Risk assessment. We all do it. Some people even make a career out of it (think: insurance companies). It’s a basic, natural instinct we are born with: to stay alive. If we take one step too many on a cliff, for example…well, that’s no good. Don’t do that. Not looking down before we jump? Yeah – yikes. It’s healthy to consider risks. What happens, though, when you get stuck in the same spot because every direction you could take has risks. Not taking risks is risky, too.
Good news, hipsters. There’s a trick to this whole risk assessment thing, so let’s learn it now so you can get on with the awesomeness of your life! What do you need to do? Well not to take it back to investment, but….you’ve got to think like an investor. You need to calculate the risk and reward of something and then decide where it all stacks up for you.
To calculate the risk and reward of a decision, you need to be real. Honesty is key here. Think: what is the best possible outcome of a risk you take? What if everything goes right? What would that look like? Next, you’ve got to think about what might happen if everything goes south. What would that look like? What would you lose? The truth is: your results will probably be somewhere in the middle.
So, look at the median results you can expect to get. What’s next? Compare these results to where you’d be if you didn’t take the risk. Now think this: what is riskier for your future? Doing nothing or taking the risk? See how simple this can be!
Key Takeaway for Everyone:
Nothing goes perfectly in life but the good news is that most disaster preparation is just that: preparation only. Don’t let fear of the unknown stop you from all the magic and possibility that can happen when you open the doors for change. Using the power of realistic thinking, you can take risks while protecting yourself.
Key Takeaway for Real Estate Investors:
With investing, nothing is a sure thing. You are constantly assessing risk vs. reward. As an investor, you know that if you do nothing, you are taking a risk by not taking a risk. Start using your skill with this kind of thinking to enhance your lifestyle and personal life!