‘Tis the season for spring break – and with it for many, comes the annual pilgrimage to somewhere warmer or more fun than those familiar four walls at home. Going on a spring break trip is a wonderful way to wave bon voyage to the winter doldrums for adults and kids alike.

But it’s also an experience that isn’t free as those unpleasant credit card bills are about to remind us this month. The price of admission for spring break includes:

• planning and booking the trip
• packing (and the inevitable unpacking)
• the cost of travel, be it gas or plane tickets
• accommodations, whether it’s a hotel or Airbnb
• activities and events on the trip
• flight delays and cancellations (raises hand)

So why do we keep coming back for more? Simple: because the memories we make on these trips are priceless. They stick with us long after the tan fades or the ski boots come off, making the cost of admission worth every penny.

Now, let’s talk investing. Our goal? To secure returns that pave the way for our long-term financial dreams. The price of admission for a spring break trip is well known. But do investors know the price of admission for successful investing? And more importantly, are they willing to pay it?

• The price of admission for investing comes in two forms – volatility and uncertainty. It’s having a lumpy return stream while withstanding the pain of recessions and bear markets.

• The entry price for investing is stomaching the volatility of years like 2023 when three large banks failed, the U.S. debt ceiling almost crumbled, inflation remained sticky, and 2/3 of economists predicted a recession.

• Successful investing requires remaining invested despite the uncertainty of not knowing when the wars in the Middle East and Ukraine will end, what the outcome of the U.S. presidential elections will be, or when inflation will return to pre-pandemic levels.

• Why should investors pay that seemingly high price of admission? Frankly, it only makes sense if the rewards for doing so are significantly better than taking no risk at all – i.e. holding cash. Over the past 15 years from 2009-2023, the S&P 500 index returned a robust 14% per year on average while cash earned a measly 1% annually.¹ Translation? Investing in stocks would have turned $100k into a whopping $714k over the past 15 years, while the same amount in cash would barely scratch $116k.

It’s much easier to digest the price of admission when you know the total price up front. That’s why it’s critical for investors who want to achieve their financial dreams to understand the cost of admission for investing – volatility and uncertainty – AND be willing to pay it.

Just like the joys of a fantastic spring break trip offering a lifetime of memories, it’s easier to pay the price of admission as investors when we’re keenly aware of the long term rewards.

Bonus Read – Why I’m Starting an Investing Blog

Source: ¹ JP Morgan Guide to the Markets

Castle Quote: “The most important quality for an investor is temperament, not intellect. You need a temperament that neither derives great pleasure from being with the crowd or against the crowd.”

– Warren Buffett