Ready For Financial Achievement

Oct. 10, 2012 - PRLog -- When I was in my early 20s, I was told by a very wealthy man and leading entrepreneur that until we can handle a gain or loss of $10 million dollars with complete equanimity, we cannot truly call ourselves decamillionaires. I did not quite grasp his insightful message at the time, but now, after many more years of financial experience, I have come to understood what his savvy financial wisdom meant. What he was teaching me was a general rule of human behavior, - which I now have termed the 10 percent rule.

We can handle fluctuations of approximately 10 percent in our net worth with little or no emotional reactions and no deviations from our financial wealth building strategies. But once we have volatilities, or gains and losses that exceed the 10 percent rule, we are vulnerable to foolish emotional reactions and strategic deviations. To give a clearer example of this 10 percent rule, imagine the following age-evolving scenario:

If we are 20 years of age and we have a net worth of $1,000 and we gained or lost $400, we would probably feel elated or depressed and deviate from our financial strategy.

If we are 30 years of age and we have a net worth of $10,000 and we gained or lost $4,000, we would probably feel elated or depressed and deviate from our financial strategy.

If we are 40 years of age and we have a net worth of $100,000 and we gained or lost $40,000, we would probably feel elated or depressed and deviate from our financial strategy.

If we are 50 years of age and we have a net worth of $1,000,000 and we gained or lost $400,000, we would probably feel elated or depressed and deviate from our financial strategy.

If we are 60 years of age and we have a net worth of $10,000,000 and we gained or lost $4,000,000, we would probably feel elated or depressed and deviate from our financial strategy.

If we are 70 years of age and we have a net worth of $100,000,000 and we gained or lost $40,000,000, we would probably feel elated or depressed and deviate from our financial strategy.

If we are 80 years of age and we have a net worth of $1,000,000,000 and we gained or lost $400,000,000, we would probably feel elated or depressed and deviate from our financial strategy.

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