The Emotional Issue of Money....

Some more thoughts on the emotions of money....

I don't know if many here have been to a casino. Casinos are places where the emotions of money are intensified....

People love those highs they get when they've suddenly doubled their money on the roulette table, or whichever game they're playing. Of course, the house always has the odds in its favor, so unless you're a card-counting blackjack player, or you're a skilled poker player, you'll always lose in the end (statistically speaking)....

How this relates to the emotional topic of money is that some people treat their lives like they're playing in a big casino. But, I think it's better to stop thinking like one of the gamblers, and instead start thinking like the casino itself....

Casinos are in the business of risk management. They make sure that for EVERY GAME in the casino that the odds are in their favor.... Sure, they may lose some money now and then, but odds are in the long run, they'll be making a nice profit....

Every person should be in the business of risk management.

Take a look at housing investment.... Where's the risk? If you do your homework, there can be very little risk to you.... That's how to play the game, do it without risk.... :)

If you become a real estate investor the way that most people do, you'll be buying with the bank's money. Ideally, you'll want a place where the rental income will MORE than pay back the bank.... If you can do that, excellent! Every house you buy will be putting a stream of money in your pocket....

But, what about the risks? One risk is that your house will go DOWN in value.... But if you buy in a clearly growing area, that's very unlikely to happen....

What about if your tenants burn the house down? That's why you get INSURANCE, and reduce your risks....

And what about if you can't find tenants? Apparently, you can even INSURE against that! (Insurance against loss of rental income....)

So where is the risk? By using the right strategies and knowledge, you can reduce your risk down to very small amounts....

Every opportunity has risks, but most opportunities also have ways of reducing those risks.... It makes sense to take advantage of them! :)

I talked about reducing risks with housing.... With mail order, you reduce risks by TESTING before you do a national roll out.... I just mention this because insurance isn't the only way to reduce your risks....

Another way to reduce risks is to farm it out.... For example, if you could make a deal so that you pay your suppliers a percentage of the profits from your venture (instead of paying them a fixed fee), suddenly you've shifted some of the risk from you to them.... So there are a variety of techniques....

That's how to start thinking like the casino, rather than the gambler. And we know the casino always wins in the end.... :)

Any thoughts on this?

- Dien Rice