Author
Daniel Bustamante | Coach
Blind risk is what we do when we don't realize the risk at hand.
Sort of like your 401K or retirement accounts. The ones that you hand over, check maybe once a year and then hope that there's enough there when you retire. That's blind risk.
It feels safe because you don't have to see it or think about it on a daily basis. It's the reason most people never take their own money management into their own hands. Seeing a loss here and there bothers them. Two years ago I had a student angrily email me because they lost $1,000 trading futures.
$1,000 gone. Sad. But let's be real here. Your 401K and retirement fluctuates a hell of a lot more than that and if you saw it you would be on the phone with your advisor looking for them to tell you a story to calm you down and make you feel all warm and cuddly inside. The truth is investing has fluctuations and no I'm not talking about the ones where you buy a stock, it drops 50% then you tell yourself; "It's a good company, I'll hold it for a while because it will come back".
What I'm talking about is the face is that you need to define how much you want to earn each year. If you have $900,000 and you want 10% a year you sure as hell don't need to have all $900,000 diversified in stocks, mutual funds and bonds to just make $90,000. And if the thought of making $90,000 from the markets is unthinkable to you there are two issues:
1) You don't have enough capital to invest
2) You prefer blind risk and don't like to see a loss
This is, in my opinion, why most people wait too late to plan for retirement or even take control of their finances because not thinking of the risk at hand is easy. It's the ones that stare risk head on and find a solution to it that make the returns in the markets and in life.
I hope this helped.
Daniel Bustamante
Coach
Sort of like your 401K or retirement accounts. The ones that you hand over, check maybe once a year and then hope that there's enough there when you retire. That's blind risk.
It feels safe because you don't have to see it or think about it on a daily basis. It's the reason most people never take their own money management into their own hands. Seeing a loss here and there bothers them. Two years ago I had a student angrily email me because they lost $1,000 trading futures.
$1,000 gone. Sad. But let's be real here. Your 401K and retirement fluctuates a hell of a lot more than that and if you saw it you would be on the phone with your advisor looking for them to tell you a story to calm you down and make you feel all warm and cuddly inside. The truth is investing has fluctuations and no I'm not talking about the ones where you buy a stock, it drops 50% then you tell yourself; "It's a good company, I'll hold it for a while because it will come back".
What I'm talking about is the face is that you need to define how much you want to earn each year. If you have $900,000 and you want 10% a year you sure as hell don't need to have all $900,000 diversified in stocks, mutual funds and bonds to just make $90,000. And if the thought of making $90,000 from the markets is unthinkable to you there are two issues:
1) You don't have enough capital to invest
2) You prefer blind risk and don't like to see a loss
This is, in my opinion, why most people wait too late to plan for retirement or even take control of their finances because not thinking of the risk at hand is easy. It's the ones that stare risk head on and find a solution to it that make the returns in the markets and in life.
I hope this helped.
Daniel Bustamante
Coach
