How many times have you heard someone say something like: ‘it seems impossible until you do it’? Too often fear stops us from taking action. We self-doubt, fear judgement and exaggerate the risk of action. If you want some proof, multiple surveys and studies conclude that our fear of standing up in front of a group and talking is so great that we fear it more than death. Reflecting on the absurdity, Jerry Seinfeld famously quipped that ‘at a funeral, most people would rather be the guy in the coffin than have to stand up and give a eulogy.’
Princeton professor Daniel Kahneman asserts that if people can think of an incident in which a risk has come to fruition, they will exaggerate its likelihood. The phenomenon is so well known in science that it’s spawned the study of ‘Risk Perception’ in psychology and probability. If you’re a massive nerd and want to learn more on the topic, I suggest you have a read of: Exaggerated risk: prospect theory and probability weighting in risky choice by Kusev P, et al.
I’ve been in this game long enough to know that the publicised risks of property investing are certainly exaggerated. We hear a scary story on A Current Affair or 60 Minutes of someone who invested in a suburb we can barely pronounce and use it to make risk assessments of property markets broadly. Nassim Taleb, a probability expert at the University of Massachusetts, says the first step to better risk assessment is understanding that most dramatic news images represent the exception rather than the rule.
Author Jack Canfield summed it up pretty well when he said: ‘everything you want is on the other side of fear.’ I do, however, feel that I should add a caveat to the quote; by no means should you take undue risks. What you should do is get educated and exploit the expertise of professionals. Perhaps it ‘seems impossible’ until you equip yourself with the tools to make informed decisions.