This is a preview of my new book, “Millionaire Gym Owner,” coming in early 2024.
To create a balanced portfolio, some people like to invest a little in many different buckets. But according to Nassim Taleb, a mathematical statistician, former option trader and risk analyst who also likes to deadlift, there’s a better way.
Taleb recommends having a lot of conservative investments, one or two high-risk investments and nothing in between. Like a barbell, your investment portfolio is heavily weighted on both ends instead of spreading your investments across 10 different things.
It’s tempting to put a little money here and a little money there. But it’s best to invest where you have some expertise.
The higher the risk, the more time and attention you’ll have to invest along with the money. You’re better off to get really good at one or two types of investments instead of dabbling in a dozen.
If you’re not really interested in learning about stocks or real estate, just park your extra income in something boring and stay focused on your gym. More on that in the next post in this series.
Conserving Your Attention
I personally love using the “barbell strategy” to guide my investments—and not just because of the name.
As a gym owner, my business is my high-risk investment. It’s my passion project. It pays me a good income because I’ve learned to be a good entrepreneur.
So I balance that higher-risk investment with conservative securities—the other end of the barbell—and save my attention, which is the most valuable asset that I have.
Where do I put the excess money from my gym? Into conservative investments.
The exact investments change over time, but as I’m writing this, I’m looking for bonds or other high-security spots where time is on my side. I can play the long game there because my short game is to be all in on my gym. I get the money out of the gym, put it in places where I don’t have to also invest my attention and just let it grow quietly.
An attractive way to get started is through vehicles you can invest in easily, such as insurance funds, index funds and bonds.
The advantage of these options is that once you’ve made the investment, it usually requires little involvement from you.
Most of these options offer relatively secure returns and are typically a good home for your first external investments while also being an important part of your ongoing investment strategy.
Of course, you might be really attracted to overfunded life insurance, crypto, buying art or flipping houses. Those investments will take a lot more of your time and energy, but if they make you happy, then go after one of them—just know that your business will suffer when you remove your attention.
The simplest investment formula is the barbell because your attention is finite. Don’t split it too many ways or you’ll lose it.
