J.C.’s Money Blog

One reason why I decided to quit my corporate job, is that I have a valuable asset, which I am not taking advantage of. This asset is risk tolerance.

I work at a huge, stable global corporation. The risk that my company will not send me my paycheck each month is essentially zero. My paycheck is ensured through corporate stability.

If you believe in mostly efficient markets, like I do, then you also believe I have to pay for this insurance some how. If another company wanted to hire me for the same position, they would have to offer me something better than what I have now. If I weren’t confident in the prospects of the company, I would expect at least higher compensation now.

This is just like a credit card company, they will give credit cards out to less credit-worthy people, but only at a higher interest rate. The credit card company must be compensated for the higher risk.

I am a young, able-bodied, unmarried, childless guy with virtually no financial obligations. I have a decent emergency savings fund, and no debt. The worst that could happen to me is that I temporarily have to find a job as a bartender or something to pay my minimal bills.

So why should I risk the stability of my corporate check each month?

Because I am paying for insurance that I don’t need.

There is one major hitch. In general, if you want to seek better returns you have to increase the risk you are willing to take. However, the reverse is in no way guaranteed. Simply taking on more risk does not necessarily translate into better returns, it only gives you the potential.

So, lets see if some risk taking pays off in the end…