Some people are essentially adulting before they finish high school. Others don’t cut the tether until they’re well into their twenties. But most of us get there in some way, eventually.
As an adult, I have learned patience, sometimes in the school of hard knocks, and am better able to guide my decisions using logic and the guideposts of history.
There is a certain amount of financial knowledge that must be mastered in order to grow from an “investing child” into an “investing adult.” This includes basic mathematical concepts such as compound interest and the future value of money.
In order to more easily study financial history and investing in the pre-computing age, academics were forced to use simplified models that generally equated investment risk with volatility.
This includes dying, becoming disabled, acquiring an illness or injury that is expensive to treat, or becoming legally liable for physical or financial damage to another person.
This is the risk that comes from the fact that the prices of assets, such as stocks, bonds, or real estate, can fall precipitously causing a very real loss of hard-earned savings.