In economics class, everyone learns the risk-reward relationship. You have to do something dangerous with your money for a shot at the big time.
But does this relationship always hold? Or are we all being held hostage to an old theory that doesn’t really apply in the real world?
For many people, it’s the latter. It turns out that there are ways to become successful that require almost no risk-taking at all.
This is a contributed post. Please refer to my disclosure for more information.
Invest In Yourself
Perhaps the main way to become wildly successful without taking a big risk is to invest in yourself. The more you build the person you are, the more likely it is that you can navigate the marketplace and dominate your industry.
Warren Buffett, the legendary billionaire investor from Omaha, Nebraska agrees. He sees self-education and training as the keys to building wealth in the future. The markets can fall, he says, and the government can take away your money, but they can never tax your mind and your brain. And that’s what ultimately drives your wealth and success in the external world.
Of course, education isn’t without cost. But many people work part-time during training to keep their finances ticking over.
Join An Existing Business
Starting up a new business is hard and only a small number of people manage it successfully. However, joining an existing business reduces the risk tremendously.
For instance, you might want to try starting a franchise. According to Franchise Direct, there are dozens of opportunities for people who understand business basics but don’t want to take massive risks with their money.
You can also buy a business. New companies come onto the market all the time, not because they are failing, but because they are successful. Owners often want to pass them on to someone else who understands how they work and can take them to the next level.
Invest Slowly And Steadily
Investing requires taking moderate risks. But it isn’t the same as putting your house and car on the line. The cost, of course, is the time it takes. Putting a successful investment portfolio together can take decades..However, if you take a long-term view, the risks are fairly low. As long as there is an economy, a diversified portfolio of firms will continue to generate profits, delivering significant returns over time.
Doing Nothing Is Also A Risk
Perhaps the biggest risk in life is to do nothing and just wait for something to happen. (Newsflash: it won’t). As Albert Einstein famously quipped, life is a bit like riding a bicycle: you need to keep moving forwards to keep your balance. Being ultra-risk-averse doesn’t pay in the long-run.
It’s worth noting that life is inherently risky. That’s what makes it so exciting. Some risks are calculable, whereas others aren’t. In some cases, you need to do risky things.
With that said, the idea that you need to take massive risks is probably wrong. Most entrepreneurs are actually quite risk-averse. They just appear to take risks because they know more than other people about the likelihood of success.