Luck
As the author sees it, luck is really about grabbing opportunity whenever you see it. You shouldn’t make the mistake that the “gods” dash some people with a measure of good luck and others with misfortune. This concept of luck comes up a lot for those who play poker. Here is an example: in Texas Hold’em, a pair of aces comes around only once every couple hundred of hands, on average. If you happen to pick up a pair of aces, then you have a very strong hand; the best hand relative to everyone else at the table. However, a common mistake made with aces is to “slowplay” with them; this means that you play them in a way that suggests that you have a weak hand when you really have a strong hand. Sometimes, it is good to be deceptive, but the rest of the time, the right play is the straightforward one.The danger in being deceptive is that once your opponent sees the three cards on the flop, the money is often going in only when you no longer have a strong advantage. Many players in this situation often get angry and tell others how unlucky they are to have their aces cracked, yet again. The truth is, they didn’t take advantage of the opportunity to make the most value out of their hand while it still had value. If they had pushed their advantage preflop, then one possibility is that everyone would fold and they win a small pot, but another possibility is that someone with a second-best hand, such as two kings or two queens, would follow them into the pot. When that happens, they have a 4 out of 5 chance to win the entire pot, so it is a guaranteed money maker.
The main lesson to take away from this is that in life, as in poker, opportunity needs to be taken advantage of when it’s there. There are always risks (even aces can lose preflop against the worst hand in Texas Hold’Em, 7-2 offsuit), but the rewards can more than compensate for the risk. You can get unlucky a few times in a row, but statistically speaking, if the odds are in your favor, then you will win over the long run.
That said, this is also a lesson to never make a habit of gambling at a casino. For most games, the odds are stacked in favor of the house, and it is impossible to win at them over the long run!
Building wealth
My previous post on seven wealth building strategies goes into this in more detail, but again, here are the most important points:- Wealth can only be built if you spend less than you earn. It is recommended to invest at least 10% of your earnings. For help in preparing your budget, there are many different tools you can use, such as Gazelle budget.
- Your investments should be well-diversified in order to reduce risk, and they should be in efficient and liquid investments such as a broad market-index fund that tracks the TSX or S&P 500.
- To further elaborate on the point above, invest in what you know. If you are going to buy real-estate or stock in a single company, then do your homework, analyze the reports, and ensure that you know what you are doing.
- If you don’t know, then take advice from those whom are qualified to give it. Don’t take advice from people not qualified or from people who try to sell you promises but don’t deliver results. If something is so good, then why would they need to try so hard to sell it to you?
- To further elaborate on the above point, read Andrew Hallam’s post about a Bernie Madoff style investment which seemed too good to be true, but delivered for the first few years; in the end, however, it imploded just as Bernie Madoff’s funds did.
Helping family and friends
It is tough to watch a family member or friend struggle financially, but often, the best way to help them is through non-financial means. If they are having trouble paying for groceries, then offer to bring them some food. If they are having difficulty finding a job, then help them to find leads and contacts.If in the end, you do decide to lend them money, then to avoid trouble and loss, ensure that they have the ability to repay the money. Look at their spending habits and what kind of work they have; i.e. do they have a stable income? Are they blowing lots of their money on cigarettes and beer? Take a look at these factors before lending money to family and friends, and again, that should be a last resort should other means of help not be sufficient.
The importance of insurance
If you are already filthy rich, then maybe insurance is not so important, but if you are not… then think of it as protection against the slim, but real chance that something bad can happen. It might not be likely that your house burns down in a fire, but think about what you would lose if it did? You probably aren’t expecting to total your car this year, but think how much it would set you back financially if you did, and you didn’t have proper insurance. You probably don’t go traveling somewhere expecting to get very sick or die, but imagine how much it will cost for you to pay for medical expenses out of pocket if you don’t have travel insurance.Insurance is our modern form of protection against bad things happening. The chances of these things happening is slim, but if they happen and you don’t have protection, then the results can be devastating.
The value of motivation and perseverance
In the end, a lot of what we achieve out of life is in part a product of what we put into it. As engineers like to say, “garbage in, garbage out”. Well, the same applies to life.Depression is an emotion that can hold many of us back from getting to where we want to be. It places us into a catatonic state, where we live just to get through the day, without much hope for the future. This is an emotion that may have had an evolutionary advantage back in our hunter & gatherer days, when a conservation of energy until things got better might have been what we needed to survive. However, in today’s world with an abundance of both food and opportunity, depression often just holds us back.
If you are not happy with your job or where your life is going, there are so many ways to make a difference. You can start being more physically active, which is one way to help yourself get more motivated, or you can even take more drastic change and move to a different city or country, or change your career path completely. You can even go help build houses in Cambodia; imagine how small your troubles will seem when you see what real poverty is like and when you know you’ve made a real difference to help improve someone else’s life!
The last part of this point is that part of how we feel is linked to how much we feel other people value us. If you only treat your work as a way to make money and don’t actualize any part of it into your own life, then chances are you aren’t making yourself valuable to your colleagues and to the company. There are also other ways to self-actualize, such as starting your own company, whether on the side or full-time, and becoming really good at something. Don’t strive to just be “average” at something, try to become good enough that people actually respect your opinion and count on you for advice. Probably easier said than done, but it will feel really good when you get there.
The Richest Man in Babylon
Again, I recommend reading this book; it is a valuable read and contains a lot of interesting parables which go into much more detail than what I described here; consider it the first step of a financial education.So, have you read this book yet? If so, what did you think?
No comments:
Post a Comment