Episode 177: Design a Risk System That Protects Your Investments, Retirement, and Financial Freedom (No Perfection Required)

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Are you holding back from your next investment move or sticking to your retirement goals because you’re concerned of being wrong?

Too many entrepreneurs and investors get stuck chasing “the right decision” instead of designing a system that lets them handle mistakes. In this episode, Jon Orr breaks down why avoiding failure limits your success—and how to rethink risk so you can move forward with confidence, even when things don’t go as planned.

Here’s what you’ll take away from this episode:

• A mindset shift that helps you embrace uncertainty instead of fearing it.
  
• Practical strategies to build a financial system that protects you when risks don’t pay off.
  
• How to spot and overcome the hidden biases—like loss aversion and sunk cost fallacy—that are sabotaging your decisions.

Stop waiting for certainty—press play now and learn how to build a system that succeeds even when you’re wrong.

Resources:

• Ready to take a deep dive and learn how to generate personal tax free cash flow from your corporation? Enroll in our FREE masterclass here. 
• Book a Discovery Call with Kyle to review your corporate (or personal) wealth strategy to help you overcome your current struggle and take the next step in your Canadian Wealth Building Journey!
• Discover which phase of wealth creation you are in. Take our quick assessment and you’ll receive a custom wealth-building pathway that matches your phase and learn our CRA compliant tax optimized strategies. Take that assessment here.
• Dig into our Ultimate Investment Book List
• Follow/Connect with us on social media for daily posts and conversations about business, finance, and investment on LinkedIn, Instagram, Facebook [Kyle’s Profile, Our Business Page], TikTok and TwitterX. 
  

Calling All Canadian Incorporated Business Owners & Investors:

Consider reaching out to Kyle if you’ve been…

• …taking a salary with a goal of stuffing RRSPs;
• …investing inside your corporation without a passive income tax minimization strategy;
• …letting a large sum of liquid assets sit in low interest earning savings accounts;
• …investing corporate dollars into GICs, dividend stocks/funds, or other investments attracting cordporate passive income taxes at greater than 50%; or,
• …wondering whether your current corporate wealth management strategy is optimal for your specific situation.

Achieving financial freedom in Canada takes more than just smart saving—it requires the right mindset and a system built to adapt when things don’t go as planned. Too often, Canadian entrepreneurs and investors fall into traps like loss aversion, sunk cost fallacy, and overconfidence bias, holding them back from seizing real opportunities for business growth and wealth building. In this episode, we break down how effective financial planning, risk management, and decision making—paired with strategies like RRSP optimization, corporate wealth planning, and tax-efficient investing—can help you design a Canadian wealth plan that supports your financial independence and early retirement strategy. Whether you’re navigating salary vs dividends in Canada, creating passive income, or choosing between real estate investing and renting, you’ll learn how to optimize your financial buckets, align your corporate structure, and set a clear financial vision. Plus, we explore estate planning, capital gains strategies, and retirement planning tools to build long-term wealth and protect your legacy.

Transcript:

All right, Canadian Well, secret seekers. This is an episode about risk and the mindset of risk. And it’s, it stems from a conversation we’ve had numerous times with our clients, with partners of ours. and it really comes down with this kind of mindset about this dichotomy between right and wrong. And the idea here is that.

people who are obsessed or striving for being right often take less risks than people who have a mindset that says I may be wrong and actually most likely I will be wrong but I am okay with being wrong because I now or I have a plan for what to do when I am wrong and I think that

That is the breakdown of kind of where this rant that I’m doing right now for you is to help you think about risk. This is coming off a meeting with, right away with our client and the client was trying to think about some of the moves they were making and they’re like, wanna make the, and you hear this a lot, I wanna make the right moves. I wanna go down the right pathway. I wanna make sure it’s right.

And I think the mindset of, again, being right and focusing on that is actually the wrong pathway, is that we don’t want to say which one is right. We wanna just say, what is our system? How are our systems designed to support us when we are wrong? Because we actually are going to be wrong. We’ve got so many overconfident people, and I think here’s where the crux comes from, or the actual.

underlying fear comes from obviously we don’t want to be wrong. There is loss aversion. Loss aversion basically says we fear wrong more than the value of winning, so we actually avoid risk.

You know, it comes from a very famous, very famous study with with coin flipping and petting on coin flips and in knowing that if I got paid for a dollar or I lost a dollar, we that coin flip, we’d have to earn more than a good chunk of of upside in order for just to offset the risk of losing the appropriate downside. We lose. We fear and it hurts more when we lose things that we feel like we’ve lost versus gained.

And that’s called loss aversion. It’s a bias that we all have. And I think that’s where this kind of like this mindset of like I wanna make sure I’m right comes from and just accepting the fact. And this is what this, my main message here is accept the fact that you are going to be wrong more times than you’re gonna be right. And if you accept that, you actually will be better off. You will be the bigger winner down the road because people who are focused on being right take less risks. This business owner,

didn’t want to move forward with a particular deal because you the deal wasn’t perfect. The deal wasn’t going to be you know. Well here’s the thing you don’t know if the deal is going to be a grand slam but it hit some checkboxes and there are some checkboxes that maybe didn’t didn’t get checked off but when they didn’t move forward and the reason they didn’t move forward was like I don’t want that to be a loser. I don’t know what we’re going to do here.

about if it’s a loser and that right there. like that part about not knowing what to do, like which means you didn’t design the deal to account for a cushion of safety or the margin of safety. And when we don’t have that, that will prevent us from knowing what to do when we’re wrong because like we are going to be wrong more than we are right. markets, investments, ideas, they don’t reward people who avoid being wrong. They avoid people who adapt.

and they avoid people who adapt quickly. So the question here isn’t, know, what do we, like, I don’t want to move forward because I may be wrong or I’m not gonna, this might not be the right move. It’s what are the moves to make when we are wrong and do I feel confident that I can make those moves in this type of margin of safety because we don’t want to make that work. Another kind of bias that we all hold that I think,

holds us back from taking appropriate risks or making appropriate risks is the sunk cost fallacy, which is basically throwing bad money after bad money and not knowing when to get out. And that’s the part about the system, right? So if I make a move in this way, so let’s say I invest in this stock on the stock market or in this ETF on the stock market, and I’m going to go in, even if I do go in with the assumption that I’m going to be wrong on this move.

then I have to know what is my moves to say, a deal with the wrongness that happens there. What is my stop loss? What is it gonna look like when to get out? Because when things do go wrong, and this is I think why people who are focused on being right more than the system have an issue with this is because when they have been wrong in the past, then they double down on the wrongness.

right? Because it’s like the sunk cost fallacy kicks in. I’ve already invested this much. I shouldn’t take my losses and walk away. Or I’ve already kind of gone down this road and now we have to just live with it for the rest of the year, two years or three years or five years. This property I’ve just got, it’s going to like work out. Like that mindset is I think tied to the people who are focused on making the right choices versus appropriate risk calculated choices or just know that they’re going to be wrong.

the sunk cost fallacy holds us back there. The other kind of fallacy here in bias, which is overconfidence bias, which is investors, business owners, alike overestimate their own intuition and underweight data, underweight conditions, underweight information that makes them change their mindset or their mind immediately. And that comes down to like, it’s very much paired with the sunk cost fallacy.

because we’ve got a saying here, which is basically, you can have strong beliefs or strong convictions, but just loosely hold them. And when we make that choice, I’m gonna go in with this deal right now, so I’m knowing that I’m gonna be wrong, I’m gonna make this deal, I have my backup plan, I have my system designed to support me when I go down this path, which is linked to your vision for making…

your financial plans come true, which is our stage one of our financial planning system. The overconfidence here is that we’re gonna move forward.

The overconfidence is here because I’ve got new information, I got new data that’s telling me that my old belief or my old conviction isn’t true anymore. And am I willing to pivot? Am I willing to make the choice? Like all of these ideas are really tied to risk and really tied to how we handle being wrong. I…

I flipped the mic on here to talk to you today about this because we see this so often with our clients. We see this often with the people that we talk to regularly. I’m sure you see this often with folks that you’re interacting with, your spouses, your loved ones, your family members, your children. Taking risks isn’t about say, I just don’t want to, what happens if this doesn’t go the way it is? Just assume it’s not and then plan for the.

plan for the worst case scenario. You know, that whole saying, like it comes down to this very common saying that we all say. It’s like plan, like hope for the best, plan for the worst. Like it is a true statement, but a lot of times in finance we don’t do this. In business we don’t, we may not be doing this.

One of the really important philosophies that I follow is also another common phrase around the same idea. It’s not maybe say directly related to risk in the way that most people use this, but I see it this way, is plans are useless, but planning is invaluable. And I think the act of thinking about your

vision for where you’re trying to go. Your act of stage two, is, you know, looking at your wealth, your wealth reservoir, making sure that you have access to liquidity, which is very much tied to how risky you can be. Stage three is optimizing your structures, you know, your different, your different accounts or tax situations or different ways to like position yourself to take advantage of different say, pieces that allow you to less pay less tax maybe or earn more income like.

that stage three is an essential component of a healthy wealth planning system and then your estate planning and your legacy planning is stage four. the planning work across the four stages is essential and if you can do the planning, the more planning time, why it’s so invaluable is if you can map it out, if you can look at this case and you look at this case, like oftentimes we don’t budget time.

in our day or our planning work for this, whether we’re a business owner or whether we’re an investor or an entrepreneur, planning time is so valuable. But we often think that, I didn’t do any actions today or I didn’t get this done today. So then it feels like you wasted your time. But the planning is the invaluable part because without the planning, without that stage one visionary work, then it really makes it hard to

take action. really makes it hard to get out of that mindset of being right. Just know that you’re going to be wrong.

It’s about being adaptable. And the people who succeed long term are those who build systems that can survive being wrong and move forward. And if you’re only betting on when you’re sure, you’re not betting enough because when you make those bets and you make enough of them, the winners outweigh the losers. And that’s why…

people who are holding back and only going in on when they know they’re right, they actually invest less. They make less sound financial decisions, whether in business, whether in life, they’re too concerned about being right. So instead of asking, this the right pathway or the right move or the right investment, instead ask, what will I do when it’s wrong and does that still make it a good deal?

What does it look like? What does my system look like to handle that scenario? And that’s the thinking that we do. And right now, this is the thinking that we’re trying to help our clients with when designing their financial systems and guide them along their pathway, guide them along the business deals they’re making, guide them along the investments they’re making, guide them along the structures they’re putting in place to optimize their goals. It’s not about being right. It’s just about what to do when you’re wrong.

If you wanna know more about the four stages that I outlined here in a healthy financial system, head on over to CanadianWellSecrets.com forward slash pathways. In there is a quick assessment. After you complete your assessment, we will email you a customized report that gives you an assessment of those four stages for you and also some next steps on what you can do to impact maximize your outcomes.

Canadian Wealth Secrets is an informative podcast that digs into the intricacies of building a robust portfolio, maximizing dividend returns, the nuances of real estate investment, and the complexities of business finance, while offering expert advice on wealth management, navigating capital gains tax, and understanding the role of financial institutions in personal finance.

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