Secrets of the Rich _ 05
Secret 05
They’re Not Crazy Diversified
Here’s another secret of the rich: it’s hard to hold too many baskets!
Throughout the years there’s been this false impression that the more diversified you are the safer your wealth is. This entire premise is false.
Why? Money needs to be overlooked, it needs to circulate, rotate, redistribute and you can’t be a master of that many trades.
Rich people on average have their earnings split into 3 separate wealth pools, in some very special cases, a maximum of 5.
The most successful entrepreneur of our time, Elon Musk is barely able to keep 4 companies going, without any other backup plan, because it would require too much of his time.
The richest man in the world, has 3, amazon, blue origin and more recently the Washington post – which to be honest was more like a passion project.
Why don’t rich people diversify more? Simply put, it’s because in order for something to perform incredibly well in the market it needs professional oversight. Yes, some people have successfully hired others to take over for them, but that only happens in low volatility industries.
When you know you’re the best CEO for the company that you built, you have the vision where it should go, it’s like shooting your company in the foot by bringing someone else. See what happened with Apple, when they brought in the CEO from Pepsi and fired Steve.
The most common segments of diversification are as follows:
- Business
- Real estate & Land
- Stocks & Funds
