Anyone who plays poker knows about a thing called pot odds. Simply put pot odds tell you that if you estimate that you have a 1 in 5 chance at the end of the hand of holding the winning hand, based on what you know about the cards in your hand and visible to you on the board, that the pot must offer you more than five times as much return as what you must bet to win it in order for the gamble to be a good one. If you consistently fail to apply this metric to your play you will lose over the long haul because you must win enough to compensate for the inevitable losses. This applies to virtually everything you do in your personal life when it comes to finances! You make many gambles over the years with personal finance. Each of them has a set of odds of success; nothing is a sure thing, ever, except that you will die some day and will pay taxes of some form during the time you are alive. One of the most complicated aspects of evaluating the wisdom of a particular path when it comes to anything that betters yourself is performing an honest assessment of the risk you will fail in your endeavor. That risk is never zero and yet to properly manage risk in your life you must adjust the return on a given investment for the odds that it will not pan out and will be lost in whole or part -- that is, you will simply whizz that alleged investment down a hole.
Posted on: Fri, 21 Mar 2014 13:30:16 +0000
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