One Way To Think About Taking Risks With Money And In Life

This is a newsletter for those of us who will Never Retire. Whatever that looks like for you.

For me, it looks like a January 2025 move to Spain, which we’re chronicling and detailing step-by-step and using as our conversational springboard—continuing now.

So much of what we have discussed this month around personal finance and investing comes down to balancing risk and reward.

How much risk are you willing to take on with money? Is the possible reward worth the risk?

We would all likely be willing to risk $1, $10 and maybe even $100 for a clear, though uncertain shot at $10,000. However, up that number to $250, $500 or $1,000 and many of us would prefer to keep what we have.

The way this relates to how much risk we’re willing to take in life is interesting. While I won’t be able to cover every aspect of this conversation in one short installment, today will set the stage for further discussion. I hope you’ll help advance the conversation.

I find it funny.

The other day I decided to enter an options trade. With $240. I’ll tell you about the trade later in the year—when I have a better idea of its success or failure—but, for now, just know that I went back and forth about risking $240. I actually had to start by depositing $300. I ended up getting a good price on the trade, so I spent invested $60 less than anticipated. All of this trepidation over a couple hundred bucks.

Yet, I don’t consider moving to Spain—from the country I have called home for more than 48 years—that much of a risk. In fact, I see it as nothing but an opportunity.

And, even though making the move contains several important financial elements, I don’t worry about the money aspect. Much of this probably comes down to control. Or, at least, our perception over how much control we have over a situation and our near- and long-term destinies.

For some people, the second act of life is about settling down. Taking it easy. While I want—and already have—a nice-size amount of both, I feel the need to combine it with some risk taking. By embarking on journeys and experiences I don’t technically need to have that will—as I anticipate—enrich my life and aid my physical and mental health.

When you’re 18 and leave home to see what’s out there, take up challenges and venture off into uncertainty, you’re really not taking a risk. How can it be a risk if you have nothing to lose other than—(in some, though not all cases)—the in-house support of mom and dad?

This is what you’re supposed to do at age 18. And nobody thinks it’s weird or warns you about it. They give you a pat on the ass, a few words of wisdom and tell everyone you left behind how proud they are of you. Do the mid-life equivalent of this 30 years burnin’ down the road and at least some people think you’re crazy.

When you’re 44 like Melisse (I hope she doesn’t mind that I gave up her age!) and giving up a longstanding career to do something entirely different with the rest of your life, that’s a risk. When you’re 48 like me and have to learn a new language to best integrate into a new culture, that’s a risk. When you’re 44 and 48 and giving up what you know—a relatively comfortable life in a familiar place—for an unknown you fully believe makes all kinds of sense for your second act of life, that’s a risk, no matter how confident you are.

That said—it’s a big opportunity and one you feel more urgency to seize because you’re at mid-life, not 18. The financial and other logistical sides of the equation don’t feel as daunting because you’ve been there before.

You managed to put yourself in the position to have and seize this opportunity, so you go in with a high level of confidence. Not cockiness. But clear-headed confidence. If something goes wrong, you’ll figure it out. This isn’t your first time setting up utilities or filling out a government form.

Plus, it’s exciting to think you’re taking the reigns at an age when lots of people you saw come before you started compiling lists of the things they can’t do anymore. I don’t keep lists like this. I’d rather add to my body and mind’s agenda in such a meaningful way that the stuff I can’t or no longer want to do is marginalized to the point of insignificance.

Confidence and control. Things you can and should have—in appropriate amounts—in life.

But …

These are the very same things that get people in trouble with money. Particularly investing. Lots of people—especially if they have had investing success in the past—get overconfident and overestimate the control they have over their investing activity. So they try to be stock pickers. They take on too much risk. And they lose money.

The behavioral side of investing and economics has names for this and related tendencies. That’s

Ben Le Fort

’s area. So maybe he’ll chime in with a thought or three.

But, for me, it explains why I go back and forth on a $300 option trade, but literally haven’t thought twice about moving to Spain since cementing the decision. I have zero control over what happens at the company I made a guess about. Zero. So I don’t see the potential reward—commensurate to risk—the same way I do with the move.

Yes, we don’t have to go. However, we’re all but certain to have a minimum $2,000 apartment payment within 10 years if we stay in Los Angeles. If we move, the opportunity to have NO house payment within 10 years (and, quite likely, much less) is very real. Beyond that, we’re never going to have the lifestyle we want in America; it simply doesn’t exist here.

It’s about visibility based on reasonable educated projections and your confidence—drawn from past experience (trial and error)—around getting shit done. It’s not about the level of risk or even the extent of the opportunity. It’s about how much certainty you have in an uncertain situation. And whether you decide to act—take the risk—based on your sober, but potentially exciting assessment.

So much amazing food, scenery and urban architecture and vibrancy in this sprawling, but dense New York City of Europe.

Paris, France. We’re leaving today for Bordeaux, then Toulouse, before heading back to Barcelona for a night.

Expect a full report from here in a day or two, including how I had to “fight off” a guy trying to sell me something on the street and whether or not I could see myself and Melisse living in Paris.