111. The Biggest Risk of Long-term Investing is not the market

 

How do we manage risks of a long-term investment portfolio? Most would suggests employing investment management strategies such as diversification and asset allocation, 

The question of whether a goose that lays golden eggs or the golden eggs themselves are more important is subjective and depends on the context and individual perspective. Let's explore both viewpoints:

The Goose that Lays Golden Eggs: Some may argue that the goose is more important because it represents a sustainable source of wealth. The goose has the ability to continue laying golden eggs, providing a consistent and ongoing stream of value. By prioritizing the well-being and care of the goose, one ensures the longevity of the golden egg production. In this perspective, the focus is on long-term sustainability and the potential for continued prosperity. This is the analogy for the HEALTH and WELL BEING of the investor.

The Golden Eggs: Others may argue that the golden eggs themselves are more important because they represent immediate wealth and tangible benefits. The golden eggs are valuable and can be used or traded for various purposes, whether it be investment, consumption, or achieving financial goals. This viewpoint prioritizes the immediate gains and focuses on maximizing the value extracted from the eggs. This is the analogy for the INVESTMENT PORTFOLIO.

Ultimately, the answer may depend on one's goals, time horizon, and personal values. Balancing the short-term benefits of the golden eggs with the long-term sustainability of the goose is often considered an ideal approach. By recognizing the value of both the goose and the golden eggs, one can aim for ongoing wealth creation while enjoying the immediate rewards.

In a broader sense, the question can also serve as a metaphor. It raises considerations about the importance of nurturing and maintaining sustainable sources of wealth versus focusing solely on immediate gains. It encourages a strategic and balanced approach to wealth management and the recognition of the underlying factors that contribute to long-term prosperity.

The biggest risk of investing whatever the goal, time horizon or personal values is the HEALTH of the investor, because from a financial perspective, the biggest possible threat to the value of an investment portfolio is the sudden, large withdrawals to pay for the treatment of a critical illness!

Mitigate this risk by attaching a critical illness coverage!

All the best my friends!

#acgadvice