Investors often consider risk but might approach it incorrectly. By focusing solely on their tolerance for investment risk, they miss a much bigger picture. People are more than just investors; they have careers, social lives, and personal goals, each with risks.
For instance, someone with a high tolerance for investment risk might be uncomfortable taking career risks, like switching jobs or starting a new business. Similarly, they might avoid social risks like public speaking or networking. They might misunderstand the best path to accumulating wealth and happiness by only considering investment risk.
Wealthy individuals often gain wealth by tolerating career and social risks, not just investment risks. They become successful professionals or business owners by taking calculated risks in their careers and social interactions.
How much risk do you take professionally? How much risk do you take in your investments? And, if you have one, what about your partner?
The key takeaway is that a balanced approach to risk, considering both career and social risks alongside investment risks, can lead to greater wealth and emotional satisfaction. It’s the overall portfolio of life risks and returns that truly matters.
