Investing vs. Instant Gratification: A Smart Choice

Let’s talk about delayed gratification. In simple terms delayed gratification is when you postpone the now to enjoy the later. This is a very powerful tool when used in the world of investing and in particular property ownership.

Let’s look at an example of delayed gratification:

Say you worked hard and managed to save $50,000 over a number of years. Your car was starting to get old and the Km’s were starting to build up. Naturally you would be inclined to use some, all or even get a loan for a new car. The $50,000 would soon disappear.

What if you thought well, I have worked hard and deserve a holiday. Again, why wouldn’t you spend some and go enjoy yourself, everyone’s done it and I don’t blame anyone for doing it.

Now what if you took that $50,000 and invested it into let’s say a $500,000 townhouse (yes, they still exist). Now that money will be gone and yes, you don’t get a new car or get to go on that holiday now.

Let’s fast forward 10 years and that property has managed to now be worth let’s say $900,000. All of a sudden that $50,000 is now worth significantly more due to the growth of the asset and the fact that you used leverage (without going into the detail).

Imagine the sort of car you could get after the 10 years or the cool holiday you could get to go on or even better imagine the amount of time you would be able to buy back from your employer.

We all want things now it’s our nature but with some discipline, forward thinking and smart choices delayed gratification can be life changing.

This is a loose example of delayed gratification; there are many other factors involved like the cost of holding the property, how to get finance in the first place, how much profit would be made from the example, CGT and many others. I will delve into these in later posts as now I just wanted to show the power of playing the long game.