Today’s Steveism is a mantra that changed my entire attitude to investing:
The antidote to risk is skill
Risk and return are related, as evidenced by the time-honoured saying “the bigger the return, the bigger the risk”. That said, if you want to make more money without taking on more risk, then you’ll need to ‘tool up’ by acquiring extra skill(s) in the form of additional knowledge, experience or resources (i.e. time and money).
Watch this video for more information about how to use skill to neutralise risk:
For instance, say you want to do a sub-division to make a manufactured growth return. You find a property that you think would be perfect, however the $1,000,000 asking price scares you, and you’re worried that this is your first such deal and that things could go wrong. At this point naïve investors would walk away, whereas savvy investors would seek to ‘tool up’ to increase their skill base by investing in more education and/or bringing on an experienced partner.
Risk is everywhere, and your ability to come to terms with it will determine how successful you are as an investor. If you can’t overcome your natural attitude towards risk, then you’ll never be able to bust through the self-imposed glass ceiling on your profit potential.
What’s your natural attitude towards risk? How is it holding you back? Share your thoughts below.
Until next time, remember that success comes from doing things differently.
– Steve McKnight
I’m mindful of risk however, nothing comes without taking calculated risks. You have to embrace debt. As long as you have factored in all your variables, you should be OK & let’s face it, interests rates have never been lower so its a great time to borrow. When it’s getting tough, hang on, trust your instincts.
Makes complete sense when I check against life experience. The current “ceiling height” is an uncomfortable commentary on skill acquisition & application to date
I used to have little fear of taking risks.
I’ve now learned that taking risks without the right information, is a close friend of gambling.
Application to learning the skills takes time and diligence.
The pay-off is that you can walk on risky ground, with a better understanding of what the outcome will be.
That said, I’m still learning.
Yes this is a great point to make regarding the risk return equation and a timely example you make re manufactured growth.
Can anyone recommend the best courses and advisors for small development?