The question is really what prevents you from doing what you need to do to get what you want. There are many approaches to that question and they don’t all work for everyone.
Let’s deal with a simple block – Fear of Failure
There are two ways it can arise.
- I want to be successful and will feel badly if I cannot
- I don’t know what to do
I want to be successful
I think we can agree most people prefer success over failure, but we reach an impasse when decide to define success. I could be a huge success in a recreational hockey league for senior citizens and fail badly in the National Hockey League.
Do you want to do well, or do you want to be the best-best you can be?
If you want do well, then you can probably avoid most of the possible failures and be content. That may prove too limited later and when you try to move farther you will find you lack the experience that earlier failure may have taught you. That leads to the I don’t know what to do problem.
I don’t know what to do
If we examine life to date, we will all find that there is nothing we know how to do now that we did not learn somewhere along the way. With the possible exception of music appreciation. It seems that we come with that. Newborns notice discordant presentation.
How do we learn? By trying things.
Adult supervision when young prevented us from trying things that might be seriously harmful and as we grow older we learn to identify those things ourselves. The trick is to know when we are avoiding truly harmful situations. Perhaps we must define discomfort to be not harmful.
Discomfort and embarrassment are not lethal although by watching some people you would come to believe they think they are.
Experience is crucial
Experience is the key to good decisions and bad decisions seem to be the basis for experience. Isn’t that odd. You succeed or you gain experience.
If we saw the gaining of experience to be the goal, what would be outside our ability to try?
You can’t lose, you either win or gain experience
Consider Einstein on the value of experience:
The only source of knowledge is experience.
When to try something relates to risk
People relate to risk poorly. They usually fail to notice there are just three metrics to assess:
- Risk tolerance. The emotional part. We hate to lose, and sometimes prevent reaching a great goal by fearing a minor setback. You will never get stock market returns if you buy 30-day t-bills because the market might go down. If we measure risk by the amount lost, there is risk in doing nothing.
- Risk exposure. People who businesses are exposed to different risks than people who are employed by the government. Competition is a serious problem. An easy business can disappear quickly these days. Do you think the retail business is affected by Amazon?
The reality though is risk goes both ways. Risk of failure of risk of success appear together.
- Risk capacity. Two part issue. Can you afford the loss financially and emotionally? If yes, then you will gain experience if nothing else.
Simplifying some risks
If you can afford to reverse the decision there is little risk. A decision to buy a house is near riskless. The decision to sell the family farm is riskier even though the other factors look benign. First children are high risk. Later ones not so much. Your lifestyle is already changed.
Time matters. The stock market is highly variable but if you don’t need the money for 20 years why do you care what happened today. If you bought the S&P 500 index in May 1980 and kept it to the end of April 2015, with reinvested dividends you would have made nearly twenty-one times your investment. There would have been some serious down draft along the way too. Like 2008-2009 down about 50% briefly.
Just do it.
Understand yourself and the environment of the decisions you are making. The choice will become win or learn. Not so bad.
Don Shaughnessy arranges life insurance for people who understand the value of a life insured estate. He can be reached at The Protectors Group, a large insurance, employee benefits, and investment agency in Peterborough, Ontario. In previous careers, he has been a partner in a large international public accounting firm, CEO of a software start-up, a partner in an energy management system importer, and briefly in the restaurant business.
Please be in touch if I can help you. firstname.lastname@example.org 866-285-7772