Warren Buffet’s 2023 Billionaire Blueprint (Risk Free)
In this video, I’m gonna show you how to manage a risk like Warren Buffett by the end of this video, and if you make sure you stick to the end, you’ll have the two key things that you need to keep in mind when you’re looking at making big financial decisions. And obviously this is not financial or legal advice specifically tailored to you, but make sure you understand the bits and the pieces before it’s. (who warren buffett)
So right now a lot of people are looking at different moves that are happening in the market. Generally, there are two main things to focus on. When you’re making a big financial decision and you’re dealing with risk, you have the impact and you have the probability. So if, let’s say that you want to buy a real estate deal and then you’re not sure of how to do it, and your beginner real estate investor, you wanna make sure you understand what impacts and risk are, or a rather impact.
You wanna make sure you’re understanding what impacts and probability are. So the. Means the worst case that could happen if something takes place. So let’s say you’re looking at buying your first raise capital to buy a first real estate dealer. Your business, you’re buying a business using other people’s money and you’re, you try to understand what are the risks involved in doing this.
So you look at the worst potential risk of the impact that could happen. Let’s say if the business makes no money in five years, you look at the impacts of how bad that will be and what, how that affects you legally. Financially, psychologically, and everything. So you look at the worst case scenarios and you look at the impacts of these scenarios. (who warren buffett)
That’s what you do. And then the next thing is that you look at the probability of these scenarios happening. So it’s not only how bad things could happen, things can go, it’s also looking at the probability of them happening. So when you combine both, then you’ll be able to navigate. So imagine somebody who’s walking across a big cavern and they see different holes in the ground.
You have one hole in the ground that’s really deep, but it’s really narrow, so you step right over it. But if you fall into it, you can actually fall down like 50 feet. It’s an extremely deep sink hole. And then there’s another hole after that hole that’s is really wide but really shallow. Like it’s really easy to fall into that. (who warren buffett)
The, but it probably, it wouldn’t even hurt your ankle probably. It would just be like a worst case. You twist your ankle a little bit and you’d be fine. But it’s really easy to fall into that hole cuz it’s a really big hole. So the first hole that’s really deep and narrow, that’s how high impacts low probability situation where the chance of something going wrong is very low, but if it does, it has a tremendous impact.
And then the second hole is an example of something that goes a little bit, uh, that goes a little bit wrong, like. You just, you get hit with a tax bill, you don’t expect that’s not that bad. Or you deal with a customer complaints that you resolve or something then, but in the chance of that is really high.
But then you deal with that and then you go forward. So the points I’m making is you want to know both the two dimensions of risk and then when you do that, then you be able to make better decisions and you won’t confuse things that are urgent with things that are important because it’s always important to manage down. (who warren buffett)
And as the millionaires do, and in a book called Money Master The Game by Tony Robbins, he focused on managing the downside risk and on removing the downside completely, because investors usually won’t put themselves in a position where they’re taking any huge financial risk, but they’ll make sure that they’re getting a huge upside.
So you’ll want to remove, even if there’s a low probability, you want to remove things that can completely wipe you out. Because if you lose a lot of capital from the decisions that you. It could set you back a year and the time to recover would be so horrible that it’s not even worth even taking a chance. (who warren buffett)
Whereas if you just take small risks that are really capped, that may have higher probability, perhaps it wouldn’t be that big of a deal. And the last thing you have to share is really basically lower these risks and lower the probability of risk going wrong is usually through experience and knowledge.
There was a show where Stephen Graham, there’s a show where the Ed him for Stephan and Dave Ramsey once in the show. And. What would, what should I invest in? I’m too overexposed in real estate. I have about 60% or something of my assets in real estate. And then, and then Dave Ramsey said, don’t worry too much about that because how much about real estate do you understand and know? (who warren buffett)
He said, oh, about like 90%. He said, okay, I put 90% of my money in real estate. So the point is risk mostly comes from that, which you don’t understand. And Warren Buffet usually would say things, Put in money in things that you understand. That’s why here we recommend to the average public to just put their money in the s and p 500.
This is the standard and Poors 500 top companies in America. Just stocks that you invest in. It’s an index, which is a collection of companies you can invest in, in the public market here. Remove the downside risks cuz the average person doesn’t really understand that much about anything. But if you actually know more about, let’s say you work at Tesla. (who warren buffett)
And you understand everything about Tesla and you’re able to buy a Tesla stock because you know what’s going up, it will make sense to allocate more towards Tesla because you understand it. So with this, if you want to work for my team in raises.com and actually create your private equity deal and raise money, head to raises.com.
But if you’re not ready to do that and you want to learn about how the process works, make sure you watch the next YouTube video and it’s somewhere on the screen which walks through a lot of some of the key concepts that we talk about. And so with this, we’ll see you in the next one. (who warren buffett)