Please don't jump to the conclusion that this is complicated because it has some numbers in it.  It is actually hugely simple.  And it can payoff quite well if you make sensible decisions even in certains where there is uncertainty.

Although this could be done in dollar terms in investing or in business, what is relevant here is investing in our lives to get the maximum return overall in terms of happiness.  


Assume we would not do something that is ruinous or too damaging to recover from (as that would be stupid to do), but we might do something in which there is the risk of losing some times. 

Each thing we could do might have a "cost" of some sort (like an investment would but in this case more intangible values). 

Anything we do uses up our effort, our time, and also in many cases we incur an actual real world cost in terms of emotional well-being, which is our most valuable thing in our world. 

Let's quantify the cost at 10 units each for each thing we choose to do. 

And, of course, we would always calculate our "profit" from the value units we get from the result we get MINUS the cost incurred - netting the two for one final net value. 

Let's assume that we have already harvested the more certain, higher payoffs and that we are sufficiently in control of our lives to do "first things first" and, thus, we would do the most certain payoffs first.

Now, let's say, we have 10 opportunities to produce some value units.   If one out of 10 succeeds, we win big time.    (Value units are what we are using to measure life instead of using a dollar as a measure of value.)

This is what it looks like

Number of opportunities:        10 opportunities, each of the same value

Average value per hour:   500 value units estimated

Payoffs are not certain:  We estimate that they have a 90% chance of failure.

If we do one of them, it is 90% likely that it will fail and get no value.  We will, in a sense, have wasted our time. 

So we can stop there (or stop even before that because we want to avoid a loss).  (It is certainly reasonable for a person to avoid loss, but it can be wise to take on risks where the odds are reasonable and spread out well.  Loss avoidance is a big thing with people and those who cannot put the probable average returns into perspective will often give up a lot of the potential value that will in fact turn into much greater value for life!)

Or we can continue on the road, trusting that in the long term we will average a good return:



But, let's say we can't stand taking a risk and not having a payoff for our efforts.
So instead of doing the above, we do some things that have a payoff for sure each time we expend the effort.   Let's say we have 10 net for sure items we can do in that same time as it took to do the 10 items that were risky, and each of the for-sure items had a value of 5 units, if we did all 10 we would get 10 times 5 value units each for a total of 50 units of value. 

Results summary:

No risk option:       50 value units in total,
High risk option:   400 value units, net of investment

Which is better?

Clearly, well calculated payoffs and risk selections can and will payoff better over the long term, on the average, if you persist over time.

(Describing in words:  If I try enough of the risk opportunites and I've estimated correctly that I have a 10% chance of success in any one of them, if I do 10 of them, one of them will succeed for sure.  When it succeeds, I get 500 value units or , after costs, 400 value units.)

In the second no risk example I "win" every time, but in total I only get 50 value units.

Obviously, the first choice would be the best, if one were to apply rational thinking.

The latter choice, the safe choice, would be an unintelligent, unsmart choice IF you were to use your higher brain and used the above rational thinking. 

Yes there are costs and losses incurred in the process, but, in perspective over life, we see that we will have sufficient opportunities to average our efforts out to come out ahead of the for-sure no risk strategy.   We "take the risk", invest the time and effort and incur the costs to "buy" something of greater value in total.

We bargain for more in life or we accept much less...


In life, we frequently must "risk" something to get something of greater value over time. 
Yes, if we take the risk (and don't risk a ruinous amount on any one uncertain investment), we will win in life.


Most of us in life will "blow" some time totally by doing something of zero value.  They think that that is "just a part of life" and say something like "so what, I haven't lost anything - that's just life!" 

But what they have actually lost, carelessly and needlessly, is the value that they could have received by using the time to do something of value.  By doing the wasted activity, at seemingly no cost, they have actually risked their time and lost the value they could have had, to make life better. 

Here we are talking about for-sure losses of potential value because we have not realized the cost of giving up a high value item by displacing it with a low value item! 

This is the opposite of what any rational man/woman would do!

(See The Cost Of A Lost Opportunity in the piece Time Planning For The Happiest Life - Vital To Creating A Happy Life!)

In business


Many times we fail to see that we have already reaped most of the value from doing one thing and we think the value is the same as when we started.  That is a major, major mistake in life.  Consider learning how to avoid that hugely costly error.

Operate Based On The Most Extra Value Gained For The Time Spent - Stop When They Are Not As Great As The Alternative! "The Marginal Returns Principle

Be sure to link from there to The Reality Of Tradeoffs - And The Concept Of The "Net Result" - If I incur a loss, for a bigger gain...


Risk Taking - Which Ones Are OK And Why? - And which are not risks at all!  
Simple English Version

Sometimes, by     doing what is a sure payoff we get very little payoff, but often reasonable, calculated risks with high potential payoff are the better way to go.  

By knowing this, you can, after harvesting all sure high value payoff items first, one can add even more value to your life, by far, than you could ever imagine!

Applied in my business

There were some "opportunities" in my business that looked good but were not certain.  In most of the cases, the risks were mostly just necessary losses on the way to learning how to do something well (by knowing you are going to make and learn from mistakes.

I made sure I would be ok, and not risk all the marbles, but I knew it would have costs and non-certain (though probable) payoffs in the long term. 

And those were the keys to my success, though I did have to "gulp" quite a number of times as I "braved" (in high anxiety, though) the trying of what I had not yet mastered.  I did "lose" a few potential clients, but I learned as I went, and the ultimate results were magnificent, catapulting me ahead many years, in a relatively short period of time. 

See when to take risks and when not to - and what base does one need to be able to risk?  Risk Taking - Which Ones Are OK And Why?


10 opportunities taken
1 succeeds producing                    500 value units
10 were taken at a total cost of      100 value units (10 units of cost each each times 10)

Net gain                                      400 value units