Risk Taking.
How do you feel about it? What thoughts and emotions do you associate with the act of taking risks? Are they negative or positive? Most people have negative thoughts and feelings about taking risks. They associate risk with ‘danger’, ‘uncertainty’, ‘gambling’, ‘speculation’ and the ‘fear of loss’. As a result, many people avoid risks. They’d rather go for something that give them 100% certainty like ‘capital guaranteed investments,’ ‘fixed deposits’ and a ‘stable job with fixed increments’.

Yet, in order to live our life to the fullest and be all that we can be, we have to take risks. To be happy, rich and successful we have to take risks. If you want the freedom and financial success that entrepreneurship brings, you have to take the risk of losing money in a business startup. If you want to experience the joy of being married, you have to take the risk of having your heart broken and losing half your assets in a divorce.

Success is Directly Proportional to the Level of Risk

The level of success you will experience in life is directly proportional to the level of risk you are willing to take. At the same time, society pays a huge financial premium for uncertainty.

For example, if you are a relationship manager who sells insurance policies and unit trusts in a bank, your income will not be more than $50,000-$60,000 a year. However, if you are a financial planner with an insurance company selling the same quantity of life insurance products, your income could be $300,000-$500,000 a year. Why is there such a big difference in the level of compensation? It’s because the bank manager is paid a fixed salary (with a small commission) while the financial planner has no fixed salary but is paid huge commissions. Financial planners are paid much more because they are willing to take a higher level of risk (i.e. not earning anything if no sale is closed).

It is for these very same reasons that CEOs and bosses of companies are paid an average of 5-10 times more than their employees. An employee has the certainty of a fixed salary. Business owners and CEOs’ income are based very much on profits, stock options and variable bonuses. The boss of a company takes the risk of making nothing and he even risks losing money if the business goes bust. At the same time, they have the chance of making millions when the company does well. They are again compensated for taking on this uncertainty.

This is also why money placed in a capital guaranteed investment (i.e. fixed deposit) pays an interest of a paltry1%-3%. However, money invested in the stock or property market can grow as much as 20%-500% a year. When you want absolute certainty, do not expect to achieve or receive much in return. When you are willing to accept uncertainty, you have a good chance of being handsomely rewarded for it.

Bill Gates and Steve Jobs are credited for starting the technological revolution of the 1980s-1990s and changing our lives forever with Microsoft and Apple because they dared to take the risk of dropping out of school, rejecting the safe route most people take and going for their entrepreneurial dreams instead.

Imagine if these people were afraid to take a chance. Imagine if they had the mentality of having to be 100% sure all of the time. They would probably have taken a safe boring and not attempted anything. And the world wouldn’t be where it is today…if not for these exceptional risk takers.

“The person who risks nothing, does nothing, has nothing, is nothing and becomes nothing. He may avoid suffering and sorrow but he simply cannot learn and feel and change and grow and love and live”

– Leo. F. Buscaglia