In 2007, actor, comedian, and musician Steve Martin was interviewed by Charlie Rose. During the interview, he was asked about his strategy for learning the banjo.
Here’s his response:
“[I thought], if I stay with it, then one day I will have been playing for forty years, and anyone who sticks with something for forty years will be pretty good at it.”
Anyone that sticks with something for forty years will be pretty good at it. There’s so much truth and power in that statement.
Put another way, consistency is a superpower.
Diligence and patience. Battling boredom and staying focused when tempted by distractions. Sticking to simple, deliberate work for an uncommon amount of time. That’s the formula for success. So simple and obvious—it’s just not easy.
Success always seems magical to outsiders because you don’t witness the unmagical process that leads to the result. If you did get a chance to see the process, you’d realize there’s no magic to it at all—just consistent unmagical effort. A lot of times, it just comes down to sticking to it.
This is (mostly) a money blog so let’s apply Steve Martin’s banjo strategy to money and investing.
Let’s say you’re 30 and you’ve managed to save $25,000 for retirement. You’re committed to saving $1,000/month for your future. You decide to follow Buffet’s advice and just throw everything into an S&P 500 index fund getting—on average—a return of 8 percent annually (over a 30-40 year period, this is pretty conservative).
After 10 years you have $227,812. Pretty good but 63 percent ($145,000) of that came from your savings and not investment returns. You’re wondering if it’s really worth it.
But you stick to it.
After 20 years you have $665,667. Things are getting interesting. Now your contribution only accounts for 40 percent of the total ($265,000)—The rest is all returns.
But the real magic happens once you pass the 20-year mark
After 30 years you have $1,610,965. You’ve now only contributed 24 percent of that total ($385,000). 76 percent of your account came from investment returns.
You also became a millionaire at the 25-year mark.
After 40 years you have $3,651,791. Your contribution is only 14 percent of the total ($505,000).
This is why Charlie Munger said,
“The first rule of compounding is to never interupt it unnecessarily”
Genius is often looked at as something you’re born with. Surely outsized results must be due to some outsized innate talent or ability. But maybe genius is simply sticking it out for an outsized amount of time when most people don’t.
Success isn’t fancy or magical. Ok, it can be magical. But only after putting in a lot of unmagical effort or waiting for an uncommon amount of time.
Time is the most powerful wealth creator in the world if you harness it correctly. If you don’t, it becomes your worst enemy.
Next time you’re questioning why you’re saving and investing just think, one day I will have been doing this for forty years. Anybody doing this for forty years will be pretty good at it.
Either that or you will have built up quite a bit of wealth. It’s pretty simple. Just follow the banjo strategy.
Here’s to making money matter!
Matt I truly enjoy Money Matters. This article reminds me of an old story about someone watching a concert pianist and said I would give my life to plan like you, and the answer was " I have"
Thanks Matt for your all your efforts in writing Mondy Matters.