When my team and I first talk with someone about their wealth strategy, we usually find they are interested in many different types of investments.
They may want to start a business, invest in real estate and do some stock trading. Our role is to help them narrow their options so they can focus on a single type of investment.
Some people become uncomfortable when I suggest focusing on a single type of investment. This may be because the only way they have been taught to reduce their risk is to have many types of investments. The idea behind this approach is that risk is reduced because the investments will go up and down at different times so overall there is “balance.”
While I’m all for reducing the downside, this approach also limits the upside. I would much rather limit my downside through education – focusing on a single investment type – and not limit my upside.
Or, they may be concerned it will limit their options and success.
Focusing on a single investment type in no way means limiting the number of options. Within any type of investment, there are hundreds, if not thousands, of options.
By focusing, it becomes clearer which investments will work in a wealth strategy and that contributes to the success of the wealth strategy.