Showing posts with label difference. Show all posts
Showing posts with label difference. Show all posts
Saturday, October 19, 2013
Ascertain The Greatest Difference Between Managed And Risky Risks
Life is brim-full of risks, some of which we take happily and some of which we are thrust into. In any case handling risks is a part of our life. None of us are untouched by this aspect of our life in most components of our life. The key to understanding and minimising negative aspects of the risks we are facing is to understand when taking a risk is correct and when taking a chance can be foolhardy. This topic does not cover risks that are inadvertently thrust on us, but those we decide to take.
This is the meaning of risk which has been given: Risk is the chance that a selected action or activity (including the choice of not doing anything) that might end up in negative result. When you decide to do or not do something understanding that the result might not be good, that is often known as gambling.
Risks can be broadly categorized into two categories:
- Hopeful risks: These are risks that you take, without knowing the likely factors that have an effect on the result and even if you do know, you've got no control over any one of these factors. That implies you are taking a chance wishing that the result would be in your favour.
- Calculative risks: These are risks where you have punctiliously studied all the factors. Based primarily on your calculations, the likelihood of a result in your favor is more, then it would come under the purview of calculated risks.
A very good demonstration of how to differentiate between worked out risk and speculative risk, would be an easy game of Indian rummy :
- Hopeful risk in rummy: You are playing a game with a grouping of folk on the internet. The other players playing Indian Rummy Online are absolutely unknown to you. The cards are dealt to all. You get a glimpse of the cards you hold. You find that the majority of the cards you hold are no use in forming a sequence. You have got no jokers. All of the cards you hold are deadwood cards with very high points. The stakes for the game you are playing are truly high. Losing the game would imply a terrible loss to you. You have got no idea what cards other players have. You have no way of taking a look at the reaction on their faces to glean the cards they hold. The game offers the option to drop by incurring nominal points. A hopeful risk at this juncture will be to continue playing the game on the presumption that others too have unfavorable cards or wishing that the cards you pick from the open/closed pile will make the hand you hold better.
- Calculative risk in rummy: Now imagine a scenario where again you are playing 13 cards rummy online with a bunch of unfamiliar players. The cards you hold in hand are not great but have the potentiality to be melded into something promising. You are the person placed to play first and the open card is either a joker or a card that will complete a natural sequence or you have got a couple of joker cards in hand. Additionally the deadwood cards in hand do not sum up to a very high score or the stakes of the game are very low. In such a case proceeding with the game with the presumption that it is easy to win or at the least minimise losses, is a calculated risk.
This easy game of Indian rummy obviously defines the greatest difference between a calculative risk and a hopeful risk. Same goes for managing yourfinance. When you are in financial need, always work out your sums first before lending. If you don't, and not know all the terms behind it, the same thing can have a very different effect and be a hopeful risk to you!
This is the meaning of risk which has been given: Risk is the chance that a selected action or activity (including the choice of not doing anything) that might end up in negative result. When you decide to do or not do something understanding that the result might not be good, that is often known as gambling.
Risks can be broadly categorized into two categories:
- Hopeful risks: These are risks that you take, without knowing the likely factors that have an effect on the result and even if you do know, you've got no control over any one of these factors. That implies you are taking a chance wishing that the result would be in your favour.
- Calculative risks: These are risks where you have punctiliously studied all the factors. Based primarily on your calculations, the likelihood of a result in your favor is more, then it would come under the purview of calculated risks.
A very good demonstration of how to differentiate between worked out risk and speculative risk, would be an easy game of Indian rummy :
- Hopeful risk in rummy: You are playing a game with a grouping of folk on the internet. The other players playing Indian Rummy Online are absolutely unknown to you. The cards are dealt to all. You get a glimpse of the cards you hold. You find that the majority of the cards you hold are no use in forming a sequence. You have got no jokers. All of the cards you hold are deadwood cards with very high points. The stakes for the game you are playing are truly high. Losing the game would imply a terrible loss to you. You have got no idea what cards other players have. You have no way of taking a look at the reaction on their faces to glean the cards they hold. The game offers the option to drop by incurring nominal points. A hopeful risk at this juncture will be to continue playing the game on the presumption that others too have unfavorable cards or wishing that the cards you pick from the open/closed pile will make the hand you hold better.
- Calculative risk in rummy: Now imagine a scenario where again you are playing 13 cards rummy online with a bunch of unfamiliar players. The cards you hold in hand are not great but have the potentiality to be melded into something promising. You are the person placed to play first and the open card is either a joker or a card that will complete a natural sequence or you have got a couple of joker cards in hand. Additionally the deadwood cards in hand do not sum up to a very high score or the stakes of the game are very low. In such a case proceeding with the game with the presumption that it is easy to win or at the least minimise losses, is a calculated risk.
This easy game of Indian rummy obviously defines the greatest difference between a calculative risk and a hopeful risk. Same goes for managing yourfinance. When you are in financial need, always work out your sums first before lending. If you don't, and not know all the terms behind it, the same thing can have a very different effect and be a hopeful risk to you!
About the Author:
Brian Bishop is a plastic surgent specialise in plastic surgery for the male and he has been in the industry for an overall total of more than 35 year helping people with the aid of installment plans. Also he is a contract blogger during his free time and enjoys swimming surfng and french fine dining. He and enjoys swimmin, surfng and french fine dining
Friday, May 24, 2013
Budget is NOT a Four Letter Word Knowing the Difference Between Discretionary and Non discretionary Spending
What does the word budget mean to you? Do you immediately have a negative reaction and feel as if a noose is tightening around your neck? Many people have a negative emotional response and thus, the word budget is not often seen in a positive light. In fact, some people cant create and/or stick to a budget, simply because of what the word means to them.
Budget is not a four-letter word! And considering the challenging economy were in, it should be a word that is not only embraced, but spoken loudly and without embarrassment, trepidation or fear.
Why is a budget important? Because more likely than not, you are among the more than half of workers out there living paycheck to paycheck and wouldnt it be nice to know where your money is really going? Wouldnt it be nice to have more control over your hard earned dollars and save for retirement and pay off debt? And maybe even take a nice trip or two and not completely panic when the water heater dies (because youve budgeted for home repair)?
The key to starting a budget for yourself or your family is knowing the difference between discretionary and non-discretionary spending.
Non-discretionary spending is what you MUST spend each month to keep a roof over your head, the lights on, and food on the table. Housing is usually the largest chunk of everybodys non-discretionary spending. And while we are less able to change non-discretionary spending over the short term, your decisions do play a major role in how much this is (i.e. do you really need a 5,000 square foot house for 4 people or 2 new leased cars every 3 years?)
Discretionary spending includes all the extras trips to Starbucks, entertainment, premium movie channels, vacations, etc. After youve paid all your bills, do you know where all your money goes?
To find out, start writing down what you spend. Carry a small notebook in your pocket or purse and write down the amount each time you make a purchase, either in cash, on a debit card or on your credit card. At the end of the month, total the amount in the notepad.
I know many people who have done this exercise over a few months and were completely surprised (and a bit depressed) about how much they were spending and how little they had to show for it. Spending a month on fancy coffee drinks, 0 on lunches out, or 0 on shoes and accessories that are hardly used is not uncommon. The people who Ive talked to who have done this exercise often begin to question many of their purchases because they start to think of other ways they could be spending their money and having it work for them.
Theres nothing wrong with spending a day on double latte if thats where you want your money to go. But you may decide that youd rather spend that 0 a year on a new couch, use it for that trip to Paris youve always wanted to take, or save it for next year because you know little Johnny is going need braces.
If you have spending or saving goals and really want to meet them, knowing where your money is really going is the best place to start.
ReadThe RestEntry..
Budget is not a four-letter word! And considering the challenging economy were in, it should be a word that is not only embraced, but spoken loudly and without embarrassment, trepidation or fear.
Why is a budget important? Because more likely than not, you are among the more than half of workers out there living paycheck to paycheck and wouldnt it be nice to know where your money is really going? Wouldnt it be nice to have more control over your hard earned dollars and save for retirement and pay off debt? And maybe even take a nice trip or two and not completely panic when the water heater dies (because youve budgeted for home repair)?
The key to starting a budget for yourself or your family is knowing the difference between discretionary and non-discretionary spending.
Non-discretionary spending is what you MUST spend each month to keep a roof over your head, the lights on, and food on the table. Housing is usually the largest chunk of everybodys non-discretionary spending. And while we are less able to change non-discretionary spending over the short term, your decisions do play a major role in how much this is (i.e. do you really need a 5,000 square foot house for 4 people or 2 new leased cars every 3 years?)
Discretionary spending includes all the extras trips to Starbucks, entertainment, premium movie channels, vacations, etc. After youve paid all your bills, do you know where all your money goes?
To find out, start writing down what you spend. Carry a small notebook in your pocket or purse and write down the amount each time you make a purchase, either in cash, on a debit card or on your credit card. At the end of the month, total the amount in the notepad.
I know many people who have done this exercise over a few months and were completely surprised (and a bit depressed) about how much they were spending and how little they had to show for it. Spending a month on fancy coffee drinks, 0 on lunches out, or 0 on shoes and accessories that are hardly used is not uncommon. The people who Ive talked to who have done this exercise often begin to question many of their purchases because they start to think of other ways they could be spending their money and having it work for them.
Theres nothing wrong with spending a day on double latte if thats where you want your money to go. But you may decide that youd rather spend that 0 a year on a new couch, use it for that trip to Paris youve always wanted to take, or save it for next year because you know little Johnny is going need braces.
If you have spending or saving goals and really want to meet them, knowing where your money is really going is the best place to start.
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