Because investing is really more like pregnancy and parenthood than we imagine

Quite a few of my clients asked about the market recently, fearing potential technical correction, partly in view of the run up and in part because of the Portugal banking crisis … After all that has been said and done, the pullback was minimal, if any at all for some markets.

But such a quote comes in handy to keep ourselves grounded in times of uncertainty. some things just take time – You cannot produce a baby in 1 month by getting 9 women pregnant.

And as I was preparing for the post above, I got the idea that perhaps, investing is really more like pregnancy and parenthood than we imagine.

Here’s why.

In the first trimester // When you first Invest

Many mothers experience the most anxiety in their first trimester. This is when they are the most careful, as they may fear harming the baby. First time mothers have it worse as they have no prior experience and do not know what to expect, some may be in a constant state of anxiety. In view of this, most mothers turn to the internet/advice/books to learn more about parenthood. Some may become experts in the field, while others may end up following superstitions that are unhelpful or if not, completely false,

This is the same for many first time investors who can be unsure of how their investment would fare. Would they lose their capital? How should they manage their investment? Like mothers, investors turn to the internet for information or seek advice from others in such times of uncertainty.
The same pitfall applies – because it is easy to be misled by one-sided information. Like motherhood, it is important for investors to be receiving good and relevant advice.

In the second Trimester // After investing for some time

For most mothers, the intensity of emotions drop from the second trimester. Anxiety is reduced and many start to enjoy the journey of being pregnant more, as they understand that there will always be ups (experiencing your first baby’s movement) and downs (the physical discomfort). The important thing is that you now know that it will eventually get better.

Just as it is for investors, after investing for some time, we appreciate that the market is never a straight trend up (or down). Instead, we learn to appreciate the ups and downs of the market. Instead, we learn that the downs never last forever and that eventually, the turn will come. We sit through the days whereby market correct, to experience of investment-equivalent joy of baby movement. It is simply part of the process.

In the last Trimester // After investing for some time, and earning some buck

In the third trimester, mothers begin to anticipate the childbirth and they learn to cope with the significant physical changes. The fears of losing the baby have usually disappeared by this point, but a new anxiety takes its place — the fear of the baby’s arrival. Worries about labor and birth are also common during the last three months of pregnancy. But at this stage, you probably will begin to feel that deep seeded joy and anticipation of the baby’s arrival.

Just like pregnancy, there will come a point in your investment journey that you begin to feel intense joy- obviously, when you are enjoying the returns of the market rally. But at the back of your mind, you are probably concerned too – of a crisis that may occur. But of course, most are optimistic enough to believe the best outcome.

When the baby is born // As investors experience a crisis

Upon the birth of the child, many parents can still find themselves in a crisis situation because preparations simply do not suffice and parenthood is never like what you read from the book – baby cries late into the night, the painful breastfeeding, lack of sleep, and confusion on how to deal with a newborn. It is not easy. In fact, it is outright tough without the help of a supportive husband/family/nanny. Making prior arrangement is CRUCIAL, especially if you have doubt about being able to handle it on your own.

Just like being parents, not all investors are able to prevent being caught in an actual crisis situation. Simply, not many investors manage their investment well enough to be prepared for it. So be equipped, or be disarmed. Make prior arrangement if you do not wish to manage your own investment – because just like having a trusted husband/family, a banker/advisor who can stick with you through thick and thin and provide good advice will make the process alot easier.

Bringing your kid up // Staying Invested

And thick and thin is exactly what it is – bringing up a child is not easy (I would know since I was a terror to my mum when I was younger). But just like most others, I think I turned out pretty ok. In fact, I believe it almost always turns out good in the end.

Investment is exactly the same- it takes patience to grow your investment just like how it takes patience and time to bring up a kid. But give it time and it will almost always turn out fine. Treat it with care, and it thrives. And just like how a kid would benefit from learning from a good teacher, receiving better advice can help your investment blossom.

So this is it - all the similarities between Pregancy/Parenthood and investment that I can think of. It’s an impromptu post written at 2 a.m in the morning… but I hope it is lighthearted enough to drive a point across: Parenthood & Investment, it’s never easy, but patience pays.

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