By Mike Turner, Investment Solutions, Aberdeen Asset Management
This article expands upon the first of Mike Turner’s Seven Deadly Sins, which was first published in booklet form in January 2014.
In the late 1960s, a psychologist named Walter Mischel conducted a series of groundbreaking experiments. The premise was simple: he took a series of pre-school children individually into a room where there was a marshmallow. Each child was faced with a dilemma: have one marshmallow now or wait a few minutes and have two. This rather innocuous test of self-control proved very accurate in measuring children’s success in later life. Those who waited longer performed better academically, earned more money and were healthier and happier than those who succumbed quickly. Crucially, Mischel found that both adults and children could be trained to improve their level of self-control and make better decisions in their long-term interests.
You will likely be all too familiar with the struggle of delaying gratification. How many of us have broken new year’s resolutions of healthy eating and exercise after only a few weeks? Putting off important tasks such as revising for an exam is so easy when you can do something more fun. Equally, however, we appreciate that patience and discipline are very often the keys to success.
How does this relate to investing?