In this episode, Sam joins Will. Will has spent more than 15 years in the asset management industry where he built investment strategies for pension funds and sovereign funds. In this episode, we will learn about a core fundamental quality of all good investors: patience, and about the number 1 recommended strategy for making long-term investments. Throughout his career, Will has been an actuary, investment consultant and Head of investment. He has managed billions of assets and seen all the ins and outs of investing. And today, he will tell us about the only investment strategy he uses.

How can we teach children about personal finance?

Sam asked Will : “What do you think are the most important things that kids need to know about?” Will said “ it’s not so much about knowledge, like clearly learning about different money topics is really, really important. It’s more about the behaviors and the habits that we create. And actually kids from as young as seven, based on some Cambridge studies, kids form a lot of their   money habits by the age of seven.”

Will’s strategy is to get children to think of money like seeds. Every time they get a seed, they can give those seeds away. So that’s like spending, but what they want to do is keep a couple of seeds because kids know what seeds do. If you plant them, they’ll grow into a tree. Telling the children what if they keep a few seeds and plant them in the future. They’ll grow and their money can grow in the same way. The idea is that once you have a tree, it will produce seeds, which will produce more trees, which produce more seeds. And essentially. In the future, you’ll have this nice forest that’s just producing seeds for you.

Living in a world of instant gratification

Will argued that the problem is people believing earning more would solve all their problems. But from Will’s experience, whenever people start to earn more, their expenses are always scaling at least as fast as they are. Lifestyle inflation is a real phenomenon and the first step to avoiding it is realising the importance of having patience and delayed gratification.

Patience is a huge superpower. There is a lot of research which measures the correlation between the ability to have delayed gratification and success in life. And by success, it’s not just financially. It can be academic as well as romantic. Delayed gratification helps you achieve what you want in life. Because as human beings, we need to learn things. What we want actually takes a lot of time. Will also encourages parents to train their children to be patient. If they can grow up learning to save a little bit of money for later as a habit, even if they didn’t learn anything else about personal finance, they will be better than 70 to 90% of the population, because essentially the first rule of wealth is to spend less than you earn.

Will’s advice is that if people want to become financially healthy, they need to understand their behaviors and ask themselves how to stop themselves from spending all the money. How do I save just a bit? And then hopefully over time, learn how to make that money grow.

Financial education is important and starts from young children.

If you want to check out more on how to improve your childrens’ financial literacy, check out the podcast episode here!