We often hear a notion that if you spread your investments across a range, you’re going to be alright. What’s the reason you’re doing this? Knowledge? Planning? The implicit assumption behind this is diversification brings security and lower risk. That’s simply not the case. Investing in everything creates a weaker, far less effective strategy. There’s a very good reason why Warren Buffet doesn’t invest in sectors he knows nothing about, he sticks to his inner-circle. But, if everybody did that, nobody would get rich, right? That’s precisely why we believe that no, diversification isn’t the answer. It's not the right path to seek wealth. Expansion is growth and wealth is achieved by focusing on one strong sector and investing in it.

0 votes
by (120 points)
Many have advised me to spread their investments in different avenues; however, why is this not the most ideal approach for wealth creation?

1 Answer

+1 vote
by (740 points)
First things first, investment and wealth accumulation is not instantaneous. Diversification is not for everyone since it does not lead to immediate wealth build-up. One has to first understand what Deriving wealth means. It is easy to start and build wealth quickly, but that is not what should be the primary focus. Now, the objective of wealth management strategies and these wealth managers is just that – protection against possible market downfalls and hazards. It is more about limits and balances rather than uniqueness and concentration.
by (110 points)
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