Uncle points and ruins
A man lives with a small and happy family in a remote mountainous region. He moved to an even more remote place so that it is safe from animals and other sinister humans. Because of this he has to cross a treacherous path every day for him to go be able to work and earn money. The path is so dangerous that there is a 1% chance that he might fall into the abyss and not returning to his family. He saves about 1 silver coin everyday, how many coins will he have by the end of the year of doing same activity of crossing the dangerous path.
Is it 365 coins? No, chances are high that he won’t be alive, 1% risk is cumulative. He should be extremely lucky to survive 100 days, leave alone a year of time. That is the uncle point, he has ruined himself not knowing the risk he was taking. I came to know about this from Nassim Nicholas Taleb’s article “The logic of risk taking”. Seemingly harmless or negligible risk will materialise over time with repeated exposure.
How is this applicable to a working individual? If you are a person who takes risks in many forms like not eating healthy (health risk), not exercising enough (health risk), smokes or drinks a lot (health & finance risk), is not adequately insured (finance risk), not saving enough, splurging (finance risk), taking career lightly, not upskilling (career risk), working in a volatile job market (career, finance risk) then it is easy to hit an uncle point and ruin will follow and many times you may take your family down with you. Many risks taken over a period of time will compound and hit you really hard.
