Quarterly Outlook
Macro outlook: Trump 2.0: Can the US have its cake and eat it, too?
John J. Hardy
Global Head of Macro Strategy
You can access all of our platforms from a single Saxo account.
Eat marshmallows or grow your wealth
Mind Over Money in practise
Peter Siks
Summary: The ability to resist immediate gratification for future rewards is important.
In the 1960s and 1970s, an American professor – Walter Mischel – conducted research on the behaviour of children. The most famous test was his marshmallow test.
In this test, young children were given one marshmallow by the researcher. They were allowed to eat the marshmallow immediately, or if they could wait and not eat it, they would receive an extra marshmallow when the researcher returned (after about 10 – 20 minutes). In other words, the choice was between one now, or two later. Some did not wait, and immediately ate the first marshmallow, while others waited and thus received an extra marshmallow.
But what kind of return can you expect with investing? Historically a well-diversified, long term equity portfolio yields around 7% - 8% if the dividends are re-invested.
As you can see in the example above, time does have an impact on your returns, but do you know what is even more important? Getting started. So how do you grow your wealth over the long term? Set a financial plan and stick to it, resist the temptation of immediate gratification, and start investing as soon as you can, no matter your age.
And yes, later on, enjoy that extra marshmallow.
In this test, young children were given one marshmallow by the researcher. They were allowed to eat the marshmallow immediately, or if they could wait and not eat it, they would receive an extra marshmallow when the researcher returned (after about 10 – 20 minutes). In other words, the choice was between one now, or two later. Some did not wait, and immediately ate the first marshmallow, while others waited and thus received an extra marshmallow.
What does this have to do with investing?
While the example is interesting, you may be wondering what it has to do with your endeavours in the financial markets. Just like the kids waiting impatiently to get their second marshmallows, sighting a reward in the distance, most people who invest do so with an expectation to get rewarded by higher returns over time.But what kind of return can you expect with investing? Historically a well-diversified, long term equity portfolio yields around 7% - 8% if the dividends are re-invested.
How do you grow your wealth?
According to Einstein, compound interest was the 8th wonder of the world that proves its strength, especially in the long run, which is evident from this example.| Monthly deposit | Number of years | Expected return | Deposit | Result |
| $100 | 25 | 5% | $30.000 | $58.812 |
| $100 | 50 | 5% | $60.000 | $257.971 |
| $100 | 25 | 7% | $30.000 | $78.747 |
| $100 | 50 | 7% | $60.000 | $506.141 |
And yes, later on, enjoy that extra marshmallow.
Latest Market Insights
Quarterly Outlook
-
-
Quarterly Outlook
Equity Outlook: The ride just got rougher
Charu Chanana
Chief Investment Strategist
-
Quarterly Outlook
China Outlook: The choice between retaliation or de-escalation
Charu Chanana
Chief Investment Strategist
-
Quarterly Outlook
Commodity Outlook: A bumpy road ahead calls for diversification
Ole Hansen
Head of Commodity Strategy
-
Quarterly Outlook
FX outlook: Tariffs drive USD strength, until...?
John J. Hardy
Global Head of Macro Strategy
-
Quarterly Outlook
Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges
Althea Spinozzi
Head of Fixed Income Strategy
-
Quarterly Outlook
Equity Outlook: Will lower rates lift all boats in equities?
Peter Garnry
Chief Investment Strategist
After a period of historically high equity index concentration driven by the 'Magnificent Seven' sto... -
Quarterly Outlook
Commodity Outlook: Gold and silver continue to shine bright
Ole Hansen
Head of Commodity Strategy
-
Quarterly Outlook
Macro Outlook: The US rate cut cycle has begun
Peter Garnry
Chief Investment Strategist
The Fed started the US rate cut cycle in Q3 and in this macro outlook we will explore how the rate c... -
Quarterly Outlook
FX Outlook: USD in limbo amid political and policy jitters
Charu Chanana
Chief Investment Strategist
As we enter the final quarter of 2024, currency markets are set for heightened turbulence due to US ...