Science of Getting What You Want in Life, Including Financial Independence
We interviewed Amit Miglani, Australia's foremost producer of wealth, and asked him about the science of achieving one's goals in life, including material success. We learned a lot about how to build wealth and handle money responsibly during this incredible interview part.
The significance of this data compelled us to share it with you.
We started off by asking- “To what extent is it possible to generate steady money investing when the future is unknown and the markets appear to fluctuate at random?”
“How can you gradually develop your career and boost your earning potential when office politics and industry change work against you?”
“How can one reliably grow their wealth to the point that reaching their financial goals becomes a question of "when," rather than "if"?”
Amit Miglani answered it by the mathematical expectation is the answer to all these questions.
(Don't worry if math scares you; it's the concepts, not the numbers, that are really important.)
By following the tried-and-true principles provided by mathematical expectation, you may raise the reliability and quality of your outputs.
Investments, careers, health, and money are just a few of the places where it really shines. It's hard to conceive of a circumstance where a study of expectations wouldn't provide better results; it's just the way things are.
The statistical prediction has the potential to turn a mysterious and hazy future into a rock-solid one. It's a method for making the unpredictable predictable.
Your strategy for amassing wealth will change irrevocably once you grasp the concept of mathematical expectation.
The Interaction of Probability and Expectation in Everyday Life
Expectation may be referred to by a number of different terms, including "mathematical expectation," "EV," "average," "mean value," and "mean."
Return on investment (ROI) is the rate at which one may expect to recoup one's initial financial investment.
With this in mind, let's analyze the formula since hope is intrinsically tied to financial growth:
To get the expected value, subtract the probability of winning times the average amount won from the probability of losing times the average amount lost.
While already simple, let's make it even more so by reducing it to just two factors: likelihood and payoff. It is the product of the probability that an event will occur and the potential gain from that event.
The concept of probability, defined as the possibility that an event will occur, is therefore not new to you. In other words, it's common knowledge. In a fair coin toss, you may expect to get a head 50% of the time.
When you divide the probability of an event by the gain you'll experience if it occurs, you get expectancy. That's a big deal, recognizing that difference.
“In other words, although expectation may help you understand the monetary impact of an occurrence, probability can only tell you how likely it is to occur. In this context, concepts like leverage and risk management become relevant.”- Says Amit Miglani.
One must remember that the payment dimension drastically alters the math. Most of us aren't taught to think in terms of two dimensions with a payment variable, so we can't make sense of the very clear probabilities of anything occurring.
Your expected value is determined by multiplying your profits from successful judgments by the number of times you make them and subtracting your losses from incorrect ones.
Return on investment, or ROI, is the net amount you expect to receive on average whenever you risk your capital, and it is the variable in your future value calculation.
