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Taking Risks And Living With Decisions

October 24, 2011 · 71 comments

in Life, Personal Finance

Life presents us with many opportunities every day.  Sometimes these opportunities have nothing but upside, but quite often, there is some risk that accompanies the opportunity.

Usually, when the risk is just too great, you have to just walk away from what is being offered.  For example, maybe you are offered a great job with a start up company.  Salary is low but the stock options are huge, so there is potential for big pay-off.    This type of deal might be great for someone with little expenses, but if you have a large family to support, perhaps you feel you need to turn down that opportunity.  However, if the company goes public in 5 years and you would have been a multi-millionaire, you should not  live endlessly with regret.  Remember instead that  the job was never a viable option in the first place!

Then there are those little risks in life you can take.  For example, the Detroit Tigers advanced to the American League Championship Series this year, and most tickets sold for over $100 a ticket.  Fans were clamoring to get tickets even though the ticket prices were quite high.

Strangely enough, I was looking at ticket prices on Stubhub for game 4 and there were about 4,000 tickets available, starting at $14 a ticket!  Several people I knew that spent over $100 were quite frustrated that they had spent so much on tickets when they saw how cheaply they were available shortly before game time.

Who knew that tickets would ever be available once they were initially sold out, and at 1/8th of the cost of the original ticket?  You don’t know, and you can never know.  It is all about taking calculated risks.  For the person that is an avid baseball fan, I am sure they were happy they even got their hands on a ticket in the first place.  The sad thing is when they realize that they COULD have paid much less, the regret sinks in, and second guessing.

This is why hindsight is 20/20.  Had the reverse happened and they were able to sell their tickets for $350 apiece, they would have felt like the smartest people on earth.  The fact is, almost everything in life has risk, and you have to decide what you are comfortable with. Once you make that decision, try not to look back.  Accept that you made the best decision you could with the information you had at the time.  That is all any of us can do, although it is up to you to make sure you truly do have as much information as you can in order to make an educated decision and reduce the overall amount of risk you take on.

My overall point is this:  Educate yourself,  make the best decision you can, live with that decision, and learn from that decision.  Learn does not mean beat yourself up over your decision if things go differently than you hoped.  It means to make sure you don’t make the same mistake twice.

So, next time you sell a stock only to see it triple in price over the next 6 months, don’t swear off stocks and get angry.  Accept that you cannot control all of the world’s circumstances and see if you need to adjust your trading/selling strategy.  Live and learn, and try not to regret.



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{ 21 comments… read them below or add one }

Little House October 24, 2011 at 9:49 am

Great point. Many years ago (over 10) my soon to be husband at the time and I looked at a house for sale in a decent neighborhood. It was selling for $110K (there’s now nothing in SoCal for that price!). I didn’t know anything about home ownership and was too scared to actually find out what it would take to finance a home. I still kick myself for not investigating my options. We could have purchased that house and sold it a few years later for $400K. Hind sight is definitely 20/20. At least now I know that when I find a smokin’ deal, I should at least investigate it!


Kris October 24, 2011 at 9:34 pm

So hard to know when a smokin’ deal is staring you in the face. Only history can tell you that. Had you bought it, maybe the foundation would have crumbled and you would have been kicking yourself.


First Gen American October 24, 2011 at 11:58 am

Great advice for young and old. Once an action is taken, it does no good to look back and figure out how to undo it. You have to look forward and see how you can makeup for it.


Kris October 24, 2011 at 9:33 pm

I could spend a lot of time wallowing in regret, but it would bring me absolutely nothing. I can’t undo a thing. Hopefully I have learned from my mistakes and don’t need to waste any more time worrying about my past mistakes.


Miss T @ Prairie Eco-Thrifter October 25, 2011 at 12:02 pm

I totally agree. We can’t live in the past. We have to look forward and use what we have learned to make new decisions, better decisions. This is great advice for any aspect of our life. Thanks Kris.


Kris October 25, 2011 at 11:07 pm

Miss T, regret is just an awful feeling and I have looked back and beat myself up over many dumb things. In the past couple years, I have really tried to just let go as regret is not a productive emotion at all. Again, if you are going to let go though, you gotta make sure you learned during the process.


MoneyCone October 24, 2011 at 12:51 pm

Your post is a good reminder for those who know they have to refinance but haven’t taken the time to do so! 🙂


Kris October 24, 2011 at 9:32 pm

Mr. Cone- I am in the middle of a refi right now, and it was incredibly easy. Who would have thought I would ever refi when my original loan was at 4.75 percent?


retirebyforty@retireby40.org October 24, 2011 at 4:10 pm

I don’t have time to regret the past, life is just too busy!
I sold Netflix at around $200 earlier this year. It went all the way up to $300 and I could have kicked myself, but I’m happy with the profit already. 🙂


Kris October 24, 2011 at 9:31 pm

Good attitude Joe! You can never time the market perfect, but you can never go wrong with cashing in a profit!


Squirrelers October 25, 2011 at 3:36 pm

Great points. Good to educate onself, make the best decision you know how to make, and move forward. Part of moving forward ought to be a basic retrospective assessment of how the decision went, and what would be done differently next time; have to learn from experience. But once that’s done, accept that you did the best that you can and just look forward. Most decisions have risks anyway.

As for tickets…$14 to watch the home team in the American League playoffs? That seems unfathomable, wow. Wonder why people weren’t so interested, even if it was a longshot for Tigers?


Kris October 25, 2011 at 11:06 pm

Well, it wasn’t too much of a longshot for us, and I really don’t know what was going on. I think part of the problem was the games were during the day. So, people bought their tickets early, then released them to stub hub when they couldn’t go. Unfortunately for them, people weren’t clamoring to pick up the tickets…


Kevin@RothIRA October 25, 2011 at 6:57 pm

There’s always going to be risks, especially when it comes to money and occupations. I think the best approach is to accept risks as a part of life, take on some and do our best to avoid others.

Maybe the best way to do this is to lower the risk of risk, so to speak. We can do that by saving and investing for the long run (for retirement and elsewhere) and by staying out of debt. Investments stack the longrun in our favor, and staying out of debt lowers general risk. All risks in life, it seems, are more pronounced when you have debt in tow.


Kris October 25, 2011 at 11:04 pm

Very true Kevin. You can do all you can to mitigate risk by being responsible, but unfortunately, not everyone lives that way. Hopefully, when big mistakes are made, people learn instead of just making excuses.


Barb Friedberg October 25, 2011 at 8:28 pm

Sunk costs have to be forgotten. It’s no use to continue to ponder unfortunate decisions. I’m still working on this one 🙂


Kris October 25, 2011 at 11:03 pm

I have gotten better Barb, but definitely not perfect!


UltimateSmartMoney October 26, 2011 at 7:09 pm

I recently received an offer to join another company but ended up staying put because it was more risky for me to change my job as the new job was not as stable as the current job. I could have received a nice increase in my salary but I was too afraid to take the risk. Also, the commute would have been very bad.


Kris October 26, 2011 at 8:32 pm

Commute can make a huge difference when deciding whether or not to take a job.

Are you happy with your decision?


Financial Samurai October 30, 2011 at 10:57 am

I definitely try and live and LEARN from every poor decision that I make. I’ve made so many. One of the things I do is simply ask for the best advice possible first before making one. That’s helped me out a lot.


Kris October 30, 2011 at 7:03 pm

Sam, we have all made a ton of mistakes. It has taken me a long time to learn to move on, and I am still not perfect by any means.

I too ask for a lot of advice, and sometimes I need affirmation. However, I have to be careful of how much I ask for or else the waters get even muddier.


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