The Fifth Realization of Rich People: Risk for Reward

So far in this mini-series we’ve uncovered that you’re not rich not only because of what you don’t know, how you don’t think, or how you don’t feel but also because of what you don’t believe.

What is the biggest thing you don’t believe? Easy…

You don’t believe in yourself.

Rich people understand an inherent relationship between risk and reward. While it’s not true that always the greater the risk, the greater the reward (there are plenty of risky stupid things that people do that have little likelihood of reward), it is true that the biggest rewards will always include risk and uncertainty.

The number one risk that rich people are willing to take is to be paid for their results rather than or in addition to their time.

They choose to take a chance on themselves. They believe in their own self-discipline and their own ability to produce results.

Venture Capitalists sink big money into something when it is basically just an idea because they believe in the ability of themselves and their team to create results with it that will pay massive dividends.

Salespeople invest time and energy into making sales calls in hopes that they will eventually be able to make commissions that pay off at a great hourly rate and that they will get referrals that will help their business grow and grow and grow.

Entrepreneurs risk their livelihoods for the chance of controlling their own destiny by paying themselves last after all the other people and expenses in the company are paid.

Recruiters in direct sales companies forego traditional salaries on the conviction that if they can help enough other people be successful that it will come back to them many times over.

These are just a few examples of the professionals who risk a lot to (hopefully) be rewarded a lot later on.

Yes, these people sometimes lose and lose big; but they also win big because they take a chance on themselves. They win rewards because they risk losses.

You don’t have to risk everything though to profit from this principle. Even if these levels of risk above aren’t right for you right now, here are some ways you can still start incorporating some risk for the chance to earn bigger rewards:

  1. Take regular wages but from a company with a huge future growth potential where you could be positioned to become an executive, divisional leader, partial owner, or key influencer over time. Hopefully as the company grows so will your income as the result of your loyalty and contribution.
  2. Request to be on an incentive plan from your current employer where you offer to take less up front money for a chance to earn bonuses if you help deliver measurable results. Many owners are willing to share with you in the reward if you’re willing to share with them in the risks.
  3. Be creative about ways to add an additional stream of income to your ordinary income by working extra hours to begin selling something part-time. In our company, for example we pay referral fees to anyone in operations who refers us a client or team member, and we also have products that anyone can sell and make a commission off of in addition to their normal duties.
  4. Once you are out of debt start investing! Yes you could keep your life savings in a coffee-can up in your closet, but even there if you are not earning an interest rate at least equivalent to inflation you are losing money every day. (Explanation: because the dynamic of inflation means your $1 you have today will purchase less than $1 worth of goods in the future because of average rising costs so by squatting on your money you haven’t lost the number of dollars you had, but you lost the power of what those dollars can buy. That’s why, generally a good goal of investing is to earn at least the inflation rate so the dollars you’ve earned so far will buy you the same amount of stuff in the future as they will buy you today.) While investing into the stock market is a bit risky because you are giving up control of the result, you are still in control of what investments you make. And there are many that are very safe over long periods of time.
  5. Start a side business where you can invest extra hours on nights and weekends on the chance to pick up some money over time. Or offer to take on an additional project related to your normal job but with some after hours work and a results-based pay incentive.

The bottom line is this: you have to be willing to risk in order to receive more reward. You have to choose to be paid for your results and not just your time.

But if you’re betting on yourself, your own self-discipline, and your own ability to work hard then really, what’s the risk?

Would you bet on you?

  • http://zechariahnewman.com/ Zechariah Newman

    Very timely for me Rory thank you. My writing and speaking are starting to take off and the last few days I have been very fearful of this new venture. Thanks this was encouraging.