A money tree, a candy store and some eggs in a basket.

A friend just congratulated me on my purchases made earlier this week in the stock market.

He said:

"You were like a kid in a candy store."

I said:

"Nope, I was an adult in a candy store."

He asked:

"Got difference meh?"

I said:

"Yup, a kid would not have the money to buy like I did. A kid would probably have enough money to buy one type of candy but I bought a variety."

I hope my friend got the messages I was trying to share and didn't think that I was trying to show off.

1. Money doesn't grow on trees. For most of us, to have money for investments, we need to save money from our earned income and, later on, save the passive income generated by our investments.

2. Avoid concentration risk unless we are very sure about the investment choice. As most of us are "know nothing investors", it is a good idea not to put all our eggs in one basket. This is sensible not only in the stock market but in other forms of investments too.

Remember,
"Putting all your money in a single investment to have the income it generates cover all your household expenses exposes you to concentration risks."
From:
What would I do if I had $750,000 to invest with?

  

Related posts:

1. Wealth is attracted or repelled by habits.

"As my blog becomes more popular, it disturbs me that people think that I am some investment guru. Of course, I am not. I might be a bigger retail investor than most of my readers but I think that is where the difference mostly ends."

2. Concentrate or diversify?
"You have, however, rightly pointed out one of the weaknesses of such a strategy, especially if our funds are limited."