Risk vs Reward

One of the most popular advises around is that the best way to win by gambling is to not gamble at all. By using pure logic this is obviously correct. By not playing a game you don't risk the money or anything else you would have to give to join the game. So you keep your initial investment free of risk. I was a fan of that advise until someone I know told me that by doing this you exclude yourself from the potential reward as well.

After that I got thinking. He was right. Risk and reward are the sides of a balance which leads us to make decisions, either important or not. Fear or logic prevent us from taking risks. Recklessness or

logic lead us to seek rewards. Most of the times one or the other wins. Depending on the person making a decision risk or reward is magnified and so the decision is made. They seem mutual exclusive but in reality they are not. The right decisions have both the risks and the rewards calculated in the same equation. This can lead to vast personal advance and profits. But most people don't do the math and they are just led by feelings. They are afraid of getting or losing something (risk). They are ready to lose everything for a chance of a quick profit (reward). Both situations lead to tunnel vision and potential disaster.

The fallacy of the opening advise is that it treats all people like passionate gamblers. People that choose to seek their reward driven by their passion. Not everyone is like this though. I will give you an example. Someone has some extra money for a coffee every month. Just for a coffee a meaningless drink. With the same money instead of taking the coffee he can take a lottery ticket giving him the chance to win one million dollars.

 There are three options for him. Drink the coffee which equates to a moment of instant pleasure but no long or short term profit. Take the lottery ticket and have a chance of a life change. The third option is to not spend the money at all which in very long term, we are talking about money equal to buying a coffee cup monthly, will give him an amount of money not comparable to the lottery choice. This example has a clear winning choice. This kind of thinking makes other difficult decisions easy as well.Just remember in order to get a reaction you have to take action. Nothing happens by itself.