Experts reveal the most important skill in investing. Can you do that?

The most important investing skill does not involve performing advanced technical analysis or picking hot stocks. It’s something much simpler: patience. Decades of market data and behavioral research show that disciplined long-term investors consistently outperform those who seek quick gains or react emotionally to short-term fluctuations.

“Investing is about building wealth steadily over time,” Evan Biaggi, author of Trading Calm: Mastering Your Mind for Trading Success, told Investopedia. “The key phrase is over time. If you’re after instant riches, chances are you’ll accept gambles that are unlikely to pay off.”

In other words, the ability to wait without holding back during market ups and downs is one of the most powerful advantages an investor can have. It’s not about timing the market, but timing the market that builds lasting wealth.

Proof that patience pays off

Market history is clear: the longer you invest, the greater your odds of success. Over the past century, the average annual return for the S&P 500 has been about 10%, but that number masks wild short-term fluctuations. For example, in 2022, the value of stocks represented by the S&P 500 index fell 19.4%, but rose 24.2% the following year. However, those who invested for the long term would have seen a significant upward trend over time, despite this volatility.

Morgan Stanley’s 2023 report analyzed the probability of losing money in the MSCI World Index over various time horizons from 1970 to 2023, and found that investors are much less likely to lose money the longer they stay in the investment. For example, over a one-year investment horizon, 23% of months resulted in negative returns. But over a 10-year investment horizon, that number drops to just 3%.

Dollar cost averaging: patience in practice

Dollar cost averaging is patience put into practice. By investing a fixed amount regularly – regardless of market conditions – you automatically buy more shares when prices are low and fewer shares when they are high. This disciplined approach removes the temptation to time the market and reduces the impact of volatility on your investment portfolio.

The chart below shows how a simple monthly investment of $50 in the S&P 500 could have grown over time, turning steady contributions into wealth despite market volatility. Part of the reason for the gains is the power of compounding – earning returns on both your original investment and the interest it generates.

Emotional discipline: Avoid costly mistakes

Impatience often leads investors to buy high and sell low, chase trends or flee during recessions. Quantitative analysis of investor behavior conducted by market research firm Dalbar shows that the average investor earns significantly less than the market due to making poor timing decisions. For example, the average stock investor gained about 16.5% in 2024, compared to the S&P 500’s gain of 25.05%. the difference? Emotional reactions to short-term fluctuations.

Warren Buffett, perhaps the world’s most famous investor, attributes much of his success to patience. “My life has been a product of complex interests,” he told Bloomberg in a 2016 interview.

In 1985, Buffett explained Berkshire Hathaway’s decision to help finance Cape Cities’ $3.5 billion acquisition of American Broadcasting Corporations (ABC). “For the Cape Cities, ABC is a major undertaking whose economics are likely to be unexciting over the next few years. This never bothers us; we can be very patient,” Buffett wrote in a Berkshire Hathaway shareholder letter that year. “No matter how great the talent or effort, some things take a long time: you can’t have a baby in one month by carrying nine women.”

Ten years later, The Walt Disney Company (DIS) bought Cap Cities and ABC in a $19 billion deal.

Bottom line

Patience is the most important skill for building long-term wealth. The data is clear: those who stay invested, resist emotional reactions, and let the magic of compounding are rewarded over time. Next time the markets get turbulent, remember: your greatest advantage is the ability to wait.