[WI] Decision Making 101: Taking A Look At The Different Between Risk And Reward

We as humans are almost universally so much less than stellar when it comes to evaluating risk and reward.

Will you bet $10 on a game of chance such as roulette or slots even when you know the odds are much higher than 50% that you will lose your money? And what about the lottery?

If you look at it with any form of logic, are those wise decisions?

But on the other hand, how willing are you to take social risks such as going up to a member of the opposite sex to say hi?

The risk is almost zero, but the potential payoff is massive. But not many people are prepared to take this so-called risk, even though this is a nearly perfect situation: a very low risk with a very high reward potential.

The question is: are you assessing your life choices in a wise manner? Just like with a magnifying glass in the sun, actions are mostly determined by where you choose to focus your attention. If you upsize the positive side of something and downsize whatever make you feel uncomfortable, you probably will take that action. If your focus is on the opposite side of the spectrum, you probably won’t do it

Here is an easy way to beat this. So when you next have to take any big decision, try going through the next exercise and see if and how it gives you a new perspective.

The Positive Side:

As Wealth Creators we don’t take any risk or minimize the risk as best we can. Are you taking into account all the ways the risk could possibly pay off? In the example above (walking up to an attractive member of the opposite sex), it could be the start of a new friendship. You might even get a new career out of it, or meet your spouse or a new golfing buddy. But keep in mind all the potential benefits of taking that risk. Write it down if that will help.

Some people subconsciously minimize the upside as an excuse for a reason not to move forward. You should try to be as accurate about yourself as possible. Don’t give in to anxiety and play down the potential rewards. People who allow fear to guide them, normally have smaller, less satisfying lives.

The Negative Side:

Are you blowing up or playing down your decision? Does the fact that it may embarrass you or that you might be rejected hold you back? Do you focus on that, or do you tell yourself that it doesn’t matter and that at the very least they’ll probably be flattered? The one approach will get you there; the other will probably keep you right where you are.

Blowing up the perceived risk is a sure way to remain stuck. Playing it down will make it much easier to move forward.

Again, be accurate. If you are 100 percent honest with yourself, you will see that you probably have nothing to lose but everything to gain.
Let Go of your Ego

Just imagine you are not bothered at all by what anyone thought about you. Think about it for a moment. What would you probably do that you are not doing now? How would your life be? Just think of the freedom you would have to do as you want according to your deepest needs and desires.

If you can laugh at yourself and not take this too seriously, you will be so much better off.

You can either laugh now and smile when you get older, or kick yourself because you allowed so many opportunities to slip between your fingers. Come on, be true to yourself ‒ be brave!

The next time you need to take a decision that might hurt that precious ego of yours, think again and weigh up the real risk as opposed to an imaginative risk. Most people loathe to embarrass themselves, which prevents them from reaping all the great things that life has to offer.

Stand in front of a mirror and look yourself in the eye. Do your best to accurately assess the risk and do what needs to be done. Not lying to yourself gets easier every time. Before you realize it, your friends and family will call you the bravest person they know.

Discover if and how you can retire in less than 10 years

About The Author

Hannes Dreyer

Wealth Creator | Mentor | Coach - Dr Hannes Dreyer is one of the world’s leading authorities in Wealth Creation. As a speaker and author on the subject he is at the forefront of his personal development industry. He is the founder of the Wealth Creators University, a private education organisation based on the culmination of 30 years of experience, research and study info finances, economics, psychology and philosophy.


  • Maryke

    Reply Reply March 19, 2016

    Baie om oor na te dink. Dankie Hannes en “Wealth Creator”

  • Dineo

    Reply Reply March 17, 2016

    This is eye opening, thank you.

  • Tony

    Reply Reply March 16, 2016

    Never a truer word written Hannes. This particular article has merit in my life right now. Thank you

  • Peet

    Reply Reply March 16, 2016

    Die lewe is soos breiwerk – Dit is eers aan die einde dat jy kan sien hoeveel steke jy gemis het.

  • lukas koning

    Reply Reply March 16, 2016

    all so very true. must be more true to oneself.just do it !!

  • a wealth creator

    Reply Reply March 16, 2016

    This is an interesting post as it coincides with my current thoughts. I was at a family members funeral yesterday. In many ways this was an eye opener. It caused me to take stock of who I am, my progress in what I want for myself and also by observing others see those that are achieving their goals in life and those that don’t seem to have any. I met one person that was applying the principles of wealth creation, although he was not really aware of it, sort of an unconscious competent. I will definitely see him again, as I can learn something from him. The deceased was an atheist and I think that many at the memorial were like minded. This concerned me, as I am on the extreme opposite side of the spectrum. He was a head master and later a university lecturer, author and actor who was always well spoken and well respected. He was confident and loved life and it was obvious that he had left his mark on society and had touched many peoples lives from young to old. It was the first memorial that I have ever attended, although sad because of the departed, that was truly a celebration of someones life. I think it was because he had decided what he wanted to be in life, and then lived that life. The introspection that I went thru has made me realise that being consumed by my busy life style and hum drum, which is my fault, has taken my eye off the ball somewhat. I regret not having met Hannes much earlier in life to gain the skills and clarity of purpose that I now see. At my age of 49 I have not done too badly, but when I consider the time wasted on chasing fruitless pursuits, I am quite nauseated. When I was younger it was quite frankly a case of not having a clue as to what I wanted from life, a lack of direction, focus and wealth creation and other skills. I think that this is where a lot of people are at. The right mentorship is so vital and although I had good people around me there are so few that can actually teach and inspire.

    I did not take responsibility for anything. This has to be the biggest realisation that I have ever had. This may sound strange, but when I first bought a computer years ago I relied on a friend who was a webmaster pc boffin to sort stuff on it that I did not understand. He always said “play with the pc, don’t worry I will fix it if you break it, just get to know it” When I eventually did I realised that – I was taking responsibily, I was upskilling myself, I was no longer reliant on others, I was in control. This may not sound that impressive, but when you apply it to other areas of your life then it starts to make a difference. I realised that I must take responsibility and own and control whatever I applied myself to.

    It’s time to gain traction and ramp up my efforts in achieving what I want. No more slacking off. This is not just on a wealth creation level, but in many other ways that are important to me in my self actualisation. It is clear to me that I need to be ruthless, focused and have single mindedness of purpose in my efforts. Yesterday was a good day. It gave me clarity and focus. Thanks Oom Chris

  • Waldemar Budeli

    Reply Reply March 16, 2016


    I fully agree with your take on risk versus reward. Your assertion makes me even feel bad about myself of what happened just yesterday. I attended a property auction in Braamfontein – upon arrival I could see that the property was a gem – but the hesitation in my mind resulted in not participating. I woke up this morning depressed because the voice that says that was a great opportunity is rising to crescendo inside myself.

    Lesson taken, and thank you for juxtaposing the battle of risk v reward in a simple but powerful way.

  • Henning du Preez

    Reply Reply March 16, 2016

    Hi Hannes,

    Just some clarity:
    Playing roulette or slots – if the odds are 1 in 2 or 1 in 1000 or 1 in 1,000,000 people will respond differently based on the odds. Trust you will agree with this!
    Saying hi to the opposite sex – if just saying hi, or saying hi and asking for directions or saying hi and asking for a blind date people will respond differently based on what their intentions are. Trust you will agree with this!

    I am not sure if you still agree that the “The risk is almost zero, but the potential payoff is massive.” In all the cases people assess the situation and check what is the odds of getting what they wanted or getting what they do not want. If the odds are very bad most people will just not waste the time. By the way, low risk with massive payoff normally come with very bad odds – if they do come with favourable odds the resource is consumed in a very short period of time – there is no unlimited resource with low risk massive reward that you can just tap into all the time.

    Maybe, I am missing the point. I know people make decisions based on two prime needs: 1= security ( which you call risk) and 2 = satisfaction (which you call reward). The definition for security = the reliability of my prediction and the definition for satisfaction = doing something that there is some doubt that you can actually achieve it. If there is no conflict in your mind based on the two needs then you will make the decisions and get on with it. If there is a conflict then most people will put security first ands satisfaction second.

    Thanks for the opportunity to chat


    • Hannes Dreyer

      Reply Reply March 16, 2016

      What if the odds are 2 in 1 or 10 in 1 will you still not play?
      I bet you 10 to 1 you won’t 🙂
      What if we are conditioned to think that 100 in 1 is a bad deal or even R10,000,000 to R1 – simply because we buy into the saying if it is too good to be true then it is probably not the truth.(The odds are against you if someone tells you that they can give you 30% per month on you investment that you will eventually loose your money – but the odds are for them that people will go for it – that is why they play the game and why so many smart people are caught in pyramid schemes)
      In 2013 I helped 77 people to start a business all 77 succeeded but thousands did not take the deal even when there was no risk because they could ask their money back if they did not succeed.
      This is exactly what people are conditioned to think and therefor they will NOT take the risk because they don’t understand risk. The risk is never in doing – because then you can learn… the risk is in NOT doing… because then you cannot learn.
      It always amazes me to see how we are conditioned to think about risk

Leave A Response

* Denotes Required Field