Your Risk-Aversion Determines If and How you Gamble, If And How You Invest And How You Work/Earn A living - As An Entrepreneur or A Person Who Works for Someone Else

I was thinking recently: Your aversion or tolerance levels to risks will determine if and how you gamble, if and how you invest and how you work/earn a living - Entrepreneur or Laborer/worker(working for someone else). As such your tolerance to risks (“risk-aversiveness”) should also determine your peace of mind and standard of living, ceteris paribus (all things being equal: depending on the fairness of the competition and the context or conditions within which your life is being lived. It’s important to note here that in economics and finance, risk aversion is the tendency of people to prefer results with low uncertainty to those results with high uncertainty, even if the average outcome of the latter is equal to or higher in monetary value than the more certain results. However, due to the unfairness within most (capitalist) societies such as America, where some people will always have better outcomes given their class, race or gender status etc, risks are only a major deciding factor and in many cases the status quo and their legacies and inheritances have the power to minimize and absorb the potential risks redefining it as costs that they can write off on their taxes or pass to the consumers or their workers. 

But for the rest of us risk taking may mean that you have to bite the bullet and quit your job to pursue your dream of owning your business. You may need to come up with most of the financing through creative and personal means to start your business if you do not come from a legacy of inheritance that passes down wealth. You may not succeed initially when and if you start a entrepreneurship, as losses and personal debt may define your life at the outset. And this could derail and demotivate you and your efforts. These all may play a part in arriving at your risk level and life’s work. 

But you may also need to think that you can succeed, not just financially but personally as you’re now doing what you want to do and have more control over your work and life and therefore more peace of mind. Yet this does not come without hard work, and the difference between success and failure of a start—up could mean the amount of hard work and smart work that you invest in your entrepreneurial efforts so that any intolerance to or fear of risks may be shortsighted and myopic as it does not consider hard work and everything else that goes with risk and business in their proper perspectives. A low risk version may not consider success in terms of the work one have to put in. Or you may have calculated the work of entrepreneurship and determine that it is too much and resort to the comfort of very little work effort (working for someone else) for very little or lesser pay and standard of living than if one were to work for self. Indeed businesses or efforts may encounter challenges that lead to failed efforts. But failures provide learning opportunities for entrepreneurs to rise above this, as trials and errors are part of good science that leads to great discoveries. “Eureka” never happened without a plethora of trial that led to errors at first. And one’s limited ability to minimize risks or to absorb losses may discourage starts ups, as they may lack the resources to withstand and rise above losses, errors or failures. 

Nevertheless, it is by having the right perspective and the appropriate and accurate approach that should determine one’s aversion to risks so that by accepting risks which are largely challenges that can be prepared for  becomes easier. Thich will then move you to doing the right things that will determine ones standard of living and peace of mind. 
Upcoming and related blog to check out: “Two main reasons employers/companies fail”. Check this out tomorrow Sunday April 4, 2021.