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Whether in the investment world or even any avenue of life, higher risk doesn’t always equate to higher reward. Instead, as author Morgan Housel says, the saying should go: “Higher risk means I’ll probably earn lower returns most of the time, but there’s a small chance I’ll earn very good returns that make up for it.”READ THE ARTICLE
Lower your bar: This thought process draws down to the simplicity of low expectations. Having the ability to accept repetitive loss increases your odds of hanging on long enough to eventually see a return, and hopefully, more than make up for the risk. Whether it’s Elon Musk launching SpaceX and Tesla or the stock returns of Fortune 500 companies, one commonality of many who experience success is the ability to bring expectations down and get the goalpost to stop moving.
My thoughts: You should always plan with low expectations in mind; expecting higher taxes, lower equity returns, rising inflation, etc. Then, you will be prepared for the worst and pleasantly surprised when it’s not as bad as expected.