How Investing in the Market Is Like Having a Teenager
Do you have a teenager at home? How’s it going for you? If your experience was like ours, parenting a teenager is about as easy as navigating this year’s stock market: It’s been a wild ride.
While economic and political climates move the market, surging hormones and social pressure undoubtedly affect teenage behavior. Navigating such terrain can drive investors and parents crazy. Despite how different these two feats may seem, there are a number of similarities between the challenges you face as the parent of a teen and an investor in the market, including:
1. Fear
When you have a teenager, it’s hard not to think a crisis is always right around the corner. You face almost constant uncertainty about what your child might do to him or herself or what the world might do to your child.
In a volatile market, your stocks are just as scary. If you invested in oil stocks and you were hanging on for a turnaround, you were probably feeling pretty anxious earlier this year. Oil is unlikely to stay below $30 a barrel forever, but it could. It’s terrifying to think that your investments may never come back or that a company you own shares in may go bankrupt.
2. Fatigue
I thought I was tired when I had a 2-year-old. Worrying about a 14-year-old makes my toddler-based parental exhaustion seem as small as the Ninja Turtles T-shirt I saved.
But exhaustion affects investors, too. Twitter, the CNBC app on your phone, and the never-ending ticker tape streaming across your TV relentlessly feed you disappointing news, keeping the fear of investment losses front and center. You promise yourself that you won’t look at your phone to see how the market is doing, but you can’t help but check, which leads to more sleepless nights.
3. Mistakes
Many teen mistakes can be fixed and can function as excellent life lessons. However, some mistakes — such as a drinking-and-driving accident — can do irreparable damage. Teens often don’t have enough information to make fully informed decisions, but even when they do, they sometimes ignore it.
The stock market doesn’t provide all the information we need, either. Investing in the market is inherently risky because we don't know what will happen to our picks. Sometimes we will make mistakes that can’t be fixed. If you invest in a company that goes bankrupt or if you are forced to sell stocks at a loss, that money is gone forever.
4. Excitement
Having a teenager around is a lot of fun. It’s hard not to get caught up in the energy of their activities and friends. They’ve got so much going on, and even though you’re on the periphery, you still get to enjoy some of the excitement.
In today’s volatile market, the opportunity for exciting plays is much more likely than what we experience in duller periods. When you’re invested in Las Vegas Sands Corp. (LVS), for instance, and it jumps from $37 to $50 in a month, that’s fun and exciting.
5. Growth
Despite all the challenges, it’s very satisfying to see your teen grow and mature. When he or she surprises you with an amazing hit on the volleyball court or a caring gesture at the nursing home, you know all the hard work has been worth it.
Investing’s no different. When you stick with an investment through ups and downs because you know it’s a solid choice in the long run, the profits you eventually take from that stock are sweeter than those from a less-volatile purchase.
Part of the package
Though the stock market roller coaster ride seems to be slowing down compared with the beginning of the year, we all know that we’re just going to get back in line to ride it again! The big difference with teenagers is that at some point, the volatility ends for good (we hope). The teenagers who kept you up at night with worry turn into caring, solicitous adults who fuss at you for not eating enough protein, take your hand to cross a busy street, and react with unrealistic concern over your every ache and pain. Like investing in the stock market, parenting turns out to be well worth the effort over the long term.
If you want to grow your money, the stock market’s the best place to do it over time. If you want to grow a family, the teenage years are part of the deal.
Kathryn Hauer is a certified financial planner and fee-only investment advisor with Wilson David Investment Advisors in Aiken, South Carolina.
This article was first published by NerdWallet on March 10, 2016 and appears in NASDAQ and NewsOK - Investing , Investing Basics , Retirement , Stocks
