"Diversification is a protection against ignorance. It makes very little sense for those who know what they are doing."
What exactly was the Oracle of Omaha getting at when he made that comment?
Perhaps that diversification when it comes to investing is an overrated concept. True, It is religiously preached by the investment advisory, investment publishing, and journalism communities, but should it be the end all be all?.
Diversification isn't inherently bad, it just shouldn't be the end goal. Warren Buffett doesn't diversify his portfolio for the sake of diversifying. He was more interested in looking at business cycles, industries and companies that made sense, and diversification was the end result.
The wealthiest people don't believe in diversification as it is sermonized by the general investing public. They believe in concentration of capital. They can hold a few investments and have all the diversification they need. They don't need hundreds of smaller investments. To them selecting a few great investments far outweighs investing in dozens of investments that in sum end up resulting in a merely a middle of the road portfolio.
For example, diversifying by investing in a bunch of stocks in the same volatile market would not be achieving true diversity. To them, value is created by performing due diligence and selecting investments wisely just as Warren Buffett does.
Instead of focusing on diversification, the focus should be on increasing permanent wealth. Diversification will come in time. To understand permanent wealth, it's important to understand what money means to the wealth.
For those who understand money, the true value of money is not measured in dollar and cents but in what money can facilitate and that is time and choice. And money, in the form of passive income, the greatest enabler of time and time freedom.
Who would you rather be?
The person who makes $20k a month working 50 hours a day/5 days a week or the person who makes $20k a month from passive income. When you don't have to worry about living paycheck to paycheck, you can live the lifestyle you want with the time freedom to do the things you want.
"Developing Permanent Wealth is about acquiring assets that increase your net worth steadily and consistently year after year that provides current passive income that increases every year...
The only issue is that very few assets are able to offer the types of return — steadily increasing cash flow and consistent equity growth — that we want. The stock market is too volatile and offers very little in the way of cash benefit."
Good news for those who are seeking permanent wealth. A passive investment in private companies or funds can be the best strategy for generating the type of income and equity growth you need to build your legacy.
Need to start investing for your legacy? Ask us today and be the first to hear about our new opportunities.
Living the life,
Jose Reyes, Executive Manager
Bneevige Realty Investments