One of the fascinating things I observe about human nature is the competing desires for both stability and excitement. We want safety but also something that’s feels a little bit daring—swimming with sharks, driving fast down a country road, starting our own business. In short, there’s a desire for a new adventure.
The same dynamic is in play with investing. I’ll listen to a person describe themselves as a conservative investor, afraid of volatility and risk, not wanting to think about their investments day-to-day, minute-by-minute. Then, the next thing out of their mouth will be:
“I’m really interested in buying bitcoin.”
“I just read about this new company that’s going public. It’s going to become the next goliath. I want to get in now.”
So, what are we to make of these competing ideas? First off, if you feel this way, it’s totally normal. Stability is what keeps us alive and in position to tackle life day-to-day. Excitement helps inspire us to grow. It provides the motivation to expand ourselves. So, in general, both add value to our lives. The real key to this balancing act is proportions. How much stability versus how much excitement.
It’s probably not sustainable to live a life of 100% thrills–gambling every last dollar; getting box seats to Bon Jovi (or Beyonce) before buying enough food for your family; buying a Ferrari instead of paying the mortgage. But, likewise, a life that’s void of any thrill may not feel satisfying. There’s the old adage, “you’ve got to live a little.“
So, when thinking about your portfolio, we believe the same philosophy applies. Just as everyone has their own risk tolerance for their personal life, everyone has their own risk tolerance for their financial life. We believe the vast majority of your portfolio should be comprised of more reliable assets that have a consistent track-record. Then, depending on your stomach, you can look to add some excitement around the edges. This allows you the best chance for financial success while also giving you the trill of possibilities with your more speculative assets.
If you’re not sure how to best decide the right mix for yourself, reach out. We can show you.
This material is provided as a courtesy and for educational purposes only. Please consult your investment professional, legal or tax advisor for specific information pertaining to your situation.