With age, they say, comes wisdom. Is that true? Maybe, maybe not. Age certainly brings experience. If you’re willing to learn, you can turn experience into prosperity. And the best way to gain experience? Taking risks. Because sometimes, those risks don’t pay off.
Most business owners I know have at least one decent failure under their belts by the time they hit fifty. A failure that held them back, briefly. A failure they recovered from, even if it gave them a few grey hairs. And a failure they never repeated.
Failure teaches us more about ourselves than success ever did. We take stock, identify what went wrong, revise our approach, and move forward. We don’t waste time crying over spilt milk. That would only distract us from the main game: building wealth.
Some people are born wealthy. Others acquire great wealth in a single stroke of good fortune. My clients are different. They build wealth over decades. By the time the first grey hairs appear, they’re building genuine momentum. Once they reach an inflection point in their businesses, their wealth begins to snowball.
Are you there yet?
Here’s a live example of risky behaviour, which could easily lead to disaster. I know a bloke who invested $20,000 in mining stock. It’s shot up to $400,000. He plans to keep riding that wave. His original investment has already doubled four times, and he expects it to double again. Is holding it his wisest course of action?
Usually, I’d say buy and hold. But this case is different. An asset that increases in value by 1900% can crater just as dramatically. Personally, I’d take half the money and diversify. Spread the risk over multiple asset classes.
Let’s be clear. I wouldn’t give the money a holiday. I’d put it straight back to work. Commercial property’s a great investment, with rents in Adelaide increasing 12% over the last 12 months. Property values are rising, too. I’d use the cash as part deposit for a new purchase.
Mind you, 12% returns are not as adrenaline pumping as a 1900% increase. Maybe the remaining $200,000 in mining stock will balloon further. Maybe it’ll hold steady. Or maybe it’ll crash.
Whatever happens, my strategy means I’m ahead. His doesn’t.
This is a moment when grey hair matters. This story isn’t just about one guy who’s enjoyed a dream run on some mining stock. It’s about all of us. At what point do we let blind optimism and fear of missing out (FOMO) override common sense?
FOMO’s always part of the equation. Some people would feel devastated if they pulled out $200K, and the remaining $200K tripled in value. They’d lament not staying the course. They’d rue the $600K that slipped through their fingers.
But keeping $400K in volatile mining stock isn’t investing. It’s gambling. And over 35 years in business, I’ve learned one truth above all else.
Gamblers always end up losing.
So my clients and I follow the same broad investment strategy.
We buy secure assets, residential property, commercial property, blue-chip shares, and hold them long term.
We apply just the right amount of leverage: not too much, not too little. There’s nothing wrong with debt if your assets and income cover the spread. Especially as your assets are increasing in value.
We diversify our investments. Because diversity breeds resilience.
I couldn’t have done this when I was younger. I lacked the patience and the asset base. Now, as I’m acquiring a few grey hairs, my wealth is growing exponentially. My clients are the same. If you believe that grey hair matters and want to get on board, let me know!