The word “Risk” has become such a scary thing; in fact, we do not even treat it like a neutral word. Often, when it is used, it brings with it negative associations or feelings of fear and anxiety. We discuss risk as the possible downside to any decision, opportunity or situation and not the potential for great reward. Risk is a part of life and is not something to be feared without taking the time to understand. In our daily lives and strategic decision making, instead of fleeing risk, we should stop and understand the risk. Here is what I mean.
Identifying Risks
Often times, the biggest hurdle to risk-taking is education. Instead of running from the black garden snake, if we educated ourselves of the risks (probability and impact) associated with getting attacked, we would likely not carry the same fear around the black snake (because while the chances of getting bit may be the same as any other deadly snake, since this is not a deadly snake the impact of a bite is very low since it is harmless).
For many of us, we treat the unknown like black garden snakes. We do not get married because we heard its risky; we do not go after that next career position because we heard its tough; we do not invest outside our 401k and stocks because we could lose our money.
Get Educated
I challenge you to treat the unknown like a book ready to be opened. Learn about what it is that you fear or consider a risk and reassess the risk. This may not change anything about your aversion to these areas of life, but repeated exercises of addressing the unknown with facts, data and education will make a world of difference.
Risk Taking is Rewarded
As an added step, as you live your life confronting risks, you will inevitably take a risk more or two, and as a result of your education and calculation you will reap the rewards that come to those to take risks. Remember, not all risks should be taken, but some risks are general misconceptions or lack of education. Here is an example:
When it seems everyone considers the real estate market in general to be hot and overpriced, your astute knowledge tells you that there are emerging markets that are bringing jobs and population growth with outsize potential and current real estate values do not reflect this demand. To many, emerging markets such as Boise, Idaho, Tulsa, OK and Greenville, SC, may not sound attractive. After all, they are not on everyone’s radar. But because you did your homework, you know that the perceived risk is not reality. If you choose to invest in these markets, perhaps your risk taking will be rewarded!
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– How To Use Your 401k To Invest In Real Estate
