Failure Is Essential
Did you know that failure is an essential part of learning how to do things?
None of us start out knowing how to do things. Despite that, many of us feel that we should somehow be instantly proficient when we we try something new. That means many of us are reluctant to try things that are new to us — especially when it comes to our money.
We worry that we’ll do it wrong, and so we don’t even really investigate our options. Or we may get started with something and then give up when we encounter difficulties or get frustrated at the speed of our progress.
Give new things a try
While I’m not recommending jumping on every new thing that comes along (especially not without thoroughly investigating the risks), I do think it’s wise to consider options that may be new-to-us. After all, there’s always a first time for things like renting an apartment, buying a house, opening an IRA, etc.
Persist long enough
When we try things that are unfamiliar to us, we should persist long enough to make sure that we really understand what we are doing. Not being an instant success is no reason to give up.
As an example, if I had based my stock-picking abilities on my Freddie Mac pick, you can bet I’d have concluded that investing in single stocks wasn’t for me. (I have a 100% real loss on that stock at the time of this writing.)
But I didn’t let that early mistake stop me. Instead, I analyzed where I went wrong in picking that stock. (I allowed myself to be influenced by an expert whose reasoning made sense, bought the stock even though it didn’t have my definition of a “pretty chart”, and bought a disproportionate amount of the stock because I got greedy.)
In other words, instead of giving up based on that big mistake, I decided that it was normal to make some mistakes and that the important thing was to learn from them and hopefully not make them again.
Don’t overestimate your abilities, either
But what if Freddie Mac had shot through the roof after I bought it? The reverse is also true: It isn’t wise to automatically attribute great results to instant expertise. Surely I was not an expert after buying just a few stocks.
In fact, currently one of my stocks is up a HUGE amount from when I bought it. If I had based my stock-picking abilities on that pick, I might have (erroneously) concluded that I was a stock picking expert. Instead, I analyzed what I did right with that stock. (Recognized that it was speculative, bought only a very small amount, analyzed its prospects, and got lucky.)
Understand that it takes time
Becoming good at things almost always takes time. In fact, becoming good at things often takes a lot of time — and it may involve multiple failures. If you’re not willing to fail, you’re not willing to really succeed.
So understand that failure — or at least the willingness to fail — is an essential part of getting on the path to success. You might look at failure as tuition. Of course, you’ll want to do what you can to mitigate it, but don’t the fear of failing stop you.