Make Risk Your New Best Friend

Make Risk Your New Best Friend

Why taking risks is essential for financial success

I recently saw an article that asked why women take less investment risks than men. A common belief is that women are more risk-averse than men in most areas of life. We all know that stereotype that says men are the brash, risk-takers while women are more thoughtful and prone to playing it safe.

That stereotype has bled into the arena of finance and investing, to the point where female entrepreneurs and investors are often seen as less likely to succeed because they take less risks.

But is it true?

Not so fast

Recent studies have proven that women actually aren't more risk-averse than men. One study showed that decades of research on gender-based risk have been misinterpreted, and that when it comes to business and finance, women and men have a fairly similar risk appetite.

In an article from the LA Times, Therese Huston says, "We do find men taking more recreational risks, such as skydiving or driving over the speed limit. When evaluating risk in a business setting, however, gender differences typically disappear. Researchers find that female managers, for instance, take the same number of risks as male managers when proposing projects."

In fact, appetite for risk seems to be more of an individual trait, rather than a gendered one.

An entrepreneur's best friend

Many of the successful women I know thrive on risk. It's an integral part of their financial plan, and it should be part of yours too.

When Robert and I first started our path to financial freedom, we took a lot of risks. We left our stable, safe jobs to start a company that had no guarantee of success. We chose to pay ourselves and invest before paying our bills. We gave up the steady path and took a chance on a new one because we understood that it was the only way to achieve our goals.

Success doesn't happen without some healthy risk. I've never met a financially independent person who says, "I regret taking that risk."

Sure, we made some mistakes along the way that made our journey a lot harder. But I wouldn't trade those mistakes for anything, because they taught us valuable lessons that helped us move forward.

Taking smart risks

Now, there's a difference between taking smart risks and being foolhardy. Taking a risk with your finances isn't the same as gambling in Las Vegas. Kayt Sukel, author of The Art of Risk: The New Science of Courage, Caution & Chance, says, "A successful risk-taker is a planner…Successful risk-takers don't just look at immediate outcomes. They make moves that will help them reach their long-term goals."

You still need to do your research, ask the right questions, and have a sound financial education before you act. Once you have the education to evaluate a financial risk, it won't feel so scary anymore.

So what's holding you back?

Have you been hesitant to fully commit yourself to the path of financial independence? Have you been held back by your fear of the unknown, of the risks involved with taking a less stable path?

Now is the time to take a chance on yourself. Embrace risk like an old friend, and let it lead you where you want to go.

There's also a ton of data showing that women led companies outperform other companies

Not crucial, but one way we've framed up risk in the past is to show that what most people view as "safe", a steady job, savings, etc., is actually riskier than the risk investors and entrepreneurs take on.

Original publish date: August 11, 2016

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