Living Dangerously Safe
Living boring and living risk-averse are two different things. Our culture has romanticized the idea of taking risk. While “no risk, no reward” may be a popular saying, it is just as ignorant as it is popular. Often times, we minimize protection from risk in our lives because it isn’t a romantic subject. Sometimes, we get so focused on winning the game that we forget about not losing. We have been conditioned to have an either/or mentality when it comes to our money - either I take a big risk for a big reward, or I hunker down and don’t grow my money at all. Think about your finances like you’re playing offense and defense in a basketball game. Many times, we focus so hard on offense that we forget about defense, and then we lose (ask the Phoenix Suns of the 2000’s how that worked out for them). Defense is just as important as offense.
We often minimize protection in our life because it is not exciting. Our culture’s fascination with risking it all has led to many possessing a “Blessed are the risk-takers” financial theology. Yet, there is nothing rewarding about leaving your family unprotected. Where is there a written law or principle that says to grow our money means we have to put the money we invest at risk. The “great gain takes great risk” mentality is dangerous. A true investment is when you can protect the principal money you put into something and have the potential for gain. Protecting what you value is a core value for those who achieve financial autonomy. In fact, being risk-averse is one of the main characteristics that sets the financially independent and free apart from everyone else. They don’t hand wealth down from generation to generation because of the extraordinary risks they are taking. In fact, they are extremely risk-averse, understanding that winning the money game is just as much about defense as it is offense.
There is a big difference between speculating and real investing. If you believe that risking the hard earned money you are using to build the future you desire is necessary, then you may be forgetting to play defense. Protective measures in our lives give us the ability to live with more certainty, and make risk less dangerous. Bungee jumping without a bungee is just free falling towards your death - attach the bungee (protective measure) and now it becomes an enjoyable activity. Speculating is like bungee jumping without the bungie! Protect what you value.
