When it comes to setting yourself up on the path to financial independence, nobody has it easy. The people who have it easy are the ones who are already there. Everybody else has to struggle along their way to the top, and there’s a lot of risk and reward along the way. This is where a lot of people take diverting paths. Financially astute people can be cautious. This isn’t always true. Other people who achieve financial independence do so through….uhhh….recklessness. Most of these people have a method to their madness, but to someone standing outside, it can look like pure insanity. We all know someone like that. And sometimes, these people don’t crash and burn. They survive and eventually thrive. It’s important to look beneath the surfaces of financial risk, to learn the method behind the madness, and determine the amount of risk tolerance you should accept.
If you want financial independence, you’ve surely got to take on some risk that others are unwilling to take on. The alternative is to become wealthy very slowly. To many, this is a perfectly fine option. They’ll enjoy their retirement. To others it seems crazy, to have lots of money when you’re no longer spry enough to fully enjoy it. For these people, the only alternative is to make money faster, and that means to take on some more risk than the long, slow investors are willing to accept. There are a million different ways to do this. We’ll talk about just a few.
One way is to borrow money, then turn it into more money. Quick cash loans are widely available from a variety of sources. This is where people start to get finicky. The ultra-cautious among us were told never to borrow money. We were told to pay for everything in cash. Well, grandpa, where is all this cash coming from? That’s the problem. Millennials and our older/younger brothers and sisters don’t have a lot of extra cash lying around. We understand the dangers of credit debt, but we don’t always have an alternative when it comes to funding our futures.
So borrow money, but have a firm plan about how you are going to use it. If you don’t have a business that you know from the bottom of your heart can succeed, it’s a good idea not to borrow the money. But if you want to finance that real estate investment project, or start that business you dreamed up in school, or consolidate the debt that is holding you back.
There are risk models that are a whole lot riskier. You could become an expert in a field and invest aggressively based on insights that few people understand. You could start a business that aims itself at a market inefficiency. You could find a way into the employ of one of the United States best companies, living in your truck like someone at Google until you make enough money to slip away into young retirement. But any of these models will require you to accept risk. With financial independence, the same old saying is true: no risk, no reward.