Skip to main content

Posts

Showing posts from August, 2011

taking risk, when?

It has always been said that in order to achieve higher returns on your investments, you need to take bigger risks. But a better question would be, when should I take risks? and the answer is: when you can afford to. Its ironic how poor people spend a significant part of their income on buying lottery tickets or gambling when they have so much to lose. If someone steals 500 pesos from your wallet and you can't sleep at night because of it, then you are in a financial position where you cannot afford to lose such an amount. So why would you spend 500 on lotto or gambling or on a risky business. On the other hand, if someone runs away with 100,000 of your money and it doesn't affect you emotionally, then you are in a financial position to spend 100,000 on risky investment because you can afford to lose the money. If you start from zero, then have an emergency fund first, about 6 months worth of income stashed safely in a savings account. This money is relatively safe since thiev…