Most people have a natural inclination to “keep their options open.” However, in most areas of life the greatest rewards come from eventually making commitments that limit your options. A few common examples include: romantic relationships, academic study, learning a new skill, competing to win, and making a geographic move.
When people approach their own investing, it is no different. The common first impulse is to insist that your investment money is available at any time and comes with a guaranteed return. There are some investments that have these features but they also offer the tiniest returns. These investments may have a suitable place as part of a minor part of an investment portfolio. But, these types of investments will never make a notable amount of return to maintain purchasing power above inflation, grow into any meaningful amount, let alone generate wealth.
On the other side of the spectrum are investments that generate the highest returns. These investments require all kinds of commitments. The investment will likely have long lock-up period (3-5 years before you can get your money back), no guarantee of any return (you may possibly lose all of your investment), and you need to educate yourself in order to make a prudent investment of this type. A few examples of this type of investment would be: a start-up company, the construction of a new apartment building, a hedge fund, or partnering with a producer split the proceeds on a crop or inventory.
The easy investments require no knowledge but offer almost no return. The high-return investments require a lot of knowledge and due diligence effort but there can be substantial financial gains. Do you invest solely to keep your options open or do you have a couple investments requiring homework and a long-term commitment so you can earn an outsized return?