Everyone wants to win big, in business in life, in sports or whatever else. However, most people want to win without betting. Without risking. We don’t want to take any big risks, whether necessary or unnecessary. Life is a gamble, you know it. And in order to win, you need to place bets. Most of us however try to place as little and few bets as humanly possible. But that’s not the way to go. In order to get something you need to risk something. And that’s the often overlooked universal rule.
Risks are a necessary part of life. Yes, taking risks makes you worry. Not many of us like this. But worry is a good part of life. I know you might not agree, but just think about it. If you are not worried, you’re probably not risking enough. And let’s be honest, if you’re not worried, you’re not risking and if you’re not risking, your life will be boring as hell. Life needs to be an adventure. Adventure is what makes life worth living. And for that you need to expose yourself to risk.
The old saying that you should only bet what you can afford to lose is wrong. Unless what you can afford to lose is something big, maybe 100% of your fortune? Okay, that’s usually too much but I hope you get the idea. The thing is that usually the amount you can “afford to lose” is too little to do you any good even if you manage to double or even triple it. You play on stock markets with 100 bucks, you win 100 bucks extra. Did it really make you and richer? I doubt that. You need to risk with stakes that matter to you. As this makes you worry about it and this makes you a better decision maker. So a meaningful stake is a stake that makes you worry, even if just a little. Of course, when you place bets, try to place calculated and knowledgeable bets.
And remember, the less you risk, the less you can earn.
Now let’s imagine you have achieved a nice outcome. When you have achieved something great, on stock markets, in business, don’t hope things to grow a lot more, learn to quit the game. Learn to quit the game earlier than others might do it. While you are risking your chance to make a lot more, you are also risking losing all what you have gained. Risks are necessary but you need to end your investments, ventures at peaks, to be on the safer side. Not safe side, but safer side. I know it’s difficult, we all want more, always, but that’s not the way to go. Stop at right times. It’s all about setting your limits and quitting according to them. It’s all about management of your investments, money, ventures.
Imagine a poker player who wins 5000 bucks, whether with 8 hours in cash tables or in a tournament. He’s been doing well. And now he wants to do even better. But you need to keep in mind, lucky strikes never last. And most likely the poker player will not go home with 6000 bucks, neither 5000 but rather 4000 or less. Yes, he still won, but by accepting less he could have taken home more.
Know your limits, your goals. And once you reach them, get out of the game. That’s part of good money management. And these limits and goals should be set for both possibilities – for gains and losses. Yes, sometimes they say persistence is good. But...when the plane is starting to fall, it probably will, so take your parachute and jump! Don’t hope you’ll make it otherwise. Hope is often for fools.
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