Millionaire Acts

I’m sorry for not having enough time to update this blog. I have been very busy in other matters during the past few weeks. Anyway, I would like to tackle in this article another lesson that I’ve learned from the famous Robert Kiyosaki that covers the investment topic of risk vs. risky.

Risk and Risky are two different terms. Except for the fact that one is a noun and the other is an adjective, risk and risky are two different terms when it comes to investing. Risk is primarily the amount of control you have over your investment. This control is only available through proper financial education. Every investment or investment strategy has risk and the more the investor stand to lose, the more risk there is. However, risk is not the same as being risky.

Let us take this example. For instance, when you drive your car, there’s risk. That’s why we have things such as seatbelts and airbags but that does not mean you have to be a risky driver. If you obey the traffic regulations and be nice to other drivers, then definitely you can reduce the risk in driving. But there’s still risk as you cannot completely eliminate it. Likewise, all investments carry risk. But risky investors are so-called “risky” because they lack financial education.

People usually say that investing is risky. Kiyosaki tells that there are three main reasons for this. First, those people have not been trained to be investors. Second, they lack control or are out of control over their investments. Third, they invest from the outside and not from the inside.

Proper financial education manages risk in that it identifies known risks, it determines a strategy for managing risk, and develops a measure for investment rate of return. In summary, the lack of financial education is considered to be RISKY since most mistakes are made by people who don’t know what they are doing.

Lastly, Kiyosaki tells each and every investor to prepare themselves emotionally when it comes to investing. Instead of saying, “that’s too risky”, ask yourself “how can I manage that type of risk?”. Instead of saying “I can’t do that, ask yourself “how could I make that happen?”. Lastly, instead of saying “that’s too scary for someone like me, ask yourself “how can I overcome my fears and make this investment successful?”

Rich Dad Tip:

“If the investor is uneducated, anything he or she invests in will be risky. So it’s not the investment that is risky. It’s the investor.”

Source: Robert Kiyosaki Coaching Lessons