The Roman philosopher Seneca the Younger once wrote, “There are more things … likely to frighten us than there are to crush us; we suffer more often in imagination than in reality.”
Around a century later, the Roman co-emperor Marcus Aurelius mused, “It is not death that a man should fear, but he should fear never beginning to live.”
You may be thinking, “Easy for them to say,” but nothing could be further from the truth. Seneca was installed as a tutor and political advisor to Nero; when his influence over Nero waned, the relationship quickly soured and came to a terrible end. Aurelius’ reign was marked by the tremendous losses associated with war and a years-long plague that killed millions.
The ancient philosophers’ wisdom might have greater relevance today than it has had in a long, long time. We have enough very real fears to grapple with without letting the groundless ones prevent us from achieving our goals.
It’s one thing to take realistic stock of our finances, our health, our relationships and the state of the world. It’s quite another to let every little fear cripple us into complacency and inertia. We won’t be around forever, and we can’t build the kind of wealth that ensures optimal quality of life if we entertain what-if scenarios that aren’t likely to happen.
James Gordon Gilkey, a pastor and author who penned “You Can Master Life” in 1934, estimated that legitimate worries account for less than 10 percent of the anxiety that keeps us up at night. The fact that his book is still touted on the internet in 2020 speaks volumes.
Generally speaking, fear is our friend. It’s useful to have a racing heart and hair that stands on end when we hear a low growl in the woods or when things go bump in the night.
Fear becomes a bad thing when we decide to just live with it rather than face it and respond sensibly. Fears that go unaddressed keep people from starting valuable businesses, making lucrative investments, scheduling yearly health checkups, retiring to exotic locations, and pursuing relationships after wildly successful blind dates. It keeps them from fulfilling lifelong dreams such as learning to play the violin, skiing in the Alps or running for city council.
The trick is to confront fears as they arise and evaluate their legitimacy. It is to approach apprehension from a logical standpoint rather than an emotional one. It is to thoughtfully calculate each risk rather than shy away from all risks.
Is an investment unreasonably risky just because you’re afraid of a bad outcome? It’s a mistake to assess the level of risk based on your level of fear about it. If we made every decision solely based on our emotions — namely fear — none of us would ever get anything done.
If people hadn’t pressed on through fear there might be no Microsoft, Apple or Amazon today. Oprah Winfrey would probably have retired in obscurity from a local TV news station by now. Mark Cuban might still be tending the bar and sleeping on the floor of the apartment he shared with six roommates.
Risk-taking, no matter how scary, is a crucial component of building wealth and achieving personal goals. Sure, it was easier for Cuban to take risks when he had nothing to lose. He admitted in a recent interview that now, given how much more is at stake, he’s “terrified of risk.”
However, he mitigates fear through preparation like keeping current on industry trends and doing comprehensive market research. Since he relentlessly educates himself on the sectors he invests in, he can avoid all but the most calculated risks.
Winfrey urges, “Do the one thing you think you cannot do. Fail at it. Try again. Do better the second time. The only people who never tumble are those who never mount the high wire.”
Jeff Bezos was fortunate enough to land a corner office on Wall Street immediately upon graduation, but entrepreneurship called. He kissed a lucrative salary goodbye to found Amazon and peddle books from his garage. Now, that’s scary.
Fears of financial failure, loss of security or losing face are not the only fears holding people back. Neophobia, which is fear of the unfamiliar, is equally paralyzing. Successful people work through it in a few ways.
First, they do their homework before they buy stocks, purchase real estate or develop new streams of income. They know the pros and cons of things like passive investing or investing in rental properties. They’re tireless learners in their industries, so there are very few unpleasant, neophobic surprises. A former employee of Bill Gates swears that he once read 14 educational books while on vacation.
Second, successful people chalk up the missteps along the journey to valuable experience. They leverage their failures, for lack of a better word, to become better risk-takers and build greater wealth in the future. As the unfamiliar becomes more familiar, they can avoid making the same mistakes.
Finally, they rob neophobia of its power by envisioning a better future. Did Bezos envision the Amazon of today? Perhaps not, but one thing is for sure: He saw himself doing something that he’d rather be doing. For Cuban, the vision could have been as simple as having his own bed to come home to.
Someone who doesn’t take time to contemplate life after a potential career change or move to Maui could be stuck in a rut, drudging on in fear, for years to come. The same is true for someone who steers immediately to the worst-case scenario and parks there.
When you set business, personal or lifestyle goals, the ability to envision positive outcomes goes a long way. Vision may be the strongest motivator there is.
In the context of building wealth, there’s nothing wrong with money in itself being the motivation, but few billionaires cite wealth as their primary goal. It’s simply a byproduct of their success in some other endeavor. Examples include making a social impact, improving quality of life, building better products, and having complete freedom and control over one’s life.
You may envision providing amply for your heirs, establishing a nonprofit or becoming a YouTube star. Don’t laugh; 23 million subscribers tune in to DanTDM’s Minecraft commentaries. His net worth is £25 million.
No one denies that some fears are perfectly valid. That’s why a distinction should be made between envisioning outcomes and daydreaming. Envisioning outcomes involves extensive research.
By all means, picture yourself launching a startup or sending your kid to Harvard someday. However, by the time you’ve decided to take a risk or aspire to a lofty goal, you should have examined potential outcomes from every angle. You should be well aware of the pitfalls. You should know what the monetary cost will be, know where you stand now, and know specifically what it will take to ensure that the risk pays off.
In short, worst fears realized are often a direct result of failure to plan.
Nothing alleviates fear like setting goals, and all the experts agree that physically writing them down strengthens commitment to them. Setting goals and deadlines provides you with a road map, and you should consult it frequently to measure your progress. It will most likely need tweaking now and then as interest rates rise and fall, the tax code changes, the market sags or your family grows.
Let’s say you hope to buy real estate in New Zealand and are saving accordingly. You plan to purchase a property in five years. If you don’t keep an eye on the rate at which properties are appreciating in value, you could come up significantly short. Your worst fears could be confirmed.
That’s how setting goals, planning and measuring progress keep fears at bay. You may need to save more each month, channel funds into investments with higher yields, or explore other income streams, but fear of the unknown won’t defeat you.
Some unavoidable life circumstances, either directly or indirectly, have monetary impact that could derail your current plans. Naturally, everyone fears long-term health problems, the death of a spouse or child, and loss of cognitive ability. Global pandemic, of course, is a new one.
Compared to those alternatives, a job loss or stock market crash should be the least of your worries.
The worst approach is to obsess over legitimate fears. The best is to face fears and put them to work for you in the form of preparedness. It’s one of the most valuable financial tools you have.
As you educate your children about saving, investing, passive investing and other tools, be honest. Tell them what you’re afraid of. Explain how you face fears and press on despite them.
Fear reinforces our own sense of mortality, but the ancient philosophers’ advice to keep it in perspective is still valuable today. After all, growls in the woods and bumps in the night often turn out to be nothing.
Disclaimer: The views and opinions expressed in this blog post are provided for informational purposes only, and should not be construed as an offer to buy or sell any securities or to make or consider any investment or course of action.