Issue:

One of the major roadblocks to young people setting up their future is concern for the unknown. It seems a dichotomy – young and risk, and yet it is extremely prevalent. The risk I am referring to is not – travel to exotic places, getting legless at an entertainment event or jumping off a bridge whilst connected to a rubberband. It’s the risk of self-employment, or contracting, the risk associated with leaving home and taking responsibility, the risk of buying property (with or without flat mates), the risk of direct equity investing, the risk of following ones passion. The ideology of environmental and community concerns are topical and make good social media. Admiration abounds for outstanding modern day ‘artists’ and IT superstars. I’m not so sure that courage and commitment to one’s own convictions or aspirations matches the rhetoric. The millennials and Gen Y of course do not have this on their own. One’s background and upbringing are more likely to have formed attitudes and habits than ones date of birth, but the young are our community and country’s future.

Risk and return are correlated, for investment, business and life. For many the easy option in life is the safe option – what they know. The same in sport, taking less risk as an acceptable strategy. Except playing it safe seldom wins the trophy or if it does the accolades normally go to the more adventuress. It’s certainly the case with creating a life of luxury.

The Rationale:

The problem comes down to how one thinks about any situation or opportunity and then go’s about implementing the best possible outcome. For most people the situation determines the action – the action does not determine the situation. Any successful business owner, sports person or investor has real clarity around what it is they want, they then go about implementing the activity which is most likely to get them the result. Of course they need commitment and discipline and determination to help them along the way but change only occurs when the thinking starts or the thinking changes. And that’s hard to do on one’s own. Hence most people buy a house as a couple – the same in business – when the need arises it forces the hand. When one action is mitigated it tends to have a domino affect.

Having a child creates the desire for one’s home. Wasn’t this obvious ten years earlier. Having a house necessitates a deposit – same comment. I maintain that most don’t initiate anywhere early enough simply because they don’t know how or who to ask.

When Telecom made a whole bunch of people redundant some years ago – self employment and contracting became an option. It happens all the time – employers do not offer security and safety – they offer employment. Most activities can be de risked, the how to minimise the downside. Once you understand this as a legitimate strategy it makes it somewhat easier to confront the scarier task of thinking, imagining and perhaps even innovating. In all facets of your life. You cannot react your way to good health, happiness or wealth.

Recommendations:

• Unless you understand how to mitigate risk you may not take risk (the bigger decisions in life)
• Mitigating risk has a cost but nowhere near the cost of taking no-risk
• Invest by taking risk – but diversify
• Insure your income – but take advice
• Grow real wealth through self employment and/or business and/or investment – but mitigate risk
• Volatility and risk are not the same thing – understand the difference
• Set goals and aspirations early in your life – but align them with measures and monitoring
• Accept the criticism and often the condemnation of the ‘herd’ (by taking risk) but replace the critic with the mentor
• Planning your life is a risk but not planning it is a dereliction