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Episode 3683:
Steve Pavlina explains asset allocation as the practice of dividing your money among secure, moderate, and aggressive baskets so you can capture big gains without risking everything you have. He walks through a worked example in which a diversified investor ends up more than $150,000 ahead of a safe 7 percent return over 25 years, even though two of her five picks returned nothing at all. He then extends the same thinking beyond investing to how you allocate your time, your energy, and your attention.
Read along with the original article(s) here: https://www.stevepavlina.com/blog/2006/10/asset-allocation/
Quotes to ponder:
"The point of intelligent asset allocation is to enjoy strong gains without taking on too much risk of losing your entire principal and having to start over from scratch."
"By diversifying her investments, Erin was able to participate in the big winners while not being wiped out by the losers."
"Working like a monomaniac on any one thing for too long will unbalance you, as will neglecting a key area for too long."
Optimal Finance Daily is a daily personal finance podcast where we narrate the best articles on financial independence, investing, saving money, and money management, read to you by a professional narrator so you can grow your wealth a little more every day.
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