Fake money, real risk

Whenever you make an investment, you're using real money. You could have used it to buy groceries and pay rent, but now it's locked up in something you believe will increase in value.

Of course this doesn't always work out. Lots of things can go wrong when investing. That's just the nature of taking on risk. You have to accept some risk in order to make a profit.

The most important skill you can develop is the ability to mitigate risk. Nothing is completely risk free. You have to accept some risk in order to invest.

Let's say you have $1000.

You could dump the entire amount into one big bet, but you would need to be extremely sure about the potential for a positive outcome.

The other extreme would be putting $1 each into 1000 different investments. On average, this is a better strategy. You can get away with doing a lot less due diligence. Even if half of those bets go to $0, you're still likely to break even.

For most people, somewhere in between is best.

My stock portfolio is 100% index funds. I could probably pick a few individual stocks, but I'm happy with the diversified, low due diligence route.

My crypto portfolio is 99% $KOIN. I could diversify and almost certainly improve my results. But I'm a developer actively working on Koinos. I feel I have some amount of influence in the outcome, and I've put significant due diligence into this investment.

Don't copy me.

-Luke

P.S. Diversify passive investments. Swing for the fences with active investments.