Saturday, 19 January 2013

Hide and Diversify Your Wealth

If I could give two pieces of advice on investing, it would be the following: 
  1. hide your wealth
  2. diversify your wealth.

The first piece of advice is due to safety. If you save up money and go around telling people how great you are at saving money, the risk of theft only increases. I don't even recommend you tell family or friends about money you're saving. If you spouse knows, the payoffs from divorce are so much higher, which would tempt him or her. Just keep it to yourself and, better yet, pretend that you are poor. If snobs don't want to be friends with you because they don't want to associate with poor people, it's probably better that you didn't know them anyway.

The second rule of investment is you must diversify. In fact, when I think about it, the first and second rule are similar in that they exist due to lack of trust. If you hide your wealth, it is because you cannot trust people who will tempted to steal. If you diversify your wealth, it is because you cannot trust those people who hold your money to destroy your wealth either due to corruption or incompetence.

The two rules above help protect your wealth.

No comments: