My wife works for a few hours each Saturday, so every week that’s my chance for some quality time where it’s just me and my son. This past Saturday was particularly fun. He was an absolute champ with me in the morning as we visited two different car dealerships to test drive a couple of minivans. Then we went to my parents’ house to take care of their dog while they were gone for the day. We spent a lot of time outside chasing the dog, falling down in the grass and throwing crab apples.
Later night that my wife and I took him to the park just down the street from our house. We had a lot of fun, but it also reinforced an important, one that applies both to our lives as parents and to our success as investors. And that is that you have to allow for failure in order to promote growth.
Letting your child learn from experience
There are two sets of slides at the park and the ones that my son normally uses were covered in some kind of dirt. So when he wanted to use the slide, we guided him over the other pair. Being the happy-go-lucky kid that he his, he decided to try them out without any kind of hesitation.
Well, it turns out that these other slides are WAY faster than the ones he normally uses. He pushed himself off and was immediately flying down, almost tipping over on the way down before being shot off the end and landing on his butt. He looked up at me, unsure as to how he felt about the whole thing, and I gave my now much-practiced “look totally fine and happy even though inside you’re slightly terrified about what just happened” parenting face, clapped and said “good job Aiden!”. He took the cue, laughed, and immediately got up and started running over to the stairs so he could go down again. We spent the next 20 minutes going down this crazy-fast slide, and by the end of it he had it totally mastered, even doing cool things like using the speed of the landing to propel himself into a full sprint over to the stairs.
On the way home we had a similar experience. He wanted no part of being carried the 5 blocks, far preferring to run the entire way. Fine by me, except that he didn’t have on the best shoes for running and the sidewalk is far from smooth, so of course there were a few big spills along the way. It took a couple of skinned knees and a few almost-tears, but he was determined to make it the entire way himself and that he did. Aside from the few moments of pain, he loved that he was able to do it himself.
In both of these cases, it would have been very easy to go into full-on protective parent mode to try and keep him safe. I probably could have pretty easily guided him away from the slide by distracting him with another activity like the swing. Instead of letting him run and fall on the sidewalk, I could have picked him up and carried him no matter how much he fussed. And trust me, I’ve done both of those things before and I had strong urges to do them again.
But I also know that the only way my son is going to learn how to succeed is if I give him the chance to fail. I can’t protect him from everything, especially as he gets older, but I can give him the tools he needs to protect himself. And beyond that, if I truly want him to grow as a person I simply have to be comfortable with the fact that there will be bumps and bruises along the way. It’s just a part of life.
Successful investing requires the same mentality
We all know that the stock market has its ups and downs. We know it involves risk. We also know it’s the single biggest driver of your long-term investment returns and therefore something that almost anyone with long-term money goals should want as part of their investment plan.
So what does any of this have to do with me letting my son risk injury in the name of fun? If you’re going to invest in the stock market, you have to understand that it will not be a straight shot up. There will be many downturns, many trips and stumbles along the way. But if you want the long-term growth that the stock market can deliver, you can’t be afraid of those downturns. Trying to avoid them is a losing proposition, ultimately harmful to the long-term growth of your investments just like trying to shield my son from failure will harm his long-term development.
The people who succeed in investing are the people who make a plan they believe in and stick with it through the inevitable down periods. Although there are no guarantees, this kind of commitment has paid off again and again throughout history and it’s your best chance for success going forward.
Success almost never materializes as a straight rise to the top. The people who experience true long-term growth and development in any aspect of life are those who accept failure as an integral part of the process. If I want my son to develop as an independent, thoughtful and capable man, I have to give him space to try and fail. If I want my investments to steadily grow and help me achieve long-term financial freedom, I have to accept the periods of negative returns.
What parts of your own life have you found success only after allowing for failure?
Photo courtesy of laudu