I used to loathe being an employee. I felt like I was always a slave to the whims of my employer. Exposed. So it was with great excitement that I started a business of my own. Yet, it took only a short period of time to realize that being your own boss carried it’s own perils. The buck stops with you. And so does the revenue. The master solution, I figured, was financial independence. But even now in half-retirement, I realize that risk abounds. Without a stable source of income, I could become a victim of the unforeseen. The unexpected. Thus, I have come to the conclusion that life is risk.
We can’t avoid it. Sure, you can try to minimize. We can risk mitigate. But the simple fact remains: Whenever there is choice, there are consequences. Some good. Some bad. It’s a roll of the dice.
The employee conundrum
We hem and haw about being employees. We feel tied down by the man, strapped to a desk. We are a victim of the worse type of risks. An unfair boss can radically change our job description. Hours can unfairly be restricted or expanded beyond our control. We can get fired. Often at will. Even if we are doing everything right.
We forget, however, that businesses take huge risks by employing us. They shell out all the costs of recruitment, hiring, and training. They may cover health insurance or other perks that can be costly. The worst that can happen to an employee is that they get fired. A business, however, is always at risk for destruction due to aggressive competitors, poor management, or a change in the market.
Being an employer is innately risky also. Life is risk.
Going it alone
I quickly found, that in medicine, I was much more likely to be able to have control of both my time and my cash flow by starting my own practice. This felt quite empowering. A lowering of risk, so to speak. There would be no boss telling me how much or when to work. No machinations by some administrator cutting my authority or threatening to fire me.
Sounds great. And it was. But suddenly I was taking on huge amounts of risk and responsibilities that I had never thought about. At the blink of an eye, it was my behind that was on the line if business dried up. Or if the hospital decided to refer patients to another provider, I had no clout to stand up and fight.
I now had employees. And health insurance to cover. And overhead. I had jumped out of one difficult situation and into another. Life is risk, and it didn’t just go away because I was my own boss.
Financial independence and (half) retire early
As the stress of practicing medicine and owning my own business started to wear on me, I made one last grasp to control the uncertainty in life. Financial independence is the ultimate risk management strategy. By securing my financial future, I could release myself from the bonds of employment, as well as the peril of owning my own business.
Nothing could touch me in financial independence. Except sequence of returns risk. Except a black or white swan event like a health scare. What if the market goes up? What if the stocks go down? Could a few bad rental market years dry up my cash flow?
Even in financial independence, there were still demons waiting behind every hidden corridor.
Life is risk. When there is choice, there is the possibility of choosing incorrectly. We love to think that we can make this risk disappear by changing our situation.
But we can’t.
We can risk mitigate. We can protect ourselves against the knowable and the forseeable. More importantly, we can make choices not out of fear but in keeping with our needs and beliefs. Those who enjoy being employees, and bask in what to them feels like a risk-free environment should continue.
Those who feel stuck under the yoke of the man, and need room to grow and breath, should start their own businesses.
And those who want the choice to do neither, but are comfortable with riding the tide (and risks) of their hard earned savings, should pursue financial independence and retire early.
“DocG” is a physician who blogs at DiverseFI.
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