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"I suddenly realized that investing in stocks and children's education actually have many points of comparison. I have given some thought and practice to both these aspects, and I'm recording my insights for future reference and improvement.

Both are very important for a family, and the threshold to start is not high. Often it seems we know what to do intuitively, like buying low and selling high in investments, and for children, it's about teaching by example and nurturing a friendly and strong character. These are well-known. For those who want to take it easy, there are simple choices like saving money in a bank or entrusting children’s education to school teachers. However, these common practices often don't yield good results.

Let's talk about earnestly discovering children's potential and market opportunities. What does it mean to 'earnestly improve'? For investing, it means consistently achieving an average return significantly higher than the market. If the market goes up 20%, you go up 30% or even more. If the market falls 20%, you only fall 10% or less. (Here, we're talking about average performance, not one or two instances). In children’s education, whether your child is a lovable kid, a top student, or a mischievous troublemaker who can't be calmed down, you should provide solid improvement based on their nature. This improvement might be scoffed at by others, as their children might be excellent without much effort. Like if you lose 10% in a severe bear market, and someone who kept their money in the bank earning 2% interest laughs at you. Similarly in education, with a good foundation, you can help your child become a happy and successful entrepreneur or scientist; with a less favorable foundation, you can guide them to lead an optimistic and confident ordinary life, rather than ruining them with your efforts. We can only build upon such a foundation, as you cannot choose the market conditions or your child's physical, psychological nature.

The following points show the similarities between good investment and good child education.

Both are lifelong endeavors, and the earlier you start, the better.

True investors stay in the market whether they make or lose money, constantly learning and re-engaging. Investing is a lifelong journey, not just a phase. The same goes for educating children. Many people think it's only necessary when children are young. In reality, education continues into adulthood, just in different forms. We often see grandparents caring for grandchildren and educating their now-parent children. This might not seem appropriate due to changing times and mindsets. However, the bigger issue is that most parents do not keep up with the times and get left behind. This leads to the belief that parental responsibility in education ends when the child is young, like in elementary school or even earlier. But as they grow older, parents often feel incapable of educating them effectively.

Both need to be done as early as possible.

In education, we emphasize early and even prenatal education. The importance of early stages is twofold: from the child's perspective, their physical and psychological traits are more malleable. This is well-supported by science and has become common knowledge. For parents, the earlier they start, the more experience they accumulate and the better they understand their child's traits. This understanding is crucial in determining the extent to which parents can influence their child later on. The benefits of early education compound over time. Similarly, early investment is beneficial because it leverages the power of compounding interest. For example, a 15% annual return (which is high) would turn a $100,000 investment at age 50 into $400,000 by age 60. But if you start at 20, it becomes $2.6 million by age 60. The second reason is that starting early often means smaller capital, so mistakes are less costly.

Both seem to have low barriers to entry, but in reality, they have high invisible barriers.

It seems everyone knows how to invest and educate children, but doing these well is quite difficult. We see many parents constantly around their children, giving endless advice and trying to progress with them. Some children improve academically with their parents' push, but many suffer immense psychological and physical stress, affecting their personalities. The same is true for many investors who tirelessly follow forums and market trends but still fail to make profits.

Both require managing expectations.

Managing expectations is crucial for two reasons. First, both activities are largely influenced by objective factors, and although effort is important, it's fundamentally about adjusting to these factors. Second, managing expectations doesn’t mean missing opportunities; it means not solely relying on luck, like finding a coin on the ground. In both investing and education, there's an unseen but real limit to success. The most successful investors average just over 20% returns, even in a market that has been rising for 50 years. In education, every child could theoretically excel in a specific area, but reality often forces them into a competitive environment where success is measured by exams. In this scenario, lowering expectations is a good strategy, as most people aren’t doing what they’re best suited for. Having high expectations can sometimes make life more difficult and even worsen situations.

Both involve making decisions in uncertainty.

This uncertainty isn't about blindly groping in the dark but about the challenge of making informed decisions without complete clarity. In stock investing, investors only see a fraction of the information, like the tip of an iceberg. It's a challenge to navigate based on this limited view. The same goes for child education, where parents might only see their child’s surface behavior, often leading to miscommunication or misguided guidance. Recognizing this helps us to avoid being stubborn in our approaches.

Both require more observation, thought, and less action.

This principle is based on the fact that we only have partial information. Too much action in both investing and education can be counterproductive. Our expectations naturally rise with more effort, but without corresponding results, leading to frustration and impaired judgment. For example, some children excel academically with seemingly little input from their parents, indicating that at least there’s no negative impact from the parents.

This reminds us of the previous generation's approach to education: a laid-back attitude and a hands-off management style. Without constant homework checks, extra tutoring, or incessant planning, this approach had no negative impact on children. In investing, simply saving money in a bank already beats 80% of active investors, who often end up reducing their capital through relentless effort. Successful investors might only need a few trades to achieve substantial profits.

Both offer very few truly good opportunities.

Although both are lifelong endeavors, there are very few truly good opportunities in each. In a lifetime, an investor might not encounter more than ten great investment opportunities, roughly equal to the number of major bull and bear market cycles experienced. Similarly, in education, significant impact is made during key developmental stages. Missing these critical periods makes education much costlier and less effective.

Sometimes, it depends on your investment style and educational style. It may seem like there are many trading opportunities every day and daily chances to influence your child, but in reality, truly confident and good opportunities are not that plentiful.