#137 5 Steps To Move From Risk Averse To Risk Manager

Today we're going to be talking about how to move from risk averse to being great risk managers, and in fact, using risk to get the outcome that you want. Stick around. Welcome to the Passive Income MD podcast where we talk about creating your ideal life through multiple streams of income. I'm your host, Peter Kim. If you enjoy hearing about this stuff, make sure to hit subscribe so I can bring it to you every week. Now let's get on with the show. Now, how many of you agree with this statement, doctors are risk averse? I mean, I used to identify with that as well and maybe many of you do as well, but I found that that identity, it doesn't really serve us well. In fact, it doesn't even fit. As doctors, we make critical decisions all the time. In fact, these decisions, they all probably have some sort of consequence, some smaller, some larger like life or death, but we actually utilize risk on a day to day basis. You've probably heard of something called the risk benefit ratio, where every decision that you make weigh, hey, how is this going to hurt or potentially harm the patient and how could this potentially help? And you weigh that risk and benefit to make the best decision for your patient. Now that might be you during surgery as you're going through and actually performing whatever you're doing. That might be you in a critical ICU situation. That might be you as a primary care physician deciding what medications for the patients to be on. But it's not like we are paralyzed by fear. It's not like we're paralyzed by risk and not be able to make decisions. We use risk to try to get the very best outcome. Now is that the same thing thing as being completely risk averse? Risk averse means that you'd really err or stay on the side of extreme caution and that you'd be willing to take less or worse outcomes because of that risk. And I don't think that's what we do as doctors. I mean, I'm an anesthesiologist, I see what happens in the operating room. I can tell you the doctors, we try to get the very best outcome while mitigating the risk. And we do that very smartly to really help people out. I think that's different from being completely risk averse. We know the outcomes that we're trying to get and we actually help make those happen. Now the problem is that because we've taken on this identity of being risk averse, it impacts all the rest of, you know, our lives, from investments to the way we have fun. So I Don't know where this idea of us being risk averse as people came about, somebody started this rumor and people take it on, took it on as an identity. But I think we need to stop doing that because it's bleeding into other parts of our lives, especially when it comes to investments. Many of us have issues making investments, especially that first investment, getting over that hurdle because of the idea. And you have it in your mind that you're risk averse, you're not willing to take the risk to try to get where you want to be. But again, that couldn't be further from the truth. So today we're going to be talking about how to move from this idea that you're risk averse to the place of actually being able to utilize risk and manage risk, mitigate it and use it to your advantage to get the outcome that you want to understand how to do this. Well, we just have to look at great entrepreneurs and great investors and the people you see out there and just figure out how are they doing it, how do we model them to get our ultimate outcome, which for you might be financial freedom. You might be, you know, dropping a few shifts, trying to get a little extra income just to have a little bit more fun to buy back some of your time. So here's a five step process for you to go from risk averse to risk manager and actually utilizing risk to your advantage. Number one, you have to clearly know your outcome. I've already mentioned it several times, if you haven't noticed throughout this talk. I've mentioned it before in my previous podcasts and previous episodes. You have to know what you want, what you're going after. You'd be very crystal clear on it. I do a lot of goal setting. I do it every single quarter. I do it every single year. The funny thing is, as doctors, oftentimes we set that one big goal, which is to become a doctor, to become the health professional. We work all our lives to get there, and when we get there, we kind of stop setting goals. We don't know where we want to be, except maybe we want to retire someday. But how unclear is that? How vague is that idea of retirement 20, 30 years in the future? In fact, I'd say it's probably not that compelling or exciting. In fact, it might seem a little daunting for us to get that far in the future. So what I tell people is get crystal clear on your outcome today. You know, this involves actually sitting down and taking the 10, 15, 20 minutes, 30 minutes, just to think, to dream a Little bit about what you want to be very specific about it, to write numbers down. And how many of us actually have done that? If you've done that, congratulations. If you haven't done that, that is the very first step to do on your way to getting what you want. Number two, you have to understand why you want that goal. Like many of us actually create these goals. We don't even know why. It just sounds good. Maybe it was somebody else's goal. Maybe it's a goal that somebody told you you should have. So. But it's not really compelling for you. For me, I can tell you, in the beginning, my whole goal was to buy back my time. I was working way too many nights and weekends, spending time away from my family, from my friends. I was missing out on holidays, on weekends and really special opportunities and special occasions. And I realized I didn't want to do that anymore. So when it came to my investments, I wanted to create passive income a little bit at a time for money that I didn't need to be in the hospital for, because that would ultimately help me buy my. My time back. I want to do that because, again, I didn't want to miss that time with my family. I didn't want regrets. I felt that life was short. I don't know if that resonates with any of you, but that's where I was at. So it's really important for you to know why you want it, because that's what's going to drive you forward. That's going to drive you to actually accomplish these things, to take the first step, to take the fifth step when it's difficult. And what you want to do is think about the upsides and think about the downsides. What are you going to gain from. From actually getting there? You're going to gain that family time. Is it going to fulfill your purpose? Are you going to have the time and opportunity to do all sorts of new things that you always wanted to do? You've got to understand what the upsides are, and then you've got to figure out what are the downsides of not getting it. Meaning the cost of not taking the action to get where you want to be. I know many of us think about consequences if we actually do something, the risk involved, and how it could damage us or hurt us down the future. But how many of us actually take time to think about what happens if we don't actually go for it? Meaning what would it look like if you took no action and was in the same place and in five years. Are you okay with that? Same place in 10 years? If your life continued to be the same and nothing changed in terms of your time or your freedom, would you be okay with that? I think it's important for us to look at the downsides of not taking action as well, and that'll help drive and hopefully propel you forward. For me, when I looked at medicine and where it's going today, with all the current political environment, with all the reimbursements, I actually didn't see it going in a good direction. I don't know about you, but I felt like I would be in a worse place five years from now if I did absolutely nothing. In fact, I'd be older, I'd be further behind financially. I would have given up five more years of my life, of good times, of occasions, happy occasions, of weekends and holidays, and I didn't want that. So that was actually the bigger driving force for me to actually take steps to invest, to move forward. Number three, after you've really clarified what you want, why you want it, you thought about, like, what are the upsides and downsides? The next thing you have to do is actually assess the. The risk. And this is where risk comes in. And it's really important for you to understand what risk is and where the risk is in that opportunity or deal. When it comes to making investments, we always want to think. We don't want to lose our money. We've worked really hard for that income. In fact, we put a good amount of time. The first rule of investing by Warren Buffett is not to lose money. And his second rule is, see rule number one. So when you look at an investment, when you think of an opportunity, look at the upsides and look at the downsides. I mean, I'm pretty good, to be honest with you, at finding, figuring out the upsides. I'm a dreamer in a lot of ways. So I think about all the money that I could make, all the great things that could happen. But I realized that looking at the downside of the deal is where all the power is learning how to do the proper due diligence for these investments to understand where this thing could blow up in your face. In fact, there were many times where I looked at an investment and figured out that the downside was relatively low versus the upside was extremely high. In some of those situations, there's something called asymmetric risk return, where your return potential far outweighs the risk involved in doing the deal. In those situations, it's a lot easier to invest in Those type of opportunities, at least mentally, because, you know, the upside far outweigh the downsides. And the one thing that I noticed for a lot of people, when they look at the risk, they just focus on one huge risk. In fact, they don't even spend time writing out the risks. Looking at the pros and cons, I think we spend more time sometimes thinking about where we want to go on vacation, the upsides and downsides. We spend more time analyzing those type of things versus actually the things that can really impact our life on a day to day basis. And so what I recommend for people when it comes to risks on an investment, I would simply list out the pros and cons. It's something that many of you probably don't even do. And if you did it, it would absolutely change the way you look at these investments and think about risk. The clearer you define the risk, actually sometimes the smaller the risk looks and actually less daunting it is because you can figure out ways to mitigate it, ways to actually manage it, and actually utilize that risk to get where you want to be. Nothing happens without risk. You've taken risks so many times in your life. You took out a good amount of loans to get where you were at. Nothing was guaranteed in life, but it helped you get where you want to be. Same thing comes with investments. Nothing happens without risk. Every single day you face risk, not only in your personal life, even getting in your car and driving to work, or when it comes to your career, again, make many decisions you make, you are always weighing the risk and there always is risk to every decision. But you use that to your advantage and to help you get where you want to be. Number four, at this point, you've looked at every single angle. You looked at all the risk. You looked at the upsides, you looked at the pros, you looked at the cons. You got to make a decision. You got to figure out where you want to be, what you want to do. You got to figure out which direction to take. And here's the thing, there's no perfect one way. It's actually impossible for anyone to actually predict how that one decision will impact not only just that investment, but your life in general. Like many of you have probably made a decision in your life where you thought it was wrong at the time, but things worked out in your favor later. I mean, that's happened for me before because there have been certain investments that I made where I thought, okay, that was a dumb decision looking at the endpoint, but it created a connection for me, it created a resource for me that actually created a far greater return. At the end of the day, when you look back at your life, you're going to find situations where you thought that thing worked out poorly for you and. But it was the best thing to ever happen to you and for you. So the thing to remember is that nothing will change if nothing changes. I know that sounds silly or stupid, but you have to take a step forward and the first step will lead to so many more steps. And I always tell people it might not be that first step that makes the biggest difference. It might take the third or fourth investment. So the faster you take that first step, you're going to get to that third or fourth step which might actually change your life in a significant way. Number five, find a community or a mentor or just somebody to keep you accountable and help support you along the way. We all second guess ourselves, we all think about risk, we all think about not taking steps to move forward when we get inside our own heads. I don't know if it's about you, you can sit there and be stuck in something called analysis paralysis. You can sit there forever. But having other people who are taking action are keeping you accountable to keep moving forward, to support you, to bounce ideas off, these are the things that I believe will ultimately help you move forward. So I have a group of people that I bounce investments off. A lot of them are in our Facebook group. We have something called the Platinum Investor Club where we vet deals together, we show each other deals and we say, hey, this is a good opportunity. What do you know about that sponsor? What do you know about that operator? Are they good to work with? Have you worked with them before? It's great to have a community of support when you doubt yourself, which will happen to every single person, I promise you. Which happens to me, happens to you. To have other people say, hey, that sounds like a great decision. Looks like you're making it smartly. Sounds like you're thinking about it from all angles, or somebody who will say, hey, have you thought about this? Have you thought about that? When I look back at my life again, this fifth step, finding that community, finding those mentors, it's made all the difference in the world. And if you follow this five step process, I promise you it will help take you from that identity, or at least that feeling of being risk averse. Maybe that's kept you from making an investment to something called a risk manager. And a risk manager is somebody who utilizes risk to their advantage. What side would you rather be on Risk Averse or Risk Manager, and it really comes down to just doing those things I've outlined. Try it. The first time might be a little more difficult, but each time it gets a little better and better. Thanks for listening. We're here to support you. Let us know how we can do that. Thanks. Enjoy the show. 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