Risk Only If You Can Afford to LOSE

If you cannot afford losing $8,000, don’t invest $8,000. You can take that risk only if you can AFFORD to lose it.

Think about how much money you are allowed to lose. Risk only that money.

I was in high school, I had a close friend. He had this natural business mentality that he was born with [maybe that’s because his whole family were entrepreneurs]. He would sometimes tell me things that his uncle or father taught him: “Only lend the amount of money that you can just give away.”

I took that advice. And since then I have had this personal rule: “Can you just give that money away? If not, you cannot lend it.”

This lesson — invest only if you can afford to lose — is applicable not only in business, but basically in many other spheres too.

If you cannot afford to lose your reputation, for example, dont publish too much on social media.

If you cannot afford to be rejected, dont approach a girl.

If you cannot afford getting punched in the face, dont go up in the ring.

Any risk implies WIN or LOSE. You have to be ready for both.

If you look at the list of the richest men in the world [Bill Gates, Jeff Bezos, Warren Buffet] — each of them are “self-made”. Meaning, they built their companies FROM ZERO.

Jeff Bezos founded his company in a garage [Amazon.com at first sold only books]. He made some money. Reinvested it back to the company, taking the risk that he could lose everything. Then he made some more money. Reinvested again taking the same risk. He did it over and over again.

Even to this day he re-invests the cash company generates BACK to the business. Mr Bezos is famous for NOT giving dividends to Amazon shareholders.

In other words, he constantly takes this risk of losing money. Because he came from zero. He knows how to survive even when he loses everything. He is not afraid. That is why he can take those risks. Dont you think?