There comes time in everyone’s life when we are faced with a choice that involves risk. Perhaps a change of career, moving home, starting a new relationship or having a child. Risk is by nature, scary. Uncertain. Unpredictable. Unchartered territory. I’ve been there recently.
We actually risk everything, every day of our lives without knowing it – there is no such thing as a ‘risk free’ environment. We spend our lives managing risk. There is always a chance that walking outside will kill us. There’s a chance that we’ll never make it to our destination, a chance we won’t get to see our loved ones again, a chance that tomorrow will never come. Life is all about risks – and we all take a different approach to it.
In the same way, there is no such thing as a risk free investment. Every type of investment involves risk, the important thing to assess is the type and degree of risk and the potential consequences, both good and bad, of taking it.
Even money deposited in a bank will be at risk, because in an inflationary environment, its future purchasing power is unlikely to be as good as it was when it was put there. The risk is that leaving money on deposit for long periods will cost you money when compared with other investments and is known as opportunity risk.
So, if you want your money to have the opportunity of working for you and potentially increasing its purchasing power, you have to accept different types of risk and some degree of volatility. The degree of risk that any one person needs, or wishes to take, depends entirely on their personal circumstances and outlook.
There is no magic formula for managing risk, but with careful preparation and forethought, you can minimise the risk and maximise the odds that you will succeed.
The life you live depends on the choices you make, the risks you take, and how lucky or unlucky you’ve been. #planitwell
This is from a book my Father brought for me a few weeks ago:
Go on adventures.
Forgot your inhibitions.
Believe in yourself.
Remember it’s now or never.