53 | Thinking Like a 10-Year-Old

Investing seems like it should be so much easier to understand.

As a kid, I felt like I understood it pretty well.

When you have money, you can choose to buy shares of stock of a company and over time you hope that money will grow to an amount that is bigger than what it was when you started.

I can still say I think I understood it as a kid, but man, did the world try to convince me that I didn't for a bunch of years.

No single thing can be blamed, but there are a bunch of things that can shoulder some of the responsibility for abstracting my 10-year-old self's definition.

The marketing of financial services firms. The fear-mongering of the media. The endless "fine print". The by-the-minute price quotes. The infinite number of options. The complicated terminology. The tax rules. The statements. The account types. The fake investments.

Every single one of those things slowly obscured that simple, accurate definition of "investing".

The reality is that even with a good baseline understanding of what it means to invest, the circus that is modern-day "investing" is mighty adept at leaving us dazed and confused.

It leads some to think investing is...

Riding the roller coaster of a single stock.

Sitting in the safety of a money market fund.

Making money without the risk of losing any money.

Doubling or tripling your money in a couple of years.

Borrowing to invest only to see it all slowly go to zero.

Trying to time the bottoms and tops of the market cycle to "buy low and sell high".

Hunting for the next hot investment or meme stock.

Buying and holding an index fund for the rest of time.

No wonder investing seems so hard - the way each of us define it is as if we're trying to say that badminton, soccer, basketball, and swimming are more similar than they are different because they are all "sports".

If we can get back to understanding and promoting the definition of "investing" that we all had when we were 10-years-old, I think it'll make us all better investors.