Why You Need a Cast-iron Stomach to Manage Your Money Well

Content warning: Do not read while eating lunch.

The joys of Road Warriordom are many: cramped middle seats; endless flight delays; small, impossible-to-open bags of over-salted peanuts. Some days — thanks to delays, cancellations and ever-present bureaucratic stupidity — are worse than others.

That time, returning from a business trip to Charlottesville, Virginia, things seemed to be hunky dory.

It was a beautiful spring day, and we were right on schedule. Ours was a prop plane, but even that didn’t suck— a longer flight, yes, but also a more leisurely approach into La Guardia and a chance to savor the New York City skyline.

There was, however, one potential hitch — prop planes mean more turbulence. That doesn’t bother me (I have a cast-iron stomach), but it clearly was a problem for the woman and toddler seated across the aisle from me.

I haven’t seen that much projectile vomiting since one of my sons outgrew the stage. He shall remain nameless (you have a 50/50 shot at getting it right), but for the first two years of his life his nickname was “Sir Barfalot.”

I didn’t mind the in-flight vomit — being a parent teaches you compassion.

When something horrific happens to other people’s children on a plane — whether it’s temporary satanic possession or saturation vomiting — you’re just so grateful that it’s not your child and your public mortification that when stray bits of chunder land on you, it’s no big deal.

That said, the scale of the resulting cleanup — only slightly smaller than BP’s Macondo oil spill — made me wonder if mother and son would ever fly from Charlottesville to New York again.

Which was a stupid thought, I soon realized.

I mean, what are the alternatives? By foot, by bicycle, by car, by bus, by train? All of these are impractical, take more time and, while generally less turbulent, come with their own share of risk.

It’s like investing: if you want to reach your final destination of a decent-sized nest egg at a retirement age shy of three digits, you’re going to have to risk throwing up along the way.

The problem is that market turbulence (a.k.a. losing gobs of money) can be so traumatic that some investors develop a fear of “flying”. Individual stocks blow up, the market swings between extremes of fear and greed, and even that old standby diversification (or diworsification as a witty friend puts it) doesn’t help when all asset classes implode AT THE SAME TIME.

Add to this the human, asymmetrical bias towards feeling more pain when things are bad (losses) than pleasure when things are good(profits), as well as our tendency to remember the unusual (plane crashes) rather than the common (car crashes), and it’s no wonder some people go running for the exits.

But ALL approaches to making money come with cookie-tossing potential:

If you buy gold, you have a negative return each year because it costs money to store, whether you rent storage or have to pay for a safe-box worthy of the Ocean’s Eleven team.

If you keep cash in your bank, you better be sure: 1) your bank is solvent and your account balances are no more than the FDIC insured limits, and 2) the rate of interest income minus taxes and minus inflation is positive.

And even if these are both true, at any time during your financial snail’s pace journey, you could get blown back to the starting line thanks to increases in tax rates, interest or inflation.

If you keep cash under your mattress, that’s even more pathetic. Not only have you added the risk of being robbed by someone not wearing a banker’s suit, you probably still have to pay taxes (I won’t ask so you won’t have to tell), you’re getting NO interest, and you still get dinged by inflation (the real-life kind, not the kind the government calculates).

Bonds can lose you more money than you think when rates rise .OK, I know it depends on your investment timeline, and if you’re 104 years old, I agree that investing in bonds is far safer than in meme stocks, for example.

Real estate can be an illiquid roller coaster ride. Diamonds are only your best friend if you have faith in a rapidly fading cartel, not to mention the blood money involved.

There’s barf-inducing turbulence everywhere in finance.

So here’s where I come out personally — Early on, I learned from my grandfather how much damage leverage (a.k.a. debt) can do to people’s portfolios. Leverage can be the gasoline fueling your returns, but when it works against you, it will burn your house down.

To this day, I remain conservative about debt, but my cast-iron stomach keeps me in the markets.

Maybe I’m just a risk-taking entrepreneur at heart, but somehow I’m able to keep in mind that waking up every day has its perils, and in the long run, we are all dead.

Investing (and life) means dealing with — no, expecting — turbulence along the way and savoring the occasional and unexpected smooth flight when it does come around.

Just be sure your tray table is up and that barf bag is in the seat pocket in front of you.

Photo credit: “Mixed messages from the airplane seat pocket” by espring4224 is licensed under CC BY 2.0