How Big of a Risk-Taker Are You?
When I tell people that I used to struggle with lack of self-confidence for well over twenty years, they have a hard time believing this statement. I then tell them that my current state of being is because I have taken deliberate steps to develop my self-esteem and self-confidence holistically over the last ten years. In this post, I will explain in simple, realistic terms, the risks associated with building self-esteem and self-confidence in a thorough, holistic way, so that you can see this whole idea isn’t as complex as most of us tend to believe.
The holistic approach to building confidence involves long-term commitment and calculated risk on several levels, consistently. I define calculated risk in two ways:
Putting in the effort to learn about what can go wrong if I take a particular action towards any aspect of my life.
Making the decision as to how much risk I am willing to take before I perform the action and then staying vigilant and controlling the risk by correcting an undesired event the best I can, in a timely manner.
If I get it right, I grow. If I get it wrong, I learn!
A big part of my growing up with low self-esteem and poor self-confidence, which I had to finally confront in my early thirties, was my long-sustained inability to take certain risks. In other words, I had a low risk-tolerance level, but I was unaware of this concept until I became an investor in my late thirties. Later on, I figured out that I had oftentimes been unwilling to take risks due to fear of losing things that, honestly, weren’t even worth keeping.
Why is low risk tolerance a determining factor in the lives of so many people? I remember my early childhood when I was ridiculed or bullied a lot for the dumbest things, really. For example, when I was six years old and my parents and I came back from Mexico, I spoke Spanish without an accent. My Bulgarian, however, didn’t sound right to the other kids, because I had spent my formative years, from age three to age six, in Mexico. Once I started kindergarten in Bulgaria, none of my peers were impressed with my ability to speak Spanish. Instead, they immediately focused on my weird-sounding Bulgarian and made fun it all day long.
The next thing was my wearing of eyeglasses growing up. I was born with astigmatism, which my parents wanted to correct by making me wear eyeglasses. And I remember, when I was four, and they handed me the glasses, I was thrilled because in my perception at the time, I suddenly looked like an adult. My innocent illusion quickly dissipated, of course, when other children started mocking me because of my thick glasses, and this continued well into middle school and was no fun. Interestingly enough, they never mocked the adults for wearing their eyeglasses. This observation kept me in a perplexed state of mind for quite some time. At some point, I even thought the bullying was for something else that nobody cared to mention to me directly.
You may develop an instinctual fear of further ridicule based on specific relationship patterns as you grow up. This, in turn, reflects on your thought process when it comes to making more responsible decisions such as choosing a career, for example. Or, the possibility of switching careers if you see that one vocation hasn’t worked as desired for over a decade; or beginning something new that your friends and relatives likely know nothing about, such as investing in tangible assets to achieve financial freedom by not relying on an employer; or dramatically changing your lifestyle to improve your health to where you don’t need to depend on the healthcare system or on others to make health decisions for you. With the latter example in particular, you inevitably become ‘special’ in the eyes of people in your immediate circle (and not always in a favorable light at that) due to the mere fact that they haven’t chosen to pursue healthier lifestyles, and your differences quickly become apparent and uncomfortable as you decline to eat or drink things that you have given up and they have not. All these decisions involve risks and the possibility for resentment or some sort of sarcasm from those closest to you.
I now know that my late awakening to low risk tolerance was because of certain relationships that I had allowed to dominate my mindset. And, just as the toxins in our food tend to easily travel up the food chain, the memories of those personal interactions and influences time-traveled with me as I grew up. I am sure that many of you can relate to this. I want to be clear that I have minimal inclination to blame anyone for anything as I have accepted that, ultimately, I make my choices with regards to whom I allow to influence my self-perception. This is how things are now, but it wasn’t at all the case fifteen, twenty years ago!
When I first considered switching careers in my late twenties, many good friends and prominent relatives discouraged me from acting on this idea, because of the huge time investment and work I had already put into learning the violin. I had to drag myself out of this state of being afraid and make the responsible decision to change careers at thirty-two, which led me into a true midlife crisis once I realized I had spent thousands of hours over twenty-six years perfecting my violin skills and had nothing to show for it. This whole thing was part of risk tolerance versus no tolerance.
We take risks every single day by merely driving a car! In addition, we risk facing opposition to a novel idea or an idea that doesn’t fit into the comfort zones of those in our current environment. We risk by moving away from our present career because we may or may not be more successful in the next, again, depending on how well we apply our attention and discipline to really learn that new career while doing our best to clear the detrimental-mindset history from the old career. The same notion is valid when it comes to investing money. So, the risks I made myself take were learning the scientific language and clinical skills of nursing first, and then the financial language and money-handling skills of investing. I took responsibility of my own accord, against many people’s advice not to take most of these steps.
After making progress on several levels, it is pretty fascinating to see that risk tolerance in a new career context very much equates with risk tolerance towards the possibility of losing money when you first start investing. Say, it takes you some time to get established at a job in a new field upon graduation (not to mention finding the job), yet your monthly bills and student loan payments are your responsibility and yours only. Similarly, with investing, you first spend some money for the sake of learning, meaning buying books or signing up for a coaching program created by somebody who can teach you (or both); and then, you take the risk of purchasing and managing the actual investments. I had zero risk tolerance when I was contemplating switching careers in my late twenties and waited until my early thirties to accomplish this. I also had zero risk tolerance towards losing money when it came to investing, so I had to confront this in me and, at the end, nobody could help me with it but me.
To use another important example, there is also risk involved in changing your diet because your loved ones and friends may decide to give you static over adopting something like a whole-foods organic plant-based diet, which is exactly what I did four and a half years ago. Not everybody was agreeable or supportive — they thought it was crazy, or too extreme — never mind this is the healthiest eating behavior you could possibly adopt, simply because organic whole plants are not associated with any of the chronic diseases that are killing people left and right in the United States nowadays, such as cardiovascular disease, cancer, and type 2 diabetes. I took action despite skepticism from loved ones and that further increased my risk tolerance.
By staying focused and goal-oriented, you become more tolerant to the risk of removing certain people from your life by making yourself less available to them; you become more tolerant to the risk of possibly losing some money while learning to invest with the purpose of expanding your financial means; you take risks and increase your risk tolerance level when embarking on a new career with the intent to help more people (or help people more!) than you are helping in your current career. The stronger your tolerance to calculated risk grows, the bigger your self-esteem grows, too, as you make yourself do things that seem scary at first. At the same time, your self-confidence soars, because you overcome challenges along the way that build perseverance and resilience, which are the character traits you need in order to create and pursue even more ambitious goals and dreams.
It is my hope that you, too, embrace the idea of risk tolerance having multiple dimensions and choose to step in rather than keep shying away. Think about ways to expand your risk tolerance instead of constantly avoiding risks in the context of your personal growth. I can assure you, it’s well worth it!