So there I was: trudging along through economics homework, studying my ears off for my final today, and hoping that I could publish a blog post before the 30th, to meet my current “3 posts a month” goal.
And then, as I was reading about investments and rates of return from those investments, I fell upon this section:
“Risk levels and average rates of return are positively related. The more risky an investment is, the higher its average expected rate of return will be.”
Source: Macroeconomics, 19th 19E Flynn Bruce McConnell (my emphasis)
I don’t think I can say it any better than they did. The truth is indisputable: the greater the risks we take, the greater rewards we receive.
I’m sure you’ve all had moment when you saw a risky opportunity, and had to weigh its costs and rewards. Although you knew the rewards would be great—soul-filling things, not bound in silver or gold— you shied away, deciding that safety was more rewarding than reward. You’ve regretted it ever since.
I do it every single day.
Glistening risks face us at every turn. They meet our eyes in the faces of homeless humans stranded on street corners, in painfully obvious tear streaks from red eyes, and in the hope that ideas whistle cheerfully into our ears.
Great risk = Great reward.
It’s as wonderfully simple as that. It’s so true that it manages to even creep its way into the difficult, heartless subject of economics.