\n<\/p>\n
Interested in portfolio optimization with my \u201cFewer and Deeper\u201d strategy? Let\u2019s break down how it works.\u00a0<\/span><\/p>\n To fix the issue of over-diversification, I propose starting with a small investment in something you want to explore.\u00a0<\/span><\/p>\n For example, I\u2019ve been aiming to limit my exposure to any single real estate investment to only 1% of my net worth.<\/b> That rule has served me well, and you can apply it to your investment strategy. You can start small with a $5,000 investment with one operator.\u00a0<\/span><\/p>\n Small-dollar investing helps you diversify and try a new asset class or a new operator.<\/b> You can experiment with relatively small amounts to get comfortable before moving on to the next phase.<\/span><\/p>\n As time passes, you study that particular investment, work out how it works, take note of what impacts which, and log the returns.<\/b> It will feel like you\u2019re doing homework again\u2014and you are\u2014but you need to document everything if you want to break down the investment into its working parts.\u00a0\u00a0<\/span><\/p>\n Once you gain familiarity and comfort and have identified which investments offer the best returns, it\u2019s time to double down on your winners.<\/b> Instead of spending the majority of your time looking for the next investment, you spend it deciding on allocating more capital to your high-performing assets.\u00a0<\/span><\/p>\n Depending on your risk tolerance and specialization, you can scale up investments to 5% of your net worth or more. Going back to my previous personal example, once I have enough first-hand experience on how the operator or the investment works, maybe I\u2019ll bring the<\/span> total up to around $20k to $50k, perhaps more as time passes.\u00a0<\/b><\/p>\n Some of my real estate investments now make up 5-7% of my net worth. <\/b>None of them started that way.<\/i><\/b><\/p>\n Or, if I don\u2019t like the results of a particular investment, I can just pull out or leave my small initial investment there.\u00a0<\/b><\/p>\n Diversification protects you from one asset or asset class crashing. And even if some of your holdings crash, dollar-cost averaging usually brings down prices (and we <\/span>love<\/span><\/i> DCA in real estate).\u00a0<\/span><\/p>\n However, the initial phase of the \u201cDeeper and Fewer\u201d strategy offers a smart way to find the investments you want to go heavier on without needing DCA to save the day.\u00a0<\/span><\/p>\n I\u2019ve also found that when you have less money at stake, you\u2019re more objective about understanding the investment\u2019s performance than focusing on the potential ROI alone since you\u2019d have less to lose.\u00a0<\/b><\/p>\n Once you have a portfolio of fewer and deeper investments that are certified winners, your investments start to work harder for you.\u00a0<\/b><\/p>\n As mentioned earlier, fewer high-yield investments significantly reduce the time it takes to manage them effectively. Being an expert in the asset classes <\/span>you choose<\/span><\/i> gives you an edge, allowing you to make timely and well-informed moves whenever you need to and even anticipate market trends as they come. <\/span>With luck and consistency, this portfolio optimization can reliably generate wealth over long investment periods.\u00a0<\/b><\/p>\n The \u201cFewer and Deeper\u201d strategy also puts you in an excellent position as time goes by because, to be perfectly blunt, no one\u2019s getting any younger. The older you get, the more difficult it will be to manage your investments. <\/span>A few well-researched investments in asset classes you\u2019re familiar with can ease the burden of management in your golden years.\u00a0<\/b><\/p>\n<\/div>\nInitial Phase<\/strong><\/h3>\n
Growth Phase<\/strong><\/h3>\n
Commitment Phase<\/strong><\/h3>\n
Risk and Asset Management<\/strong><\/h3>\n
Long-Term Wealth Building<\/strong><\/h3>\n