In my new book, “Millionaire Gym Owner,” I lay out four overarching strategies for wealth creation.
I’m going to focus on one here: The barbell investment strategy.
This one comes from Nassim Taleb, a mathematical statistician, former option trader, and risk analyst who also has an affinity for deadlifting.
Taleb recommends balancing some conservative investments with one or two high-risk investments. That’s it. Like a barbell, your investment portfolio is heavily weighted on both ends. You don’t spread your investments—and attention—across a host of different things. You focus.
It’s tempting to throw some money here and some there. But it’s best to invest where you have some expertise. And you’re better off getting really good at one or two types of investments instead of dabbling in a dozen.
For example, 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.
Barbell Investment for Gym Owners
I personally love using the barbell strategy to guide my investments.
As a gym owner, my business is my high-risk investment.
It pays me a good income because I’ve learned to be a good entrepreneur. But just because I’m a good entrepreneur with a lot of interests doesn’t mean I should own 10 different types of businesses.
Instead, I should maximize one type of business, take the profits out, and put them in conservative investments that won’t take my attention away from my core business.
I could start another business, but it would just be something for me to obsess over and fiddle with. I’d make new mistakes and get frustrated. And I’d definitely lose focus on my primary business.
For example, I love bikes. And if I opened a bike shop, I’d lose money and struggle for a few months—or even a year—while I figured out how to staff it and manage inventory. I’d own a business in an area of passion, but my gym would suffer.
Instead, I own a gym, make money, and spend lots of time in other people’s bike shops.
Boring, Attention-Conserving Investing
Where do I put the excess money from my gym? Into conservative investments.
The exact investments change over time, but at present 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.
You can find all sorts of funds you can invest in easily, such as insurance funds, index funds and bonds. Their advantage: Once you’ve made an investment, it usually requires little more from you.
Most of these options offer relatively secure returns and are typically good homes for your first external investments, while also being an important part of your ongoing investment strategy.
Of course, you might be really attracted to crypto, flipping houses or some other investment. Those options will take a lot more of your time and energy, but if they make you happy, then go after them!
Just make sure to balance those higher-risk investments with conservative securities—the other end of the barbell—and know that your attention is the most valuable asset you have. Don’t split it too many ways, or you’ll lose it.