Risk versus reward is an important idea that is worth investing some of your time to learn. People make a decision not to learn certain things. It is a decision each one of us has to make. There are people who analyze risk and reward, and there are people who willfully keep themselves ignorant of it.

Among all other common knowledge ideas, your feelings about risk and reward determine if you work a job your whole life or if you change course to become financially independent.

What it Means to Understand Risk

Most people think investing is risky. These people have not looked closely enough at the risk and how it relates to the reward. They choose not to invest their time to learn these things.

People who do compare the relationship of risk to reward in different financial situations will realize an important lesson. By investing ones time to learn the details of any investment, one can lower the risk involved in the investment in relation to the possible rewards. This leads to the idea that it does NOT take money to make money.

At this point, you should also review difference between gambling and investing. When you understand the difference between gambling and investing, you realize you need to invest your time into learning (increasing your knowledge).

Understanding Reward

There are short term rewards and there are long term rewards. Most people do not plan far enough into the future.Most people have large commitments of their time focused on short term rewards.

Again, people choose to willfully keep themselves ignorant instead of taking the time to educate themselves. The people who keep themselves ignorant remain focused on their income and expenses, tied to a lifetime of working for money.

The people who increase their knowledge and base their decisions on the logical comparison of risk verses reward ultimately change their focus. This change in focus determines a path of continual improvement, with a final goal of financial independence and philanthropy.