Why diversifying investments is for the ignorant

It makes sense to diversify your investments – doesn’t it? Investment Planning

Well NO – not really.

I know most financial planners and many books recommend, “Diversify, diversify, diversify.”

Yet I’ve found most successful investors, business people and entrepreneurs don’t diversify.

They specialise – they find one thing they’re good at and do it over and over again.

That’s how they become experts 

You don’t become an expert by doing a hundred things once, you become an expert by doing one thing a hundred times.

Almost a century ago Napoleon Hill recognised one of the characteristics of the successful people he wrote about in Think and Grow Rich was that they specialised.

Warren Buffet, the world’s richest investor, says, “Diversification is protection against ignorance. It makes little sense for those who know what they are doing.”

Robert Kyosaki explains that his rich dad asked, “Who’s ignorance are you being protected from? Yours… or your financial advisor’s?”

He then goes on to say:

One of the keys to being successful at anything is to know what you are doing.piggybank

When you know what you are doing, you make more money because you buy only great investments… not a basket of wishful thinking.

That’s why I specialise in investing in residential real estate and most of my investments are in 5 municipalise.

Now don’t get me wrong…

I’m not saying don’t buy interstate – most investors should to protect them from the vagaries of the differing timing of each state’s property cycle.

What I am saying is find something you can become an expert in and keep doing it


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Michael is a director of Metropole Property Strategists who help their clients grow, protect and pass on their wealth through independent, unbiased property advice and advocacy. He's once again been voted Australia's leading property investment adviser and one of Australia's 50 most influential Thought Leaders. His opinions are regularly featured in the media. Visit Metropole.com.au

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