đź”’ How short-term thinking kills long-term wealth building – Dawn Ridler

Johannesburg-based money expert Dawn Ridler swapped a scientific career studying the environment for strategising around personal finances. In this interview, Dawn shares what a wealth ecologist is and how you can harness some ecology ideas to grow your savings and investments in a struggling economy.

By Jackie Cameron

It’s a case of mind over matter when it comes to growing wealth, with short-term thinking the enemy of individuals who work hard at saving and investing.

That’s the message from Johannesburg-based Certified Financial Planner and wealth ecologist Dawn Ridler, who says that ordinary salary earners can amass considerable assets with astute decisions taken during the course of a career.


“I think it boils down to basic human behaviour,” says Ridler, in an interview with BizNews Radio. 

“We as as humans find it really difficult to think and plan long term and we are surrounded by short-termism. 

“Like, for example, in politics you know somebody like Donald Trump has got a four-year term. He couldn’t care less what happens after that four-year term.”

Ridler says a similar short-termism was in evidence in political campaigns ahead of South African elections earlier this year, with politicians emphasising policies that attract voters rather than those that might be beneficial in the long run.

It is “human nature” for individuals to “use short-termism” in financial planning, too. 

An example of a potentially poor short-term decision is when someone leaves a company and cashes in a pension that has decades to run to pay off a bond, says the financial expert.

“In the distance we have no concept of how long that is or how long it’s going to take us to catch up that money. But we think short term, in terms of what’s going to happen in the next three two to five years rather than what’s going to happen in the long term.”

Read also: Warning: ANC prescribed assets plan will damage your retirement – Dawn Ridler

Another example of short-term thinking that can knock wealth is acting on money tips gathered around a braai. Many people have bought properties and shares at the height of a market on the say-so of friends, who, in reality, know little about wealth building, only to see the value of investments disappoint or even shrink.

Ridler says she comes across many people for whom short-term thinking has prevailed their entire lives and “now suddenly time is running out”.

“However, successful wealth-building is the result of decades of small decisions,” she continues.

One of the reasons short-term thinking is problematic with investing is that few people are deeply knowledgeable about what is going on in the investment world. There is a huge amount of information to digest and even professionals in the financial world struggle to keep up with events and changes.

Short-term thinking was evident around the Bitcoin frenzy, notes Ridler, with many people getting their fingers burnt. If you are looking to make a “quick buck” or “hit it lucky”, that’s short-term thinking at play, she says.

Short-term thinking isn’t always bad, reckons Ridler, and if you do make mistakes “the younger you are you could certainly get around it”. 

An example of sound short-term thinking is offloading dud investments. “People can become attached to them. You know they don’t have feelings. Stocks don’t have feelings. If it’s not working…retrench it and buy something else. It doesn’t have feelings it’s not going to cry,” adds Ridler.

  • Johannesburg intermediary Dawn Ridler, MBA, BSc and CFP ® is founder of Kerenga.

For more insights from Dawn Ridler see:

Money tips: How to avoid going broke in a fast-paced world – Dawn Ridler

Four Retirement Annuity (RA) traps to avoid. Quick wealth-building tips.

Why you should love Retirement Annuities: wealth manager

Wealth preservation: How to draw your retirement income

Tax-free investments: Do Retirement Annuities make financial sense?