10th April 2024
There’s nothing wrong with taking some risks, in your career or with your money. There is no reward if you take no chances.
But there are certain risks that are avoidable and unnecessary depending on your circumstances.
Warren Buffett once gave a talk to a group of MBA students at the University of Maryland.
A student asked him to name some common errors successful people make with their money.
Buffett told the class:
“Anyone who has become rich twice is dumb.
Why would you risk what you need and have for what you don’t need?
If you are already rich, there is no upside to taking on a lot more risk, but there is disgrace on the downside.
The problem is making money and keeping money are two very different skill sets.
It can be difficult to transition from a mindset of risk-taking to do-no-harm.
The good news is while there are numerous ways to build wealth, there are just a handful of ways to screw it all up:
#Placing your trust in the wrong person or organization.
#Taking too much risk.
#Holding concentrated positions.
#Lacking sufficient diversification.
#Using too much leverage.
#Investing in things that sound too good to be true.
#Having unrealistic return expectations.
Unfortunately, an insatiable desire for more makes it difficult to avoid these pitfalls.
In our business, we see it happening regularly with clients & investors falling into the trap of easy money & high returns in the short term.
But as far as we know, the only way to make money is to keep things simple, consult an advisor, invest in areas you understand, be disciplined, have clear financial goals & let compounding do the job in the long term.
If you have no idea how much is enough, you’ll never be satisfied with what you have.
Don’t try to get rich twice & stay blessed forever.