30 Aug 2025 2 min read Shorts

Choosing Your Path to Wealth

A risk‑adjusted look at jobs, startups, and investing

I keep meeting well‑settled professionals itching to quit and start up. A friend just raised a round. A neighbor had a life‑changing exit. Another made a fortune from full‑time investing. These stories are powerful triggers, but they’re tilted by hidden survivorship bias.

So I decided to compare the different paths to wealth — jobs, entrepreneurship, investing, trading — to reveal their actual risks and returns.

The Nature of Risk

We first list the different paths and rank them on their success rate, returns, effort and capital required.

Ranked by:
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The True Picture

Raw returns tell only half the story. The fuller picture comes from risk‑adjusted comparisons — how much outcome you get per unit of risk. Here, I use a simple model to compute three relative metrics for each path: total risk, expected value (EV), and risk‑adjusted return (Sharpe ratio). These scores are relative, not absolute.

When expected value (EV) and total risk are plotted, patterns emerge. Total risk sits on the x‑axis, expected returns on the y‑axis, and the bubble size denotes risk‑adjusted return — how much return you earn per unit of risk. Larger bubbles indicate a better risk‑reward payoff.

Conclusions & Actions

Job: Low Risk, Reliable Payoff

The steady paycheck may look boring, but its predictability is most powerful — especially when you channel the savings into broad index funds or PPF over decades. For most people, this combo dominates on a risk‑adjusted basis, and crucially, the downside is bounded—setbacks are recoverable; there are no blow‑ups.

What to do: Max your savings rate, invest in index or direct mutual funds; upgrade career skills to increase salary.

Entrepreneurship: High Upside, Low Success Rates

Startups offer the biggest potential outcomes and the highest failure rates. Visible winners are the exception, not the rule. It’s a very satisfying path if you have passion and an edge —certainly not as a guaranteed wealth-creation strategy.

What to do: Work on a specific problem area; find a co‑founder; validate cheaply; iterate.

Angel Investing: Passion Activity, Windfall Unlikely

If you love working with founders and products, angel investing can be very rewarding. But as a wealth strategy, the base rates are harsh — most angels and VC funds underperform simple index funds.

What to do: Invest only what you can lose; spread your bets; expect long holding periods and illiquidity.

Index & Long‑Term Investing: Dependable Compounding

Broad, low‑cost index funds and patient diversification score well on both EV and risk‑adjusted return — particularly when funded by regular savings, windfall or inherited capital.

What to do: Use SIPs, prefer low fees, stay the course through market cycles instead of timing.

Day trading & F&O: Poor Odds

Leverage, costs, and base‑rate failure make this the worst path on a risk‑adjusted basis. Most traders lose money.

What to do: Avoid completely, it is not worth it.