Investing is a long-term game.
Your Goal #1 is to have enough money so you don't have to worry about it. That means the return generated on your assets covers your expenses and lifestyle. Your number can be $1M or $100M, depending on your ambitions.
You want to achieve this goal as quickly as possible.
Your Goal #2 is to protect and grow what you have already built. You can do what you love without having to work for money. You can focus on bigger ventures. You have the freedom to choose.
Depending on which stage of the RPG Life you're playing, your strategy would be different.
To achieve goal #1 faster, you need to either increase your income, return on capital invested, or both. To do it, you need to have:
- Focus
- Concentration
- Be willing to take risks
These are the rules.
If you want to make more money, you need to be laser-focused - learn new skills, grow your business, build value and increase income.
If you are investing, you must take more concentrated bets with asymmetric risk-return payouts.
High returns (on both capital and time) come with risk. There is always a chance that after spending a lot of time on your business, it won't fly. Or you can also lose your high-risk investment.
That is part of the Game.
We are paid for taking risks. And very few are prepared to do it.
After you achieve goal #1, your strategy is almost opposite. It is about:
- Diversification
- Consistency of returns
- Manageable risk
You want to compound your capital and protect it from adverse market events.
In this post, I will discuss different investment strategies and styles and explain their meaning. However, you need to remember that there is no right or wrong strategy; it very much depends on your current stage and your desired outcome.
Investments that work well for some can be suicide missions for others. I see people make this mistake often. They get into investments they don't understand or that don't suit their needs. This always ends in disappointment and sometimes in disaster.
If you don't understand it, don't invest in it!
Imagine driving a car from London to Monaco. You want to get there as soon as you can to enjoy the sun and turquoise sea of the French Riviera. You want to speed up. But if you drive too fast and are not careful, you can get into an accident and wreck your car. It's all about balance - speed, skill and how good of a driver you are.
So, now let's talk about investment strategies and styles.
Some - you would know well. Others, probably not so much.
Again, think about it as a racing car. Depending on whether it's a race track or a trail rally, you need to fine-tune it differently and adapt your driving style.
Let's dive in.
