Is there a formula for success? Yes—I’ve written about formulas, such as how to earn your first 10 million in life.

In all my advice, there’s basically one principle that runs through “success”: “Make steady progress; then you just need time—success is almost inevitable. Not just ‘almost inevitable’; most ordinary people can achieve it as well.”

But many people don’t see it that way. They think success is just good luck, so as long as you take enough risks, you’ll always succeed. (Some even think you don’t need to take risks at all—just act foolishly as if “whatever is destined will happen,” and wait for the heavens to feed you.) This is ridiculous.

Success of course requires taking risks. Great success requires great risks, but risks are not blind recklessness. Otherwise, people at the bottom lose their principal, end up owing a pile of debts, and then blame society for unfairness—like claiming that people at the bottom have no right to try, no right to make mistakes.

In investing, there’s a principle: “control the maximum drawdown.” Because if the short-term drawdown is too large, it will eat away at long-term compounded returns.

Life is the same. To make every success stand on the shoulders of the last success, you need to both keep taking ongoing risks and also prevent your social position from sliding—so you don’t fall back or return to poverty.

A startup founder once came to me and asked how to buy Bitcoin. I asked him a couple of questions, and found out he had basically no other asset allocation—he was planning to go all in on Bitcoin, and his startup’s profits weren’t stable.

I asked him: if Bitcoin doesn’t go up for 5 years, and your startup’s income also declines, how will you pay your employees?

He apparently had never thought about it at all. He said, “How could Bitcoin not go up for 5 years?”

This question is extremely typical: for a person, if in any stage of their life they take more than one major risk, then their life becomes a high-stakes gamble. Even if this person eventually achieves financial freedom, they still aren’t someone worth copying—or even worth envying—because you only happened not to see his body.

Life is like leveling up against monsters. You have to fight them one by one to move upward. Once you defeat one, you can move on to the next. All other forces should be used to stock up on supplies, to support logistics—not to open multiple battlefields at the same time that you’re not fully sure about.

Why don’t I recommend that civil servants quit their jobs to start a business, or that anyone who’s working a job do full-time investing? Because no matter what tier you’re in right now, you must first make sure your tier doesn’t decline. Only the remaining part can be used to take risks.

You could be a civil servant with a side hustle. Wait until your side income stabilizes and greatly surpasses your main job before considering quitting.

You could also be a business owner whose business structure and revenue are already stable—someone investing in risky assets—without fear of being trapped, and without needing to be forced to sell assets at the wrong time.

Or you could be a worker who has stable employment income while also investing in risky assets. All of these paths can lead to financial freedom.

I achieved financial freedom through investing before I became a boss—who says you have to start a business in order to achieve financial freedom?

Likewise, you can also completely avoid investing in risky assets. I know many traditional bosses who don’t understand investing at all and only know how to save money, yet they can still reach financial freedom through entrepreneurship.

But you absolutely cannot, under conditions where your job is unstable or your entrepreneurship income is unstable, invest a high proportion of your money in risky assets. Because your downside has no floor. Once an extreme risk happens, it’s easy to fall into a negative spiral: your risky assets get trapped, you become anxious, you think about nothing but how things went wrong and lose focus on your business, business income gets worse and worse, you can’t cover the startup costs, and you end up having to sell assets—until you end up failing on both fronts.

The problem isn’t that you’re incompetent, that your starting point is low, or that you’re unlucky. The problem is that you don’t know how to control the proportion of risk. Risk—can only be one at a time. If things don’t go as planned, the other stable foundations must kick in. Then you can take the next risk. You shouldn’t let everything burn at once and trigger a chain reaction.

So if you’re starting a business and your operations aren’t stable, or you don’t have a job, then you can only put most of your money into stable, interest-earning assets. I don’t care whether you’re a full-time investor—in my view, “full-time investing” isn’t really a job; it’s basically like having no job.

And only if you have a stable job, or your startup has had some success—with steady customers, stable operations, and a stable structure—then you’re qualified to pursue the next risk. For example, by allocating a high proportion of risky assets to achieve financial freedom.

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