The less you have the more you risk – explaining this phenomenon in finance

Finances are a very personal thing, which means that not too many people are willing to say how they make their money or where they make it. Therefore, it’s usually very hard to understand what caused somebody’s wealth or poverty.

But the cases when it’s not very difficult to see the reasons are more than enough to help us understand the risk behind the world’s financial situation.

The rich like to risk but they calculate

Those who were able to accumulate quite a lot of wealth over the course of their lives have become quite good at taking risks and managing them. But this doesn’t mean that they are all that happy with taking them.

Many wealthy people have mentioned that due to their extreme carefulness when deciding a new business venture, they’ve either missed their chance or miscalculated because they changed their minds about something.

This phenomenon was directed to the desire of not losing something. Due to the hardship and the struggle most people had to go through in order to get what they have right now, they tend to be overprotective and hesitant to risk it for more. They convince themselves that what they have is enough and overshadow the opportunity to have more, with the fear of having less.

The poor take much more risk

The poor have shown a lot more readiness towards risking what they currently have for the opportunity of having more. Naturally, this is directed to the amount they currently have as well. However, this phenomenon has been more common with those that pretty much have nothing to lose anymore rather than those who are just above the poverty line.

For example. In South Africa, which is a very hard country to dissect in terms of wealth equality, it’s become quite apparent that the poorer population has been much more active in introducing innovation and driving the country’s economy forward than the wealthy population.

This can easily be seen in the rising number of South African brokers and other financial institutions. Not to mention the hundreds of startups that the country has been producing over the last couple of years.

Furthermore, almost every single successful South African investor, entrepreneur or professional comes from a poor background. And considering that both investments and entrepreneurship require immense amounts of risk, it’s easy to say that the poorer population is taking the lead.

The phenomenon of content

Another important argument that has been made by experts is that humans are very easily satiated with what they have. Sure there are some exceptions of people wanting more and more than they already have, but biologically we are hardwired to stop at some point of wealth.

Most of the wealthy population has reached this phenomenon and is more concerned with keeping what they have than getting something more.

Because of this, we can definitely expect poor countries to be the leaders of innovation and industry in the future, as they continue to push their boundaries and take more and more risks. But this doesn’t mean that there’s a guarantee. Taking risks has a cost, and sometimes it’s way too devastating. Be it a human or a country.