Science & Mathematics Time to test your greed

[Simple Jack]

That's a nice dining table. A tad expensive - but nice.

You gotta eat

 

[Poseidon]

It depends on the safety net. Even if it's a 99% chance of 100 million and a 1% chance of absolutely nothing, vs 100% chance of 1 million, I'll take 1 million thanks.

If there was a "safety net" in the event that I miss out on 100 million, then I'd be willing to gamble.

99% chance of getting $100mil and you wouldn't take it? Not sherrif serious.....

For me I'd take the gamble for the 100mil. A million dollars would disappear quickly I feel, I'd also spend the rest of my life wondering if I gave away $99mil.

 

[Schauermann]

Jump of a bridge to avoid making the wrong decision...


Ps Perhaps after taking the gamble. But really bad question. Impossible to answer for me...

 

[Jmac2225]

All depends on my relative success when the options presented. Right now I would take the million pay out my mortgage buy a new car go on a holiday and invest the 500k left over and call it quits.

In 10-15 years if I was presented with the same opportunity (assuming life goes to plan) I will hopefully have achieved all this and be relatively well off financially. In this case I would flip the coin.

I'd back people who make 100k + a year would be much more likely to flip the coin than people earning 50k or less.

 

[dales.girl38]

I would take the $1m. Coins hate me..

 

[Bunk Moreland]

Would take the million without a second’s hesitation. Buy a nice comfortable house, a nice car plus another one to restore, and invest the rest (prob 300k or so) in the best business opportunity I can find or come up with. That’s a very good start-up fund.

In ten years the business will be flying and I’d just sell it, or pay someone to run it while I scoot around the world doing whatever I want.

The thing about the $100m is the alternative, where you don’t win, is pretty bad. People think “oh I’d be no worse of so it’s not too bad”... but the mind doesn’t work like that... it would eat you up for the rest of your life... “I was so, so , so close to having a completely different life”... you’d just wind up as one of those sad sacks leaning on the bar dribbling beer and crying about what might have been. No thanks.

 

[liam_13]

1 million, at this stage of my life each and every time.

-Would allow me to live out the remainder of my uni degree renting a nice house, and not having to worry about budgeting for food/utilities/internet

-Would allow me to work less during summer, and allow me to concentrate on doing my work placements

-Would allow me to buy a reliable, insured car that gets me to my house from uni and vice versa

-Would allow me to enjoy myself a bit more during the rest of my degree

-Would give me some cash to start myself off once I've completed my degree, and possibly get me started somewhere else (UK or New Zealand initially) for the work and life experience

-And would still have a bit to put into an interest account for future expenses (future home, future holidays, future kids etc)

Say in 30 years time, when my kid/s have moved out, and I'm already financially set, I might hesitate and think about taking the $100mil, but by that time you don't need it anyway and the $1mil would do just fine.

 

[Bunk Moreland]

The thing about $1m is, despite what a lot of people say, it’s definitely life-changing for most people.

It allows you to easily buy a very comfortable home in this country. That eliminates your single biggest living expense (mortgage / rent) for the rest of your life. A hell of a lot of people are chained to jobs in order to pay mortgages.

It opens up a massive amount of freedom re your the direction you may wish to take in your career and your life.

 

[I bleed Blue]

Would take the million without a second’s hesitation. Buy a nice comfortable house, a nice car plus another one to restore, and invest the rest (prob 300k or so) in the best business opportunity I can find or come up with. That’s a very good start-up fund.

In ten years the business will be flying and I’d just sell it, or pay someone to run it while I scoot around the world doing whatever I want.

The thing about the $100m is the alternative, where you don’t win, is pretty bad. People think “oh I’d be no worse of so it’s not too bad”... but the mind doesn’t work like that... it would eat you up for the rest of your life... “I was so, so , so close to having a completely different life”... you’d just wind up as one of those sad sacks leaning on the bar dribbling beer and crying about what might have been. No thanks.

90% of businesses fail.

50/50 are much better odds.

Here is an alternative to your sad sack story. You win the 100 Mil. Life is awsome. The end.

 

[vealesy]

100m every time.

If theres a small risk between buying everyone you know a mansion or a dingy or nothing, you go for the mansion. Every. Single. Time.

 

[Bunk Moreland]

90% of businesses fail.

50/50 are much better odds.

Here is an alternative to your sad sack story. You win the 100 Mil. Life is awsome. The end.

Not businesses where the owners have significant start-up capital and plenty of time and money to plan things properly.

It’s not a direct comparison, you have absolutely zero control over the 50/50 $100m.

 

[I bleed Blue]

Not businesses where the owners have significant start-up capital and plenty of time and money to plan things properly.

It’s not a direct comparison, you have absolutely zero control over the 50/50 $100m.

Yes those businesses too.

100m every time.

If theres a small risk between buying everyone you know a mansion or a dingy or nothing, you go for the mansion. Every. Single. Time.

This.

No guts, no glory.























*Too bad we will never get this choice in real life

 

[SugarShane]

$1 Million would set me up pretty well straight away. Pay off the mortgage. Buy the Mrs a new car. Then you're set. Everything else you earn is in the black.

 

[Bunk Moreland]

Yes those businesses too.

No, not actually.

I’m well aware of the “90% of businesses fail” cliché. It’s more a myth than a fact. I’d like to see some actual stats to back it up, because nobody ever has any.

Business success or failure (which aren’t black and white concepts anyway) depends on a shitload of things – the industry, the economic conditions, the planning and research done by the owners, the ability of the owners to absorb initial losses, the execution of the plan, level of funding support, etc etc... given a few hundred grand and some time to plan and research properly, I’m more than confident I’d be able to find something that could work for me in the medium to long term. More confident than 50%, that’s for sure.

That's the road i'd be taking anyway.

 

[treefingers]

I would defaintly have a 50/50 crack at $100 mil.

Would you really though? Even though you say it now I bet if the opportunity ever arose most people would change their mind and take the sure thing.

 

[Lensen]

Yep. $1m would not mean never working again. I'd lose and it would eat me up thinking I could have had $1m but it's the right choice, mathematically. Of course, if it was $10m or coin flip $100m and I'd take the $10m as that is enough to set me up for life.

bankroll management bro

you basically already have the $1 million in your pocket. If your net worth is ~$1.1 million, its terrible bankroll management to put $1 mill on a even money chance even if you are getting 99-1 odds

 

[Nothing]

Would you really though? Even though you say it now I bet if the opportunity ever arose most people would change their mind and take the sure thing.

Mathematically, it's the right option. You need to make financial decisions based on maths not emotion, otherwise they are not financial decisions. Conversely if it was a 1% chance to win $100m or a guaranteed $1m, I would take the $1m. Any percentage above that and you are better off taking your chances.

I'm surprised at how far people think $1m will go, especially those who are talking about buying a home with it.

 

[Nothing]

bankroll management bro

you basically already have the $1 million in your pocket. If your net worth is ~$1.1 million, its terrible bankroll management to put $1 mill on a even money chance even if you are getting 99-1 odds

What would Kelly suggest? You should bet ~50% of your BR on that event. In saying that, I guess you need to consider what your BR is though. Either way, for mine it would be take the coin flip under that scenario.

 

[Lensen]

What would Kelly suggest? You should bet ~50% of your BR on that event. In saying that, I guess you need to consider what your BR is though. Either way, for mine it would be take the coin flip under that scenario.

sorry, i was meaning if the $1.1mill net worth was inclusive of the $1mill you effectively now have. yeah, if you're worth $5mill + you'd take the +EV bet but in most of our positions I'd suggest its just poor bankroll management

 

[I bleed Blue]

Would you really though? Even though you say it now I bet if the opportunity ever arose most people would change their mind and take the sure thing.

Yes I really would.

 

[Nothing]

sorry, i was meaning if the $1.1mill net worth was inclusive of the $1mill you effectively now have. yeah, if you're worth $5mill + you'd take the +EV bet but in most of our positions I'd suggest its just poor bankroll management

I got that. If your net worth is more than $1m currently (or around that) add the $1m guaranteed and you should be willing to risk half that ($1m) to have a 50% chance of $100m, according to Kelly. You raise an interesting (and valid) point.

 

[Andre]

100 Million definitely. $1m would be nice. It'd get a good house, car, holiday, some material goods, but after that you'd have not much left to invest. So I'd still be working another 20 - 30 years - just in a nicer house and with a nicer car. 100 million and I'd switch to working part time (at 40 I'd be bored going from working in IT to vegging out full time - but around 10 hours a week would be ideal) and have a huge house (costing 2 - 5 mil), holiday house, multiple nice cars, distribute some to friends and family and still have more than half left to invest to life a massively upgraded lifestyle till I die without touching the capital.

Though given the chance if offered the deal I'd ask a billionaire to go that if I get $0 they'd give me a million, and if I get $100 mil I'd give them $5 mil. That's a massively stacked in their favour deal financially that'd ensure you'd walk away with something good no matter what though.

 

[Bunk Moreland]

Mathematically, it's the right option. You need to make financial decisions based on maths not emotion, otherwise they are not financial decisions. Conversely if it was a 1% chance to win $100m or a guaranteed $1m, I would take the $1m. Any percentage above that and you are better off taking your chances.

I'm surprised at how far people think $1m will go, especially those who are talking about buying a home with it.

Except this isn’t a “financial decision”. We’re not talking about an investment decision here. You can’t influence the outcome through good management or hedging your position. It’s pure dumb luck, a coin toss. You wouldn’t approach it as you would any other financial decision, where you have some control over the outcome.

I think any rational person would take the sure thing and the known outcome. It’d depend on your own circumstances etc as well of course - $1m would change some peoples’ lives, for others it’d just be another mil.

And if you can’t find a very comfortable home in any Australian city from under, $1m, suffice to say you have expensive tastes.

 

[Lensen]

Except this isn’t a “financial decision”. We’re not talking about an investment decision here. You can’t influence the outcome through good management or hedging your position. It’s pure dumb luck, a coin toss. You wouldn’t approach it as you would any other financial decision, where you have some control over the outcome.

oh, it's still an investment decision. you just know the probabilities of success upfront rather than having to estimate them. the issue is that expected value is not the only mathematical input to put into the decision, you have to consider bankroll management (or the equivalent investment term) as well

 

[Kcrack]

Would take the million to be safe. Buy house, retire, live it up.