- The Really Rich Journal
- The sliding scale of risk.
The sliding scale of risk.
Are you taking the right risks?
Hello again, Squad.
The Really Rich Journal
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The Weekly Tone
Let's start with a basic premise.
The world is divided into broad areas of risk and safety. The risky areas hold the promise of great rewards and great failures, while the safety spots offer comfort, stability, but less growth. Now, each of us has our unique mix of these areas in our lives.
Risk is like a roller coaster.
It's a wild ride with exhilarating highs and terrifying lows. It's the thrill of starting a new venture, moving to a new city, or even asking someone out on a date. But with that thrill comes the potential for failure. Or at least embarrassing yourself with a high-pitched scream on the upside-down corkscrew.
Yet, it's in these risky endeavors that we experience the greatest growth. The simple math is, no risk, no reward.
For example, gunning for a promotion at work often entails stepping out of your comfort zone. It might mean taking on a challenging project, networking across the firm, or even standing up to your boss. These actions carry risks, but they also increase your chances of getting that promotion.
Safety, on the other hand, is like a winter jacket. It's keeps you safe in the toughest seasons. It's the steady paycheck, the annuity, or the well-established routine. But while this safety provides stability, it also can limit runaway growth. There are times when safety matters…a lot. This is why I started an annuity company, because when it comes to your retirement, safety always beats risk.
The key is striking a balance between risk and safety, and knowing when to embrace one over the other.
Oddly, I see myself acting too safe in areas of necessary risk and too risky in areas of critical safety. You may identify with this upon careful reflection.
Sit down and catalogue your life into these categories:
1. Safe and smart: These are areas where you're comfortable and making good decisions. It could be your steady job, or perhaps you've started investing and saving for retirement.
2. Safe and stupid: Here you're playing safe, but it's not serving you. Maybe you're not taking risks in your career because you're scared of failure.
3. All risk: This is the high-stakes poker game. Maybe you've put all your savings into a high-risk investment like crypto. It’s time to rethink this.
Once you've categorized, start balancing. If you're all risk, find some safety – perhaps find a steady side hustle until your experimental startup begins to pay off.
Remember, life isn't about avoiding risks or seeking safety, but about finding the right balance between the two.
Rich: The neighbors are investing in it.
Really Rich: I know the risk that’s right for me.
🎙️ This Week On The Really Rich Podcast
Speaking of risk…
In this eye-opening video, we debunk the myth of stock market returns and dive deep into the factors that chip away at your profits—taxes, rebalancing, and inflation.
Learn how these hidden culprits impact your actual returns and discover a lesser-known investment strategy that could be your key to a more secure financial future.
🤝 How I can help you:
The Entrepreneur’s Field Guide (Book) - learn the rules for entrepreneurship and how to blaze your own path.
Revise (my annuity firm) - Accumulate an income for life that grows tax-deferred, principal protected, and tracks the S&P500.
The Really Rich Podcast (Free) - a weekly deep dive into business, finance, and wealth mindset.