One of the fundamental tenets underlying most investment activity is the expectation of receiving a greater return in the future in exchange for committing capital to an investment in the present. A related contributing factor necessary to successful investing is satisfaction deferral.
When resources are available to invest or increase immediate consumption of goods or services, the decision to commit these resources to an opportunity that may not yield results until some future time is necessary. Employing available resources for immediate gratification can be an easier decision for many people, while setting these same resources aside in some form of investment requires incremental discipline. No investments are 100 percent certain, although some may be fairly low risk.
Some investment opportunities appear very attractive and indicate returns far in excess of what might be garnered in more traditional investing. Generally, the risk of an investment should be commensurate with the expected return. Given efficient capital markets, purported low risk and high return investment opportunities should be viewed with a very high degree of skepticism.
Other aspects of life require commensurate satisfaction deferral. Making the choice to attend college might be viewed in a similar way. College requires financial resources as well as the dedication of a significant allocation of time and effort. The outcome of a college experience is not always certain when initiated. Anticipated career paths are altered; economic factors influence job prospects; and many other variables affect future employment. Enhanced prospects of economic prosperity or improving advantages of other sorts motivate individuals to pursue university level educations of many varieties.
Making the choice to form a family and have children is another example of satisfaction deferral. As most happily married couples will report, subordinating one’s own priorities and needs to those of a spouse’s or for the joint benefit of the couple is one of the essential factors for enduring happiness. Within the family unit, parents frequently dedicate extensive financial resources and great amounts of time to better the overall family situation and environment.
Rearing children can, in some aspects, be viewed like investing for the long term. Positive outcomes are certainly hoped for and generally anticipated, but the certainty of success is not guaranteed upfront. Like volatility in the financial markets, all parents experience significant ups and downs as a result of the decision to have children. Whether it is making it through a challenging night with a sick child or having a young adult child leave the house to move out on their own, parents employ their scarce resources over the long term for the betterment of their children.
Having just celebrated Mother’s Day, a time to acknowledge all those women who have contributed to who we all are, we can all attribute some portion of our current success to the satisfaction deferral of women who contribute to — or have already contributed — to our well-being. As investments ourselves, we’re all in a position to assess the return on the resources allocated to our development, nurturing and improvement.
Kirby Brown is the CEO of Beneficial Financial Group in Salt Lake City.