Investing 101

You’ll Never Retire if You Keep Doing This

Let’s say I wanted to give you $100 and I presented you with two options…

Option 1: You can take the money and go. Spend it today and never look back. Or…

Option 2: You can forfeit the $100, and I’ll give you $1,000 in a month.

What would you do?

This scenario is modeled after the famous “marshmallow test” from a psychology study out of Stanford University in the ’70s. Kids ages 4 to 6 were given a marshmallow. The researcher said they could either eat the marshmallow then and there… or wait 15 minutes and get two marshmallows.

The ensuing videos are the stuff of legend now.

Some of the kids popped the marshmallow in their mouths the second the researcher left the room. Others stared at it intently. Some paced the room or tried other distractions.

The hypothesis was that the longer a child could delay the gratification of eating the treat, the more successful they would be later in life.

So think of your retirement savings as that marshmallow. Only, instead of getting two treats after 15 minutes, you’ll get 200,000 treats after 50 years.

Even as adults, we often forget the value of delayed gratification.

Better in the Long Run Chart

It would be too easy to pocket my full paycheck every two weeks. I could spend the extra cash on a few more dinners out, a couple of bottles of wine, a weekend away…

I could live paycheck to paycheck and spend the money as I earn it. But that well would dry up fast if I ever decided to stop working.

Or I could automatically pull out 10% of my paycheck every two weeks, invest that money, let it grow and eventually be able to retire.

Living slightly below your means is a lifelong skill. And eventually it just becomes habit.

Because you never want to be stuck in a situation where you have no emergency savings, no cash on hand or no nest egg to fall back on.

The stakes are higher with your money than with a marshmallow. But the lesson is the same.

Patience and discipline will repay you later in life. And the reward will surely be something you’ll savor.

Good investing,


Last Price:

Daily % Change:

Last Update: