Does luck play a role in getting rich?

Luck in the financial world.

It’s a strong word Money, isn't it? King Alyattes of Lydia, now part of Turkey, is thought to have created the first money, an official currency in 600 BC. We do crazy stuff with them if we have some. Make decisions based on our own unique experiences. But we cannot always do what we’re supposed to. With almost 20 and 50 years of experience in the modern financial system, we are not convinced about what it’s right and how to invest and spend them. Every decision is barely justified. People can be misinformed, manipulated, be bad at math or nice marketing got them. Not intelligence, education, or sophistication can ease the burden of growing them. So we need to know that luck and risk are siblings in the financial world. Why someone would ask? Does luck play a role in getting rich? Let me tell a story now. It’s about Bill Gates. He was lucky enough to attend a high school called Lakeside School that in 1968 used the proceeds from its annual rummage sale to lease a computer. Most university graduate schools in the USA did not have a computer anywhere as Bill Gates had access to in the 8 grade. Only 300 of them had this access including his classmate Paul Allen. So only One in a million high-school-age students had this luck in those times. As he recalled in a speech to graduating class of 2005… “If there had been no Lakeside, there would have been no Microsoft.” Ok seems not luckily enough? We go further along with Bill Gates and Paul Allen. In that high school was another genius computer child called Kent Evans. It was as skilled with computers as Gates and Allen maybe even better. What happened to him? Why is it not a Microsoft partner? It’s not because he died in a mountaineering accident before he graduated high school. He experienced a million risks by never getting to finish what his mind would have wanted. The same force makes one billionaire and another vanish in heaven. Based on this, luck can be guided by forces other than individual effort.

Thus we are all in a game with seven billion other people and infinite moving parts. The actions outside of our control can decide the invisible fate. For every lucky one is another one who was just as skilled and driven but ended up on the other side. Everyone sees success, but not the 100 ideas and attempts that failed. If we read the biographies of successful people, we’ll see how often they failed, dusted themselves off, and tried again. They aren’t stopped by high walls or obstacles. They survived until they made a way.

So many actually think luck doesn’t play a role in financial success or getting rich. Wrong! Few people make financial decisions purely with a spreadsheet. They make them in a company meeting or a business dinner. Places where personal history, our own unique view of the world, ego, pride, marketing, and odd incentives are scrambled together into a narrative that works for us. Along with the cover of financial magazines which doesn’t celebrate poor investors who made good decisions but happened to experience bad luck. They celebrate rich investors who made it. Almost the same coin landed differently. But the dangerous part is that we all want to know what works and what doesn’t with money. What strategies? How to get rich? How do not be poor? Does luck play a role in getting rich? With a magic wand, we would find out exactly what proportion of these was caused by actions that are repeatable, versus the role of random luck. Identifying these would be an unbearable task. Our brains are not prepared to face many difficult answers and nuances. What is the lesson then here? Simple put luck is always an invisible force in the world of money. The difficulty in identifying what is luck and what is hard work or skill is one of the biggest problems to understand how to gain and manage money. But in the end, we should define that not all success is due to hard work, and not all poverty is due to laziness. Judging nations or people based on this is easy and not the damn reality. It’s simple to only study specific individuals that “made it”, the billionaires, the CEOs. The more we go in that direction the more we go away from the right answers and we cannot apply those lessons to our own life. Remember always results minus expectations means joy. Therefore the best strategy isn’t necessarily about earning the highest returns, because the highest returns tend to be one-off hits that can’t be repeated. It’s about earning good returns that we can stick with and which can be repeated for the longest period of time. And if anyone would ask me “to summarize money success” or if luck plays a role in getting rich? I would sincerely say yes. It’s survival luck. Not “growth” “brains” or “insight”.

This article is not a recommendation to invest in anything. Each individual’s situation is unique, so a qualified professional should always be consulted before making any financial decisions. Any references to past performance, future projections, and statistical forecasts are no guarantee of future returns and performance. Hence, anyone acting based on this information does on his/her own discretion.