Risk is relative, and often subjective.
It’s interesting how many people fail to realise this.
Starting a business is riskier the first time compared to the tenth time.
Not because the inherent risk of starting a business has gone up or down.
Because the person starting the business has increased his knowledge, skill level and, often, his assets – monetary or otherwise – thus making him more likely to succeed.
The same applies to investing.
Day trading stocks is a recipe for disaster for a layman.
But in the hands of a professional, it can yield predictable returns.
Some think that keeping your money in a savings account is less risky than investing in stocks, real estate or the more speculative derivatives or cryptocurrencies.
This too is relative.
Money in a bank doesn’t accrue as much interest as other financial vehicles and is more susceptible to inflation.
And who says a bank can’t go bankrupt?
This is not to say that everyone should invest in vehicles outside of savings accounts.
Investing in anything will likely go to zero if done uneducated.
Following the examples of successful people is fine and can serve as a shortcut.
But they are successful because they continuously educate themselves, thereby lowering their risk.
Education – and I don’t mean simply schools – gives you knowledge which you can apply to gain first-hand experience.
This, in turn, not only lowers your risk but helps you create mental models within that field and improve your ability to more accurately forecast expected results.
On top of that, it trains you emotionally, which is the biggest stumbling block for most.
Education and experience get you a long way.
Pair it with impatience, caprice or simply biting off more than you can chew, however, and everything becomes a risky endeavour.
Remember: risk is relative, and often subjective.
Next time you deem something risky, ask yourself how much you understand.
Next time you want to do something, ask yourself how educated you are.
How much time you want to dedicate to educating yourself on the topic.
Don’t dismiss something outright.
Educate yourself.
It opens up opportunities.
It lowers risk.
It makes anything in life possible and achievable.