Luck’s Three Step Formula, and My $2,000,000 Mistake

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“To be ‘lucky’, you must build the skills you’ll need in order to ‘attract’ the luck you want.”

Luck is about attracting and then acting upon opportunities.  Though some people just seem to have all the luck, they have it because they act on opportunities when others do not.  Most people have a skewed vision of luck as a passive force, or coincidence.  Magic or not, there is a formula, that if implemented, luck will find you too.

So many seek luck while expecting unusual returns with little or no investment.  Although windfalls do occur from time to time, they never happen with regularity, and what is acquired usually disappears quickly.  I like to play craps in the casinos.  I like it because it’s the only game in the house where the excitement and camaraderie is contagious.  There have been times where I have been “lucky” and walked back to the cashier like a chipmunk with stuffed pockets, but if I’m honest, I’ve lost more than I’ve ever won.  Mathematically, it’s impossible to win in the long run.  People try to beat the house by betting more when they’re winning, and less, if at all, when the table is cold.  In all actuality however, superstition or not, the dice roll randomly and the odds are stacked in the houses favor.  It’s impossible to make a long-term living playing games in a casino (unless you work in or own the casino).

Another side of that type of luck for which people often hope, is where something will come into their life whether earned or not.  Many people wish they could somehow acquire a large sum of money so they can buy the things they want or not have to work anymore.  Others wish they were famous or had a better job, house, car, or whatever else.  Some wish for love.  The funny thing here is that these things seldom last long if the person who somehow acquired the windfall lacked the skill to earn or maintain it in the first place.  It’s common knowledge that most lotto winners go broke within a few short years of winning their large sums of money.  The problem is that they lack the knowledge of money needed to maintain it and make it grow.  They spend it, loose it in poor investments, or it’s taken from them in lawsuits.

Our conventional idea of luck is flawed.  We can’t expect to get something for nothing.  There are people who are lucky often and who actually do make miracles happen.  They follow a formula.  Luck requires three things; preparation, opportunity and action. 


Civil Rights activist Whitney Young Jr. is credited with the quotation: “It’s better to be prepared for an opportunity and not have one, than to have an opportunity and not be prepared.”  Preparation starts with goals and culminates in activity.  If you truly do want to be a star athlete, you’ll need to invest the time conditioning your muscles and reflexes and in building your skills.  The same is true with money.  If you want to be worth a lot (and keep it), you’ll first have to develop the skills and disciplines of wealth to attract it.  You need to start while the amounts are small.  For more on this, I’d suggest you read “The Richest Man in Babylon” By George S. Clason.  The book is worth far more than the price on the jacket.  The book is a classic collection of parables that teach how to attract more money and make it work for you.

The comparison can continue.  If you want to have a happy marriage and family life, that takes like investments of time and skillful effort as well.  The same goes for health.  We need to learn about the right foods and activities that will promote health.  The necessary skills can be acquired through practice and study.  When I decided that I wanted to teach, and to teach well; I had to eventually take the classes, emulate teachers I respected, and practice what I was learning.  Opportunities come when we’re prepared for them, when we’ve honed our abilities.    


In opportunity is inherent risk.  The luckiest of people risk regularly, but the risk is calculated.  They either have substantial experience with industries in which they invest their time and money, or they have trusted advisors who lead them in benign directions.  In addition, they don’t expect to get rich quickly.  Opportunities are around us everywhere.  Most people rarely see them because they’re not paying attention, fear stops them, or they procrastinate.  Procrastination is the biggest enemy which is why luck tends to favor those who act quickly.  Indecision is a personal demon that I struggle with.  Opportunities are like a breeze that can push your sail with the force needed to arrive at your destination.  The breeze often blows, but with no set destination (as I’ve struggled with before I began setting goals) you’ll lack the necessary direction to set your sail to lead you to your goal.  If you don’t trim the sail, you’ll not catch the breeze and in 5 years, you may be in a different place, but only where you’ve drifted.  


Luck takes action.  We need to act on opportunities that we find…and act quickly.  I appreciate my colleague Pam Chandler for supplying me with another great quotation, this one by Ben Franklin.  He said: “I am a great believer in luck, and I find the harder I work the more I have of it.”

To be “lucky”, you must build the skills you’ll need in order to “attract” the luck you want.  To build the skills, you’ll need to do the thing that you’re working toward.  That sounds backward, but it’s true.  You must join a credentialing program and teach…before you can become a teacher.  If you want financial independence, you need to put a portion of your income away (when you’re paid, not at the end of the month) every time you earn money.  It’s highly unlikely that you’ll become financially independent if you spend your whole paycheck every month.  Skills are built through the discipline of being responsible starting now, while the amounts are small.  Another way of building skills is through research.  Information can be found cheaply in books, in advice from respected people, and online resources available at our fingertips.  All we must do is search.  Be careful to not spend too much time here.  Research can turn into a drug that stalls forward motion.  The results come from action, so don’t search too long.  This is advice that I also need to take personally.  I like to spend hours researching.  Research is part of preparation, but action is the magic piece.  

A check to determine if what you’re planning to do is something worth going after can be found in a blog by Derek Sivers.  He says, do it if it makes you happy, if it’s smart in the long run and if it’s useful for others. I urge you to read the blog for more of an explanation.

My $2,000,000 Mistake

I’m working toward living more mindfully in the present, and part of that requires letting go of the past and to stop beating myself up.  One regret I have is harder than many to get over though.  I fully knew the consequences when I was in my early 20’s, but willfully ignored an opportunity that would have earned me over $2,000,000.  When I took my first corporate job, I took advantage of my company’s 401k match policy.  It was easy to do, because I hadn’t made so much money before and my money was skimmed off the top of my check before it even hit my account.  In a short time, I had accrued something close to $5000.  When I changed occupations, I failed to take advantage of the opportunity of reinvesting that money.  Instead, I paid the tax penalty and ended up spending it on things that seemed important at the time.  Worse than that, I no longer made regular investments.  It’s easy to say that, “It’s only a few grand.  What difference does it make?”  If I had reinvested that money into an IRA or something similar that was earning perhaps 6.5% annually, it would now be worth over $15,000.  If I left it there until retirement, it would be worth between $70,000-$130,000 depending on the rate of return (6.5-8%).  If I had continued investing around $500 per month (essentially a car payment), I would have likely had over $2,000,000 by retirement.  6.5% average return rate is a highly approachable number historically, and quite conservative.  If I had the money invested mostly in stocks that averaged a 10% return (Which is riskier, but possible especially with such a long term investment), I would have had over $4,000,000 by retirement.  Spending that $5000 was a big opportunity missed, and failing to continue investing when it was already a habit was a an even bigger…or even enormous missed opportunity. 

Starting over right now, having missed the past 18 years, the best I could hope for is between $400,000 and $600,000 investing the same amount at the same rate.  I would suggest that it’s still worth while.  Had I taken advantage of the opportunity I had to start investing 10% of my income back then, I’d be a lot further ahead today.  The point is not to focus on the regret, but instead to do what you can today with what you have available.  Opportunities pop up all the time.  I love the Ann Landers quotation: “Opportunities are usually disguised as hard work, so most people don’t recognize them.” 

The Formula for Luck

As follows is my best attempt at an equation for luck:

L = a²(o+p)



a=timely, consistent Action

o=Opportunities in which you can invest time, capital, etc.

p=your level Preparation

(…so, “Luck” equals the square of timely action over time, multiplied with the value of opportunities wisely invested in, added to your level of preparation.)

Luck starts with wisely and timely invested resources toward realistic, opportunities with the expectation of reasonable returns.  Again, luck isn’t a mysterious force reserved for a select few who just happen to always be “lucky”.  Luck instead is available to all of us as long as we’re open to preparing for, and acting on opportunities that pop up.


Quite honestly, you don’t need to be mindful of a formula.  All you really need to do is vividly visualize what you want, and then enthusiastically sniff out the trail in front of you that leads you there.  An outstanding book that should be on everyones list is “As a Man Thinketh“, a forgotten classic by James Allen.  The mind is like a garden, and your thoughts are like the seeds.  Your reality is what you think it to be.

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