The following are five of my favourite investing quotes. All of them remind me of core investing principles that I believe will lead to my success over the long-term.

“Everyone has a plan until they get punched in the mouth.”
Mike Tyson

Yes, I am talking about Mike Tyson. The one with the face tattoo. And no, Mike Tyson is not a famous investor even though his Cannabis company appears to be doing quite well. He is a boxer. Many opponents found themselves weak in the knees and staggering around after climbing in the ring with Iron Mike. This may sound familiar for many investors who have been through the depths of a bear market.

Like an overmatched boxer, many investors quickly shift into fight or flight mode. That means getting as much money out of the share market as quickly as possible. Many of these investors don’t have a plan other than trying to get as rich as possible in the short-term. And when “everybody knows” the market will keep falling, the way to have the most money possible in the short-term is to sell.

Having a plan and an investment strategy can make a world of difference in these situations. Understanding where you want to get over the long-term and what it will take to get you there is what keeps you invested. And staying in the game is critical because when “everybody knows” something is going to happen, it is likely the market will do the opposite.

We covered the approach of putting together a goals-based plan in our podcast episode and webinar.

“Someone's sitting in the shade today because someone planted a tree long time ago”
Warren Buffett

There is a Warren Buffett quote for every occasion. This one is my favourite. Saving and investing is an exercise in foresight and delayed gratification - which is why it is simple, but not easy. Warren Buffett has an enviable track record, but in addition to his prolific returns he also has an extremely long-time horizon. He first invested at 11 years old, and his preferred holding period is forever.

Every time I think about selling a share, I consider Buffett’s quote and a famous study from the University of California, Berkeley. The study took data from a large brokerage firm and looked at shares that people sold and what they purchased with the proceeds. After 84 trading days the shares sold outperformed the shares purchased by 1.36%. The gap widened to 3.31% after 252 trading days and settled at 3.32% underperformance for the purchased shares 504 trading days after the transactions.

One of our biggest advantages as individual investors is the ability to have long-term holding periods. Give up that advantage at your peril. There is power in buy and hold investing. It is unappreciated by most investors.

“Where are the customers’ yachts?”
Fred Schwed Jr.

Trading platforms and investment products are a means to an end. An ETF provider would rather have you in a thematic ETF like the ASIA Technology Tigers ETF (ASX: ASIA) which charges .67% than a broad index ETF that tracks the ASX 300 like the Vanguard MSCI International ETF (ASX: VGS) with a fee of .18%.

We hear a lot about compounding when investing, but we rarely hear about how fees also compound. We can see the impact of the fee difference if we consider the growth of an investment of $10k in each ETF for a decade with 8% annual returns. You would have $21,207 with VGS and $20,198 with ASIA. In two decades that difference would grow to $44,972 vs. $40,798. Three decades and the gap is $95,369 vs. $82,405. You get the point. The difference in your account balance will far exceed the actual amount that you pay in fees. That is because you have less money each year to grow. And that compounds over the long-term.

The focus for investors should be on outcomes and not products. Approach investment products as a savvy consumer. Think about the motivation of the company selling and marketing the product. Is it to help you reach your goals or for the company to make money? Retain a healthy sense of scepticism.

"The biggest risk of all is not taking one."
Mellody Hobson

Mellody Hobson’s quote doubles as investing and life advice. Since I’m the last person that should give life advice, I will stick to the investing side of things. We hear a lot about how risky it is to invest. Mostly, we get this advice from people who don’t invest. A more sensible approach is to reframe your thought process to focus on the risk of not achieving your goals.

All of a sudden, the risk is not the short-term volatility of growth assets like shares but not taking on enough short-term volatility to achieve the returns you need. This is risk tolerance vs. risk capacity. Framing risk around your goals rather than your reaction to a hypothetical scenario is the pathway to actually achieving them.

My colleague Shani explores how many investors are reflexively focusing on the wrong type of risk. And it is too their detriment.

"The investor's chief problem-- even his worst enemy-- is likely to be himself."
Benjamin Graham

Investing successfully means trying to act as rationally as possible while knowing that complete rationality is an unachievable goal. There are so many different emotions wrapped up in investing. Describing it as greed and fear falls to capture the full spectrum of emotions. It is not greed for greed’s sake but the desire to create a better future. To relieve the burden on loved ones. And fear is not just the fear of diminishing account balances. It is the fear of failing your family. Not giving them the future you desperately want to provide.

Given the complexity of the emotions around investing it is necessary to create structure and actively pursue rationality. Write down your goals, strategy and approach. Seek out people to keep you accountable. Implement speed bumps to slow down your decision making. Behavioural discipline can be a source of edge or advantage for investors but takes as much work as analysing companies. Taking it se

And acknowledging that we all carry baggage that influences the decisions that we make as investors is a good place to start. A bit of self-reflection goes a long way in designing a process to overcome that baggage. I’ve covered this in an article exploring my own investing baggage and how it influences my decision making. And remember that the average investor is leaving 1.7% of returns on the table each year just by making poor decisions.

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