One of the most simple things a budding investor learns when first starting out is that failure is not failure, but another try at success. When we are talking about small amounts of money of $350 dollars or less, we assess investment opportunities, not for risk so much as for possible return.
Cheap investment opportunities are often high risk, but because the investment is so small, most investors can afford to attempt many of these high risk/high reward propositions. Playing the odds is a vital investment tool.
Lets say for example, you are assessing over 30 different investment opportunities. You conclude that 12 of them are worth trying. The risk is high, but if just one of them pans out, it will pay for all the failures and then some. This type of playing the odds is a way of guaranteeing success because the odds are in your favor when you are prepared to try many different cheap investment opportunities.
A quality investment is defined as any investment that has a high probability that you will get your money back. Putting your money in the bank for a return of 6% interest is a quality investment because you have no fear that your money won’t be there when you ask for it. However the return of 6% is not going to make you rich any time this year.
On the other hand, investing in 12 different opportunities of varying levels of rewards, the possibility of a real “out of the ball park winner” becomes high. So playing the odds is a way of controlling risk and controlling reward. Of course, what do you do when you find winning investments? You invest more for even bigger returns.