Jack Falvey's Investor Education Briefs: Going all in might not be best betBy JACK FALVEY
July 22. 2018 11:46PM
Don’t bet the farm, or the house, or a second mortgage to chase your dream. Those who do, more often than not, end up working on someone else’s farm and living in someone else’s house paying rent.
“A half a loaf is better than none” is not a casual saying. Anything near half of your net worth in one place is not the place you want it to be. Passion, commitment and belief are all overrated in getting a return on your assets. The cool light of day is a much better way to approach opportunity. History indicates that the opportunity of a lifetime usually isn’t.
Getting in over your head is done a little at a time. Taking the plunge or going in little by little will have the same result if the waters are dark and deep. Notice all the metaphors. There are a lot of them because a lot of people have tried all this before, and so a complete lexicon has developed to warn against one thing, and that is putting everything into any one thing.
If the deal is too big, that is a first indicator it is not for you. If immediate action is required, that is an alarm bell. If everything is confidential, why are you being let in on it? Finally, if it is too good to be true, it always is.
Nothing wrong with a little piece of the action. Risk is required in life. Survival is also a worthy life goal. Limit one and you will be assured of the other. Look at your well-thought-out financial plan. If it all must go out the window in order to make a killing, stop right there and ask yourself what you are doing. Even better, ask others about what you are thinking of doing.
Having a successful career in the minor leagues of financial returns beats going all in every time. It is better to be a winner than a potential big winner. Financial planning has nothing to do with making bets, large or small. It has everything to do with discipline and common sense. Both of these are rare. They are far better aspirations than dreams of fame and fortune.
Those putting it all on red seven and betting against the house and reason more often than not lose their house in the process!
Jack Falvey is a frequent contributor to the Union Leader, Barron’s and The Wall Street Journal. He can be contacted at Jack@Falvey.org.