Investing in the Age of Instant Gratification

Test matches have given way to T20s. An instant on-the-go meal is preferred over a full-course meal. Get groceries delivered in 10 minutes! Searching an address online, ordering food, buying clothes, getting movie tickets, booking for travel needs, and even investing in stock market – all of these can be done in few clicks or taps. We are living in the age of instant gratification. So much so that we seek instant feedback on social media posts, and even want to destress and relax instantly. 

Information, necessities, entertainment, relaxation, success – we need everything instantly! 

Instant gratification is the desire or temptation to experience pleasure immediately without waiting or deferring it, sometimes even at the cost of foregoing a future benefit with probably a less rewarding instant pleasure. 

Let us travel back in time to recollect how things transformed over generations. Gen-X (born before the 1980s) was a generation with limited income, limited needs, and a ‘save first’ attitude. The Gen-X grew up in a world which is very different from today. Living in a joint family and taking care of the family’s needs influenced them to prioritise security and safety in their job as well as investing. Their major spending/outflow were towards securing necessities like children’s education, marriage, owning a house, and retirement. They focused their energies on finding security and stability in life before opting for comforts and luxuries. They strongly believed that a combination of hard-work, process, discipline, and patience was the only way of life, and anything that is instant does not have a lasting effect. This belief allowed them to exhibit patience and focus more on the process that was necessary to be followed to achieve anything in life. 

Gen-Y or Millennials (born around the 1980s -1990s) grew up in an environment of improved economic conditions. Technological advancements carved the surroundings in which they grew up, and it continues to do so. Incentivisation gained prominence during their upbringing. “Get 80% marks and we will buy you a cycle” was one such incentive that millennials grew up with. For those who are wondering, 80% and above was difficult to score back then and was considered quite a big achievement. We started attaching rewards to even what was necessary to do, and this is continuing even today. The millennials saw the start of an era with more employment and business opportunities that demanded migration. We moved from a joint family to a nuclear family culture and from a single-income to a dual-income family. The affordability of lifestyles improved significantly, and what was once regarded as comfort became a part of our basic needs. Our spending pattern saw a replication of the west as the increased family income was accompanied by a desire for an improved lifestyle. The urge to pursue their passion, change in priorities, and live in the present is what drastically sets millennials apart from Gen-X.

Gen-Z (born between 1990-2010) and Gen-Alpha (born after 2010) are the most privileged ones (at least economically) when compared to the previous two generations. They get anything and everything they point at, and many a times they are bestowed with things that are probably not even necessary. The difference between necessities, comfort, and luxury has shrunk drastically and is almost vanishing. With both parents working, managing kids has become a huge task, and incentivisation has levelled up. Today, kids are given gadgets so that they do not disturb the parents either during their routine jobs or when they need a ‘me time’ which is regarded as essential for leading a quality life by many. Today’s generation lives for short-term pleasures and is growing up with instant gratification. 

An ever-changing world has redefined the aspirations of Gen-Y, Gen-Z, and Gen-Alpha and made them more independent as well as impatient. Moving away from the joint family structure, changing priorities, lack of quality time for personal life, increasing discretionary income – all or a combination of a few of these aspects have persuaded them to a culture of instant gratification. 

Is Instant Gratification Bad and Harmful?

We are living in a world with an ecosystem geared to trigger and cater to our impulses. And the power of convenience probably leads us to construct a belief that it is absolutely okay not to plan. Instant gratification makes us feel amazing, but too much of it, eventually can induce a mindset of short-term thinking, a lack of discipline, and impulsive decision-making. Unknowingly, our brains get trained to be impatient, seek instant results, and set unrealistic expectations in almost all aspects of our lives.

When It Comes to Investing

The Gen-X strongly believed in living within their means. They prioritised savings against spending. This naturally made them good planners. They did not have access to as many investment products as we do today. Also, the products back then usually had longer tenures with limited or no flexibilities, and they used to give higher guaranteed returns. People often sought the help of a trusted advisor or agent for their investment needs and were prepared to wait for wealth creation. The clarity on what was apt for a secured financial future was incredible.

Comparatively, as we live in an environment where everything is instant, we often tend to seek instant success in investing as well. Today, we can start investing right from the comforts of our home or office or by sitting in any part of the world. We have a plethora of product options (enough to confuse often). We are hooked on social media or Google University to validate our thoughts on every subject. A lot of finfluencers (as they call a financial influencer) even make us believe that making money from money is a cakewalk (probably true for a few lucky ones if done as a full-time job). And with so much information available at our fingertips, we often get caught up in the hype of a hot stock, or following a trend, or the fear of a market downturn. The habit of instant gratification works like a dope/nasha, and the temptation to take quick, impulsive decisions is one of the biggest challenges of investing in today’s time. Thanks to technology, we can even act on our thoughts at convenience of the click of a button. And such actions often lead us to poor investment choices, hindering long-term wealth creation. 

How Can You Succeed as an Investor in the Age of Instant Gratification?

The world’s most successful investors have always asserted that investing is a long-term phenomenon demanding discipline, patience, and consistency. However, it is often difficult to exhibit this behaviour in practise. This is one of the reasons that the number of successful investors as a percentage of the global investing population is minuscule. Following a simple approach mentioned below will help you avoid the noise, stay focused, and become a prudent investor: 

• Define Your Financial Goals: Identify the goals that you are trying to achieve through an investment. The goals give a purpose and direction to your investment efforts. 
• Prepare an Investment Plan: A plan works like a roadmap to achieve your financial goals and helps you set a realistic approach on how much to invest, how long to invest, how long you should stay invested, etc.
• Follow Asset Allocation: Once the plan is ready, you need to invest in products that will help you achieve the desired results. Identify the suitable product categories based on the time horizon of your goals (short, medium, and long term). You need to understand that each product is designed to suit a particular time horizon, has specific risks associated with it, and is conditioned to achieve certain desired returns. The time horizon is the core to asset allocation.  
• Stay the Course: A lot of distractions can prompt you to change your path or investment approach. Having a strong conviction, maintaining discipline and consistency are important ingredients for the success of an investor. Staying invested, irrespective of market volatility, is the key to achieving your long-term goals.
• Regular Review: Review your plan whenever there is a change in your income or new goals get added to your list. Review the investments to track the progress vis-à-vis the plan. Here, the definition of review is very important. Sheer comparison between products or schemes will often lead you to a “buy high, sell low” situation. Generally, long-term investments may need at least 6-7 years to show progress, so you should review them accordingly.
• Take Guidance: An expert carries rich experience of handholding people of varied backgrounds and professions. He/she will not only act as a guide in the entire journey of wealth creation but also handhold you to avoid taking impulsive decisions based on emotions, fear, or greed. An expert’s ability to offer this as a package will add immense value for you in the long run.

You are living in a world of information overflow, which, apart from doing good, also persuades you to act. The craving for instant gratification or the fear of being left out will keep challenging you throughout this journey. An irrational action might make you a villain for your own financial success. Successful investing demands a long-term perspective. Patience and the right behaviour play a pivotal role in the journey of wealth creation. This means you should train yourself to ride out the short-term volatility, stay disciplined, and consistently follow the above process. Remember that investing is a marathon, not a sprint, and the key to success is staying focused on the big picture and resisting the temptation of instant gratification for your own financial wellbeing!