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Diversification

  • #321390

    Brad
    Participant

    Hey everybody!

    I realize a lot of are new to this, so I wanted to see if we have any experienced folks to comment, or just start a group discussion over some techniques.

    I’m watching the bootcamp videos again to keep my brain engaged. In the Angel investing 101 video, Neil discusses diversification in order to reduce risk. He mentioned keeping a portfolio of 10-12 or maybe even 20 investments.

    I went back and looked at mine, and I am sitting with 35 investments, 20 of which are from this site, and 15 I have researched and invested in myself.

    This is all just from this year…. with a 5-10 year lifecycle, that becomes a very large portfolio year over year with continued investing.

    Is it better to put more into fewer investments? We are continually getting new deals and new opportunities….is it that the criteria needs to be more stringent?

    I don’t know if I feel like a bull in a china shop, or if I’m still stumbling around in the dark. Hope this sparks some great discussion!

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      • Woody
        Participant
        #323346

        I do agree it should spark some good discussion. If I recall correctly or lets say my understanding of what he was talking about is to start out with at least 10 and slowly roll up to 20. How I took that is per year. Here’s why I understood it that way. In the future, you’ll want perpetual pay outs. You’ll get to a point where they start paying out regularly and to keep that going as each is, as we hope a one time good pay out, you’ll want to have more in the pipeline. This is what I understood is representation of the meaning of deal flow. You have to get the cycle started and then keep it going, then down the road they will continue to pay out non-stop.

        I would say 35 is a great start. – But then, like you, I’m new at all of this. I have only 17 myself, but some are small and others are big, just kind of depended on how strongly I felt about the opportunity. The majority of mine are from here. With only about 3 or 4 exceptions.

        I don’t take every opportunity that comes across. I personally need to get excited about it to invest as well, so if it doesn’t fit more or my character I will pass it by.

        I’ve also taken the BDC reports to heart as well and already started investing in some of those recommendations and looking at other dividend bearing stocks as well.

        When it comes to diversification it can come in many forms. Your deals that. you invest in I think need to be diversified, if you get into stocks, those need to be diversified as well. Also diversifying yourself in different type of investments as well, like deals, stocks, bonds, crypto’s etc..

        it’s all a lot to learn, and figure out and takes time to build out. With determination we will hopefully all get there.

        I wish the best of luck in your investments.


        • Brad
          Participant
          #323679

          Brad

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