The Risk of Wealth Creation

The Risk of Wealth Creation

To make money, you’ve got to be willing to lose money.  This is what is referred to as risk.  No one has created wealth in a comfort zone.  Some investments that you make will lose you money.  I was a stockbroker at some point in my life and I do remember clients that would get upset at me personally, because a share went down in value. Now your stockbroker or indeed any other financial advisor can give you the research.  They can tell you the fundamental reason why they think that that particular share is a good buy.  However, they cannot control forces of demand and supply on a particular day or period that make the share price fluctuate. The research they give you (or you even do yourself) is to the best of their knowledge at a particular point in time. They do not, and neither do you have control over what is going to happen in the future of that company. That’s the risk you take in the process of wealth creation. It could be shares as I have talked about, property, businesses, and a myriad of other investments. Wealth creation comes at a price.  It just doesn’t happen. And that price is risk. We often think in terms of monetary risk as I have mentioned. But apart from losing money, your investment fluctuating in value or things just not working out the way you planned, there are other risks that wealth creators face.

  1. Responsibility

The first one is responsibility. You are going to have to take the risk of making decisions and being responsible for the outcome (Click to Tweet this). Using the analogy above, the stockbroker did not lose your money.  For whatever reason, you agreed to invest in that particular share. Whether you made an informed or uniformed decision, take responsibility for it. When it comes to money far too many people play victim and hence get stuck in their situation. Nobody held a gun to your head and told you to make that investment, get into the loan or spend beyond your means. Responsibility is painful because it means that you accept that it’s you who did it. You call yourself out.  At the same time, it is very necessary because you finally get your head out of the sand.  Even if you did your best to make a good decision and it did not work out, you get to understand and acknowledge that loss is part of the process.  Loss doesn’t mean that you don’t try again. That goes back to playing the very popular role of the victim. To put it bluntly, you are going to risk failure in order to create wealth. The people who have “made it” according to you have failed in some way. Not everything has been smooth sailing.  Try and have an honest conversation with them about their journey and you will see that. Do not buy into the “instant gratification” or “deal” mentality coupled with flashy things that is perpetuated by society. Many a time, a price has been paid and painful lessons learnt along the way.  The difference is really how you look at failure.  Because you failed, does it mean you don’t try again?  Or is it because you failed, you know what to do and what not to do in your next attempt?

  1. Conflict

You are also going to run the risk of conflict with people, as you try and do something different. How many times do we doubt or stop ourselves because we are afraid of what other people will think? This is a risk that we must face and it is better to understand that not everybody is going to be happy about what you want to do. I was speaking to a friend of mine who has scaled significant heights in her career about this.  She told me that to get where she is she has had to make strategic moves and decisions that have left some people around her upset. At the same time, she was aware of who she needed in her corner and made an effort to cultivate those relationships and keep communication clear. I learnt a great deal from her example.  We need people, but not everybody needs to be in your corner at all times.  Let us stop seeking affirmation from the wrong people. Are people who have never done that particular investment or run that business advising you? Are you hinging your career moves on what your colleagues say?  Are you worried how society will look at you if you leave that highflying job and start farming? Are you worried about what your friends will say if you can no longer afford to drive that car, so that instead of creating wealth, you are doing everything you can to keep driving the car?  As my friend put it, there are some people who you may want in your corner and that’s fine.  Wealth is not also created in isolation. Those are the people it’s worth having discussions with and respectfully communicating what you are trying to do. This could be your spouse, immediate supervisor, business partners etc.  However, let’s not get caught up in trying to please everybody before we make moves.

What does Character have to do with it?

I have come to understand that wealth creation is beyond what shows up in your bank account.  Money is good, but that’s not all there is to it.  You need to allow for your character to be stretched (Click to Tweet this). That is what is happening when you learn to deal with failure, conflict, speak up for yourself, manage money in a disciplined way etc. The real value is in the process, not just the destination. That’s why people who make money overnight tend to lose it. Most of them don’t have the character to sustain it. On the contrary, when those who have engaged in the process lose, they still manage to get back on their feet. Wealth is risky business.  Are you bold enough to try?

We invite you to the free event: Centonomy Open Day this Saturday 3rd September from 10 am, at The National Museums of Kenya. The theme will be Create your Season of Wealth’. Bring a friend; come, listen, learn, participate, and continue your journey in wealth creation. Find details on this free event by clicking here.

Waceke Nduati-Omanga runs programs on Personal Finance Management, Entrepreneurship and Career Success

Find her at waceken@centonomy.com| twitter @CekeNduati| Facebook /CekeNduati

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  • jeff

    its makes senses….made me realize different between haves and have not in our society