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The Next Best Thing

We are all drawn towards the next best thing. This typically manifests itself as the desire for the latest phone, newest model EV, or some fashion trend and it's no different when it comes to investing. The more you learn about investing, the more you desire the next best thing. It may be a slightly higher yield, an "opportunity of a lifetime," or simply a new investment that you find fascinating.


This is especially true in today's world where with a few clicks of the mouse you can invest in almost anything you can think of, such as wine, farmland, crypto, art, single family homes, and more. Seemingly endless investment options, coupled with the fact that investing in the stock market is literally free, means that there has never been a better time to be an investor. So, what's the downside?

The Downside

The downside is that changing your mind as an investor typically has disastrous consequences. The more you decide to pursue the next best thing, the more likely you are to underperform from a total return perspective.

One of the keys to building wealth is having an asset allocation, which is just financial jargon for how you distribute your money across various assets, that you are able to maintain for decades. For example, if you decide that you will maintain a 70% allocation to stocks and then decide to sell 20% of your stocks to invest in the next trending meme coin, it's likely to hurt your portfolio significantly in the long-term. When you make rash decisions, you may be selling at a low and locking in a substantial loss or perhaps selling at a market high and getting hit with a significant tax bill.

The Solution

There are two options:

  1. Not recommended: Fight against your natural instincts, curiosity, and desire for the next best thing! This will work...until it doesn't!

  2. Recommended: Allocate a small percentage of your portfolio towards experimentation and learning about new assets. Set aside 1-20%, depending on your risk tolerance, for satiating your curiosity without risking the bulk of your portfolio.

If you want to learn more about investing and asset allocation, please schedule a free introductory meeting! For just $5/day, it’s the most affordable way to access professional help.

Disclaimer: The information in this post is provided for your convenience only and is not intended to be treated as financial, investment, tax, or other advice. The information is intended to be educational and is not tailored to the investment needs of any specific individual.  It is also not intended to be relied upon as a forecast and is not an offer or solicitation to buy or sell any securities or to adopt any investment strategy.  The opinions expressed are those of the author.  Reliance upon the guidance and information in this presentation is at the sole discretion of the individual.

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