Early in our careers society tells us to:
- Build a stable career
- 'Diversify' between stocks and bonds
- Wait patiently for the power of compound interest to kick in
Does this approach work?
But it takes a really long time.
I much prefer a different wealth-building framework:
Build your own Personal Holding Company.
Merge low-risk, stable income with high-risk, big bets.
Let's me explain:
A salary is the lowest-risk form of earned income.
For the most part, as long as you show up every day and do enough, you will get paid.
The stability this creates is valuable. There should be a place for predictable income in every portfolio.
However, there are 3 problems:
- Your salary is capped. You can only earn as much as your employer will pay you.
- You are concentrated (and therefore dependent) on 1 income source.
- You are not in control of your time. Your employer controls it.
To address these issues, it is wise to build more income streams.
Ideally, those with bigger upsides.
How to make Bigger Bets:
We each have unique constraints.
The trick is to identify what those constraints are and design around them.
If you are constrained by both time and capital, ask yourself:
“How can I invest a little capital, and 5 hours per week, to position for a 100x outcome?”
But take this 1 step further:
Make as many low-risk, high-upside bets as you can find.
Mindset: build a mini Venture Capital firm within your Personal Holding Company.
The VC model is to make 100 small bets, knowing 98 will fail, but 2 will 100x.
In this game, volume matters more than accuracy.
So let me ask:
Are you pursuing asymmetric risk? If you were managing your investments like a VC, what 100x bets would you make?
Remember: no risk breeds complacency. And complacency stunts our growth.
If this idea resonates, reply to this email and let me know.
I'd love to do what I can to support you.
Until next week,