So far we’ve explained the main investment categories, and in a moment we’ll look at how much you should invest in each category, and how to go about doing so. But before we do that, it is essential for you to understand what Einstein supposedly called ‘the eighth wonder of the world’: compounding returns.
So far we have looked at diversifying between defensive and growth assets in order to set an appropriate level of risk.
To further spread that risk, it is essential to diversify within each category, as well. For example, it would be madness to hold only one share. The company might go bankrupt. It is much safer to invest across many shares.
In this section we’ll go through each class of investments and show how to diversify within it in order to manage risk.
Growth Assets 3: Alternatives to Shares and Real Estate
Most people trying to build wealth content themselves with simply investing in shares, or in shares plus their own home. A few purchase an investment property. Such conventional options are fine.
However, there are alternatives. Here I list a few for the more adventurous or unconventional investor. Like enlightenment, there are different paths to financial freedom. If the Roman Catholicism of shares and real estate is not for you, perhaps these Hare Krishna options might be of interest.