That’s a good takeaway (perhaps I say that because it aligns with my belief as well…?)
Start with a risk taking attitude when you don’t have much to lose, and many years of earning ahead of you. Grow increasingly paranoid and diversify as your future earning capability decreases, or if you’ve “made it” (to your point on “huge corpus”).
The point is, as in much else, about balance. To search within and seek out where your balance point lies. What are you balancing?
True paranoia and diversification is a never-ending process. Consider this:
- You can diversify across companies and sectors. What if the market crashes?
- You also include FDs (I don’t like bonds so much), and I’m talking of “safe” FDs like HDFC bank. Remember, you’ve already “made it” so there is no need to take unnecessary risk for a few points of return. But what if your currency fails or your country’s economy collapses (ala Venezuela)?
- You diversify in international assets. But what if there is a war in your country, there is rationing (or worse you are trapped like Anne Frank)?
- You create a bomb proof basement bunker and hide food and rations in there. See how the diversification can go beyond money? But what if an asteroid hits earth, destroying all life on the planet?
- You are Elon Musk, and you look at diversifying across planets (Elon may be driven by other motivations; just saying)
- But what if…
At some point, one must put a lid on the paranoia, and move to “acceptance”. Accept that there will always be risks in life, and you cannot diversify away all your risk. The balance point is different for every individual, but it is important to seek it and make your peace with it. At this point, as they say, you can stop worrying and start living.