A bird in the hand is worth two in the bush

Risk, it's one of the greatest tools to financial success, and also one of the biggest ways to meet financial ruin. You don't get far in life without taking the occasional risk, but I believe that any risks taken do not have to be big and dangerous. The bankers who caused this economic crisis were doing quite well when everything was in their favour, but they kept taking bigger and bigger risks. Look at AIG which had so much money it was advertising on the football shirts of Man Utd, but ended up needing a bank bailout. The only way that company could have avoided excessive losses, would have been by being more risk averse. This would have meant less profits, but they ended up losing the lot anyway! The book: The Richest Man in Babylon says of investing: "It is not wise to be intrigued by larger sums of money if your entire investment might be lost".

I know that some of the richest people in the world took big risks to get where they are today, but if you wish to reach that level, you should manage it by making sure that you control the entire investment. This means owning the company, starting your own business, doing your research, staying in control. Don't just give your money away for someone to manage on your behalf, in return for super high returns.

I sometimes feel like making higher risk investments, but this economic crisis has taught me that it's better to make sure I don't lose a massive percentage of my portfolio through speculation. I would rather invest safely under the motto: "A bird in the hand is worth two in the bush".