Risk is Not for Herds

Last week I talked about risk taking and how the willingness to take risk when it comes to investing is critical.  Those people who really want to attain Financial Freedom or FF need to look at themselves to determine their tolerance for risk.

As a real estate investor working towards achieving FF, it’s important to understand your own temperament, and your ability to assume that element of risk.  It’s important to know your limitations and not torment yourself with sleepless nights by taking unnecessary risks in trying to keep up with others whose capacity to assume risk might be much greater than yours.  This decision may slow you down on the road to FF, but what is FF without some enjoyment, comfort and happiness along the way?

Everyone has a level and a threshold for tolerance and excessive and unnecessary risk will only create anxiety and tension and may well shorten your life.  So take a hard look at yourself and measure how much risk are you willing to take that doesn’t make you worry you to the point of causing pain, anxiety and suffering in your life.

But keeping in mind our objective, achieving FF, it is important to remember that the greater the potential risk the greater the inherent reward will be. It is also almost impossible to avoid every risk at any one time in selecting an investment. In order to achieve and maintain high rates of return, which are critical for achieving total FF, one must be prepared both mentally and emotionally to incur a higher than average risk. So look hard at yourself and measure how much risk you can handle.

Remember that “eagles don’t fly together in flocks.”  So if you are going to make it big you can’t just go along with the flock or the herd.  If you earnestly desire to achieve FF today, you must learn to assemble all the facts, calculate the risks, be decisive, and then act accordingly.  Statistics and history prove that the majority of people fail to ever become FF because they do not have a specific plan. They are content and willing to wait patiently throughout their lifetime for Social Security or they are looking for that one super great investment or the lucky lottery number to suddenly become super rich.  Don’t follow those kinds of people. Work on your plan that will take you to total FF over a reasonable period of time and you will reach the level of Financial Freedom that you set as your goal.