Mistake 4 of 9
Concentrating in one asset
The mistake
Putting everything into one stock, one building, one coin or one country is dangerous. If that single bet goes wrong, so does all your money — and unlike a bad year for a diversified portfolio, there is no averaging-out to rely on.
The fix
Spread money across different assets, sectors and currencies deliberately. It is boring on purpose — the goal is that no single bad outcome anywhere can sink the whole portfolio.
A concrete example
A portfolio split across a broad index fund, a government bond and a small allocation to a single company can absorb that one company falling 50% and still be fine overall; a portfolio that is 100% that same company falling 50% has genuinely lost half of everything.
Frequently asked questions
Are these mistakes different for startup investing?
They amplify. Concentration is more expensive in startups because there is no liquid market to exit through and no daily price to warn you. The same discipline — small positions, many bets, long horizons — is what separates angel investing from gambling.
What counts as "too concentrated"?
There is no single number, but if one position's bad outcome would seriously damage your finances or force you to change your life plans, it is too concentrated. Diversified index funds solve most of this automatically.