The Risk of Avoiding Risk

Jason Demland

April 3, 2018

Everything we do has some sort of risk in it.  Risk is inevitable.  We don’t like risk.  It brings uncertainty.  In investing avoiding risk can be a good thing, but it can also be a mistake.  

There needs to be a reason to take a risk.  Are the rewards worth it?  Will you engender more social, career, spiritual, mental, physical, or financial reward by taking the risk?  Is the risk necessary to “level up?”  There’s a reason people start their own businesses.  There’s a reason people invest in stocks instead of CDs.  There’s a reason we get life insurance.

Risk is always there.  You cannot eliminate risk.  You can only transfer it.  

Do you have a mortgage?  You took on substantial risk in order to purchase something you thought was worth it.

Does your family depend on your income?  If you’re paying for life insurance, they’re taking on your risk for you in case you die.

Are you investing in the stock market?  You’re taking on risk because you think there may be a suitable reward in store for you.

Understanding what your goals are, what you’re dreaming of, what you want to accomplish is the primary factor in deciding how much risk you’re going to take and whether or not that risk is worth it.  If you don’t save enough you’re risking not having enough money to replace your income when you can’t work any longer.  If you don’t risk enough in your investments right now you could be risking the same income shortage.