Rich Dad Lessons: Know the difference between risk and risky
Based on Kiyosaki’s work
There is an incongruous thing in a lot of people’s lives: they think that the world of investments is risky because they can lose money, but at the same time they cling to the security of an employment by thinking that their bosses, the companies or the Government will always look after their well-being, as if that was not really risky.
Putting our financial future in a third party’s hands is really risky. Making investments to acquire assets is not necessarily risky. Of course, provided the investments we make are acquiring assets. And previously, we have defined the assets as those investments that put money in your pocket every month. Why should be risky something that puts money in your pocket every month?
Another thing is the risk. Logically, the investments have an associated level of risk. There are not completely safe investments, but that is only a technical aspect and the smart investors are conscious of this. However, the smart investors make the investments although those have risk because at the end of the day the investments are not risky for them, and that is because their financial intelligence is enough to have a great chance to make money.
The point is: in investment world, risk is not the same as something risky. The risk is an implicit technical factor on the investment market and it is the same for all people who make the investment. On the other hand, the risky thing is not the investment itself, the risky thing, in most cases, is the investor who doesn’t have enough education, experience or cash flow.
Therefore, to reduce the risky situations, we don’t need to avoid the risk of the investments… what we should do is to get ready, increase our financial education and go step by step into the investment world to acquire experience.
Of course, sometimes we’ll lose money, but eventually, due to our financial education we will win more than we lose. And when that happens, we will begin to manage an interesting cash flow and we won’t need to think about RISKY investments anymore, although the investment RISK will always be a factor in the investment evaluation.
Again, remember: risk is not the same thing as risky.
Acquiring assets is not risky. The risky thing is the lack of financial education. The risky thing is don’t have enough control over our life by trusting blindly in stock brokers, the economy, the politicians or the labor market.
The biggest risk is ignorance. And it applies to all matters, not only for the finances and investments.
If you don’t know much about the world of finances and investments, start to reduce the ignorance by acquiring financial education. As your financial IQ increases you will realize those financial threats were excuses for your ignorance.
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