There’s No Such Thing as a Safe Investment

There’s No Such Thing as a Safe Investment

Just as there is no fast, easy way to become rich, there is no such thing as a completely risk-free, safe investment. Everything we do involves a certain amount of risk. In business, it’s about figuring out what investments are worth it and how much risk you can handle.

Just because something seems brilliant doesn’t mean that it’s worth it. Just because something seems hard doesn’t mean that it’s not worth the effort. It’s easy for me to write this now. I’m in my nice house, at my favorite desk, and with sixty years of hindsight. In addition, as a concept, it seems easy enough—before you do something, calculate what you will have to put into it against what could potentially come of it. Simple, right?

In principle, yes. In practice, no. I have a pretty good eye for upside and potential downfalls. However, it took me a long time to learn how to size up an opportunity and judge whether the juice would be worth the squeeze. As I mentioned before, everything requires a certain amount of risk and sacrifice. And even then, things don’t always work out.

Of course, there are ways to manage the level of risk you are willing to undertake. I call it, recognizing the upside of calculated risk. This requires understanding your personal risk thresholds. For example, are you willing to invest nights and weekends for the next two years and not have it work out? Or do you need a more stable result in six months? Everyone has their own preferences and set of tolerances and expectations. That takes time to discern.

It is a bit more immediate to develop the ability to remove biases from your decision-making. Are you so crazy about an idea that it is blinding you to the objective likelihood of failure? Do you throw good money after bad because of your own sunk-cost bias? Are you ignoring advice from objective sources and expert friends because of dumb pride? This kind of constant humble self-examination is critical to success. You have to be willing to let go of good ideas if they are not worth the time, effort, and outlay. Additionally, you must be able to recognize the upside of calculated risk. More than anything, that is the essence of business.

In business, you will develop a relationship with risk. For some people, they avoid it at all costs. They may not make it big, but they won’t lose a lot either. Other people are cavalier. They take huge swings and strike out a bunch in pursuit of that one perfect home run. Still others, people like me, approach risk from a different angle. We don’t regret the big risks we didn’t take. That’s a fool’s errand.

Remember risk is merely a calculation in relation to any investment you consider. If the risk is huge and comes with a big upside, be suspicious but interested. Furthermore, follow that interest until the risk-to-reward relationship either becomes untenable or irresistible. In summary, the better you become at calculating the risks involved with the investment opportunities that come your way, the safer they become – even if they do involve risk.

In my book, I share my experiences and leverage proven approaches to spur your own growth, profitability, and success. Attain your own copy of Redneck Resilience: A Country Boy’s Journey to Prosperity on Amazon today!