
The first time I bet on my favourite horse at the Derby the odds given to me were 1:0.22 and after having the joy of winning and collecting Rs.122, the bookkeeper said that the bet was not worth the risk (I win only Rs.22 but am risking Rs.100) and that I should consider the risk reward ratio in future. Of course the joy of winning outweighed the risk but when I reflected on it later it made immense sense and has served me well in investing in the stock market. If the RR is not favourable, then however good the company is, the bet is risky and to be avoided.
The Risk Reward ratio affects all other aspects of our life as well, the only thing is that we don’t have the tools to evaluate our emotions/feelings. What is the risk of working overtime for money you don’t need vs spending quality time with your family or your own hobbies? Unless you figure this out for yourself, you may succeed in your profession but will fail in life. And then there are those who have retired and still try to cling on to roles that give them money, power, fame since that’s the paradigm they have lived their lives by.
Living a rich life has nothing to do with wealth, being powerful has nothing to do with power, being famous means nothing in an impermanent world.
The day you realise this your life’s Risk – Reward Ratio will align automatically.








