What’s the worst that can happen?
This question has been posed millions of times by people who are trying to find justification for an action that they are not 100% confident in.
For example, “Dude, I am about to go jump off of the back of the roof, onto the trampoline, over the neighbors fence and then swan dive into their pool! It’s gonna be sweet! Besides, what’s the worst that can happen?”
Ok, maybe not the best example, but you have all asked this question about one thing or another in your life.
It is the answer however, that I want to focus on. When you ask this question, what is your answer? Is the answer dire enough to stop you from taking action? Is it clearly defined? Is it realistic? Or is it just a reiteration of the common fears that you have heard people saying for years?
If you tried the stunt in my example above, you will probably break your neck and paralyze yourself. That outcome is clearly defined, and just stupid. Don’t try that at home (or anywhere else for that matter!)
However, in the majority of situations, the worst possible outcome is actually not as terrible as you once thought once it is clearly defined, and once you compare it to continuing on without any changes.
Paralyzed by Undefined Fear
So many people avoid doing something that could truly change their lives because they never sat down to clearly define what their worst case scenario would be.
Have you ever made the decision NOT to quit your job and pursue an awesome business idea that you had? What was your reasoning? Was it fear of running out of money? Was it fear of nobody liking your new product? Was it fear of humiliation by your family? Was it pride? Was it lack of confidence?
Have you made the decision NOT to ask your boss for a raise? Were you scared? Did you think you might get fired?
Do you even know why you decided NOT to pursue the last big decision you almost made?
Most people don’t. Most people simply say NO to things that could benefit them because they do not understand the true cost of the risk they are taking.
If you never define the worst case scenario for a decision, then you can never truly make an informed decision. Your decision will be based on circumstances and societal pressures.
Define the Worst Case Scenario
What is the worst that could happen if you asked your boss for a raise?
Let’s clearly define all of the worst possible outcomes:
- The boss says no, and you continue on as normal
- The boss says no, and he holds a grudge against you
- The boss says no, and skips you over for the next promotion b/c the boss holds a grudge
- The boss says no, and makes the decision to fire you for being “selfish”
In all of these possible outcomes, you did not get the raise you asked for. They increase in severity with the worst outcome being you actually getting fired for asking for a raise.
So now what? You asked for a raise, and instead you got fired. Where does that leave you? Well, you likely asked for a raise because you felt you deserved one. You had been working hard and providing value to the company without any increase in compensation.
You should take that same level of motivation and go look for a new job. You should look for a job where your skills and level of commitment to the company will be rewarded. You should look for an employer who will value your contributions and not fire you, for wanting to better yourself.
You could take your entrepreneurial spirit of asking for a raise, and begin to do freelance work. Someone will pay you for the skills that you have. You could transition the first few freelance gigs you get into a more regular business. You could go work for yourself, and never have to ask for a raise from your boss again.
When you take your worst case scenario and break it down into pros and cons, it becomes very easy to see that even if the worst happens, you still have options.
Often times, you have very good options.
Disaster Breeds Success
From the ruins of loss, disappointment and failure, rise success.
Many people who have suffered the loss of a job, or made the decision to make a drastic change in their lives have reaped success. Often times, a disaster is the catalyst that we need to get motivated to make positive changes in our lives.
You have likely heard many stories out of this recession of people who hav e been fired from high paying jobs, only to start a business and become incredibly happy.
People who make the decision to work for themselves feel a sense of confidence and freedom that they never felt while working for a corporation.
There is good that can come from making a difficult decision.
The trick to finding these good choices is to clearly define your worst case scenario. Once you have done this, you will likely see that your worst case scenario is really not so terrible after all.
By now, most of you know or have heard that yesterday was a horrific day on Wall Street.
The first day of trading after Standard and Poor’s downgraded the United States credit rating to a Aa+ from a AAA sent shockwaves through the international community as well as Wall Street. The 634 point drop yesterday, might just be the tip of the ice berg. Analysts are convinced that the debt deal did nothing to convince investors that the United States is committed to getting out of debt, and therefore the massive sell fest began.
What does this all mean for you as a student, or as a parent planning for your child’s future?
Maximize the investments you can control!
Nobody can control or predict the stock market accurately 100% of the time. People claim they can, and they are all proven liars. In fact, when you invest in a security you will always see the disclaimer that “funds invested in the stock market are guaranteed and the investing company is not liable”.
So if the stock market cannot be trusted to secure our future, what can we put our trust in? You can invest in your education!
Studies have shown that students with higher degrees of education make more than those without, with an overwhelming majority. Your college degree is the gateway to a world of opportunities that simply do not exist without a college degree.
I know you might be thinking about the rare exceptions in our world such as Bill Gates and Mark Zuckerberg. I cannot deny that they did not graduate from college and they are two of the most influential and wealthy people in the world. But once again, they are a RARE exception.
The best way to secure wealth in the future is to arm yourself with the credentials and experience that will help you earn more money over the course of your lifetime. Having a college degree is an excellent start.
I also encourage you to become an entrepreneur, or at least have an entrepreneur mindset. The greatest source of wealth in our economy is small businesses. As a college graduate, you will have the chops to create the business of your choosing. Even if you decide not to start your own business, thinking like a business owner will get you far within any job that you have.
So, even though you cannot control the stock market, you can control your most important asset class: YOURSELF!
Time is on your side!
It is also very important to remember that time is on your side. Hopefully, you are not a Wall Street trader (if you are, please put down the coffee and breathe…), and since you do not trade stock minute by minute, you have time on your side.
The stock market has fallen more than 634 points before, and it has rebounded.
The stock market crashed in 2008, then it rose back to glorious heights in 2010. Now it is falling again.
If you look at a historical summary of the stock market you will quickly see that this is simply how life goes on Wall Street. A series of gains and losses, ups and down. However, the historical average return is hovering around 10%.
This means that if you invest your money for the long-term, and leave it untouched, it should eventually reach that 10% annual return mark. (Once again, historical prices do not indicate future results with the stock market).
We can get into much more detail later about how to re-balance your portfolio to ensure maximum safety, but for now please know that I highly recommend index funds that mirror the market.
They are cheap, and easily understood.
Take a Deep Breath.
So the stock market took a nose dive yesterday. It will probably fall again today. It might even continue to fall for the week. If you focus on the long-term investing time frame that you have, and continue to maximize your personal education and career, then you can switch off the news and stop worrying about Wall Street.