Rule # 5
Remember about the barbell rule.
Keep an appropriate ratio in the portfolio between high risk and hedging projects.
If you’ve ever been to the gym, you’ve probably noticed that the same weight is applied to the barbell on two sides. Thanks to this, lifting the barbell we are sure that it will not overwhelm or crush us.
It’s the same in the world of investment. If the funds are invested only in high-risk instruments, there is a high risk of losing all money in spite of potential high profits. On the other hand, if we only save money on deposits or bonds, we make the savings slowly, eaten by inflation and we do not give them the opportunity to multiply.
The golden mean is to choose the security and risk instruments so that our barbell is stable and allows you to beat new records in bench press.
Thanks to this approach, you take care of the security of capital, but on the other hand, you give yourself a chance to earn above average money.