Just like in basketball, sometimes in your financial planning, you must shoot the 3-pointer. Man that sounds so cheezy, I sound like Marlin Perkins from Mutual of Omaha’s Wild Kingdom, but be that as it may, yes, sometimes you need to take a risk and crank up the 3-pointer.
So what in the world could I mean by this ungainly metaphor? Well, stay with me on this one, sometimes the following “risks” are calculated and called for in your financial plans:
- Buying a house when you think you can’t afford it. I don’t know anyone who has bought a house and said, “Yes, we could afford it”, everyone I know is nervous as hell when they buy a house, but owning a house, as long as it’s not on a toxic waste dump is usually a good investment. Now I am not condoning:
- $0 down schemes to flip houses
- Mortgage fraud schemes for profit
- Any other shady deals to do with real estate
- Start paying off bills and making sacrifices in your family’s spending. Yes to some people, this is a risk, not spending $4000 on Christmas this year but instead paying off your debt. Your spoiled kids might get pissed off at you, but at the end, having no debt is a better place to be (and maybe it will teach your kids the value of money).
- Open a trading account and start learning how to invest. Yes, this one is risky, and it takes a certain amount of common sense, but read a lot, with an eye towards what makes sense to you, and start investing in your future. Don’t just buy Mutual Funds assuming the management of those funds know what they are doing (they might, but they are making a lot of money off you for doing it).
- Go into your bank and tell them you aren’t paying $25.00 a month to have the privilege of them holding your money. Say you are going elsewhere if they don’t lower their rates. What’s the worst thing they can do? Say No? Big deal, of course. Be ready if they call your bluff to go somewhere else as well.
Take a risk does not mean buy lottery tickets, holding up a bank, or embezzling funds from your employer. Take SMART risks!!!
Like your thinking. Not taking risk may be the highest risk strategy of all. However, as you pointed out one has to follow common sense. Just my 2 cents.
Great post. Calculated risks are an important part of investing.
Everyone takes risks. Crossing the street is a risk. However, we can minimize the risk (look both ways, hold onto our mommy’s hand…lol).
The same with finances.
Like buying a stock with great growth prospects and a healthy dividend.
If one doesn’t work out, I always have the other (getting paid to wait).