By: Joey Casolaro, CFP®
“The expert in anything was once a beginner.” This quote by Helen Hayes (an American actress who is one of 16 people to win an Emmy, Grammy, Oscar, and Tony Award) is an excellent reminder that when you take the first step to learn or try something new, you are making yourself vulnerable to the feeling of failure. However, the countless failures you experience when learning something foreign are expected and are part of transitioning from a novice to an expert. Outlined below are some things to keep in mind when starting something new.
Manage Expectations
It is critical that, as a beginner, you remain realistic with yourself and understand what’s truly possible. For example, new investors with less investment experience and market knowledge may expect high returns and little volatility from their investment portfolio. We know, however, “there’s no free lunch,” and as a beginner in investing, it would be in your best interest to first learn what returns are achievable given the amount of risk you are willing to take. You can then start to develop goals and expectations going forward.
Understand the Fundamentals
Having a grasp of the basics is critical to building a solid foundation in whatever you are doing. Often, people will overcomplicate things and drive themselves crazy when it isn’t necessary. This is very common with investors trying to “get rich quick“ as they are always trying to beat the market with individual stock picking and market timing, which often does not end well. By sticking to proven techniques and not worrying about things you can’t control, you position yourself for a much higher chance of success.
Define your Goals
Having defined goals in place that are specific, measurable, and attainable is a great way to stay focused on what you are trying to achieve and can help you create action items that turn your goals into reality. For example, if your number one goal is to save for a down payment for a home within three years, you wouldn’t want to invest those funds in the market due to the short-time horizon, which would increase the risk of loss of principal. Instead, you would be better off setting the funds aside in a short-term investment vehicle like a high-yield savings account or money market fund.
Be consistent
The most important trait to keep in mind when beginning something new is consistency. The well-known adage “Rome wasn’t built in a day” attests to the need for time to create great things. Long-term investing in the stock market can be a great way to build wealth. However, it takes years and even decades of staying invested in the market and sticking to your investment plan during times of volatility like we are currently experiencing.
Failure is part of the recipe for success. The only difference between a beginner and an expert is that the expert accepted failure as a learning opportunity while the beginner decided to quit. When beginning something new, taking the first step is usually the most challenging, and more often than not, you will realize that it is not as hard or as bad as it seems. By being able to adapt and keeping the above things in mind, you are setting yourself up for success in conquering the challenges that being a beginner brings.
Joey Casolaro is a CERTIFIED FINANCIAL PLANNER™ at HIGHLAND Financial Advisors, a Fee-Only fiduciary wealth advisory firm that offers comprehensive financial planning, retirement planning, and investment management. Joey graduated from the University of South Florida with a bachelor’s degree in personal finance and successfully passed the CFP national exam in 2021. Joey enjoys working out, spending time outdoors, and hanging out with family and friends in his free time.