for me’

Initially, you might be fixated on making the ‘right’ move. What’s the ‘best’ investment? Should I buy a property or invest in shares? If there’s going to be a market crash, should I sell my investments or ride it out?

The thing is, there isn’t one single correct answer. It’s better to think of there being core principles, and you get to choose how you apply those principles to your life.

You can be financially successful whether you invest in property or shares; whether you buy a property now or rentvest now; whether you invest inside or outside superannuation.

Many choices can be a good choice – so it’s not about trying to determine one universally correct answer but picking the right choice for you.

This requires having the self-awareness to know what’s the right choice for you – and the self-trust to back that choice, even when others appear to be succeeding faster on another path.

Often, we get caught up in trying to improve financial results by taking different actions. Chasing a new strategy, trying a new tool, jumping onto the latest investment fad.

But better financial results come down to one thing: better decision-making. And better decisions start with better thinking. This is a skill you can learn – and when you do, financial growth won’t be something you need to chase. It will be inevitable.

Paridhi Jain is the founder of SkilledSmart, which helps adults learn to manage, save and invest money through financial education courses and classes.

• Advice given in this article is general in nature and not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.

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