We hear a lot about the “entitled generation” of Americans, who seem to think they have a “right,” to just about everything. They claim a right to healthcare, housing, education, cellphones, internet service and so on. My purpose is not to open a political debate but to consider how this attitude could have negative effects on investor behavior and outcomes.
As a young child when I considered starting my popsicle sales business, my Dad gave me encouragement and great advice. One thing he made clear was that if he loaned me $5 to buy my first order of popsicles, I would be on the hook to pay it back even if all those popsicles went unsold and melted. He taught that starting my business came with the potential for success, as well as the real possibility of failure. I ran many small businesses in my youth and found his counsel to be sound. Sometimes I walked away with a wad of cash and sometimes I dumped out gallons of lemonade when a rainstorm came. I learned from the latter to always check the weather reports.
Americans celebrate our constitutional Bill of Rights, which by my understanding basically says that we have the right to be left alone to pursue our lives as we choose, and if we find ourselves in legal trouble, we have the right to be treated fairly. What the bill of rights does not say, but is clearly implied by its absence, is that we also have the right to fail. Some have lost sight of that right and quite honestly, fail to see the blessing that can come from failure.
I heard a national commercial on the radio from a debt relief firm. The commercial said, “You have the right to settle your debt for a mere fraction of what you owe.” So I guess we can now add the right to not be held accountable for our financial decisions to our American rights. I wonder what our children are learning when they hear stuff like this.
I have seen investors afraid to make a move for fear of failing. They watch opportunity pass them by because they don’t want to risk having to wade through the occasional financial rain. They beat themselves up over past investment mistakes, rather than taking advantage of learning from their mistakes and making better decisions going forward. I often remind them that in investing, it’s OK to fail sometimes. I joke that mathematically you only need to be right 51% of the time to generate a positive return. No one is right all the time.
Investors should do all they can to get it right, but accept the fact that you will not always be right, nor do you need to be. As you learn from your mistakes you will learn to get things right more often. We have many wonderful rights as Americans and one of them is the right to be wrong sometimes, and to learn from it.
Hi, I'm Dan. I'm a CFP® Professional.
Securities and advisory services offered through Commonwealth Financial Network®.
Member www.finra.org / www.sipc.org , a Registered Investment Advisor. Wyson Financial, 375 E Riverside Dr, St. George, UT 84790
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