One Marshmallow Now or Two Later: The Investor’s Dilemma

The marshmallow test is a well-known psychology experiment. A child is offered a choice: one marshmallow immediately, or two marshmallows if they can wait. It is a simple test of delayed gratification, but its lessons apply far beyond childhood.
In investing, we face the same choice every day. Do we take the quick emotional payoff of acting now: chasing the latest “hot” stock, panicking in a downturn, cashing out at the first sign of uncertainty, or do we hold steady, allowing time and discipline to reward us with more later?
The Cost of Instant Gratification
In finance, “one marshmallow now” looks like:
- Selling in fear during a market dip.
- Chasing short-term performance and abandoning a strategy that works.
- Spending every surplus rather than saving and investing it.
Each of these decisions provides a momentary sense of relief or excitement, but over time, they erode financial systems. Like entropy in physics, they increase disorder: wealth plans break down, compounding is disrupted, and clients are left further from their long-term goals.
Why Waiting Feels So Hard
The marshmallow in front of us feels certain. The second marshmallow, promised later, requires trust in markets, in advisors, and in time. Our natural instincts pull us toward the immediate reward. But financial success depends on resisting that pull.
This is why so many investors underperform their own investments. They allow short-term emotions to dictate long-term outcomes.
Wisdom vs. Behaviour
As an industry, we often quote the investment wisdom of people like Warren Buffett, Howard Marks, and Larry Ellis. Their messaging is simple and consistent: be patient, think long-term, avoid speculation.
And yet, the evidence suggests otherwise. Investors admire these voices and repeat their words, but their subsequent behaviour rarely reflects the wisdom. We do not metabolize their knowledge into lived action. We only talk about it.
This disconnect between knowing and doing is the essence of the marshmallow problem. It is not that we lack wisdom; it is that we fail to embody it when faced with the temptation of “now.”
Two Marshmallows Later: The Power of Patience
The real wealth in investing comes not from timing markets or chasing winners, but from staying the course:
- Compounding: Returns build on returns when left untouched. Selling early cuts this cycle short.
- Consistency: Regular, disciplined contributions matter more than picking the “best” moment to invest.
- Resilience: Weathering downturns ensures you are still invested when recoveries come.
The investors who consistently get “two marshmallows later” are those who recognize that the short-term discomfort of waiting is far outweighed by the long-term benefits of patience.
Advisory Reflection
As advisors, our role is often to help clients resist the temptation of the one marshmallow. To remind them that systems degrade when we prioritize “now” over “later.” To protect them from the entropy of instant gratification.
Quoting Buffett or Marks is easy. Living their wisdom is harder. The real prize in investing is not the satisfaction of immediate action; it is the compounding power of disciplined behaviour over time.
If you want two marshmallows later, you need a plan, the patience to stick with it, and a trusted guide who will help you say “no” to the one marshmallow now.
Written by Marius Kilian