the other day I said I was going to write some notes on my approach to investing. this is not comprehensive, but it should at least serve as a nice outline into my thought-processes.

some context, before we begin.

  • there are a million bajillion different types of assets to invest in, and a similar number of ways to gain exposure to those assets. I typically focus on two: equities and crypto.

  • the reason I do this is simple: I’m a dolt and I don’t like to overextend myself into markets that I don’t fully understand.

so, having said that, let me see if I can pull apart my mind and give some decent insights. warning: I am self-taught, so if you read a term and think “that’s not what that means…” feel free to message me somewhere and let me know but also be aware that I’m using many words in here colloquially, not technically. I will also leave out some critical information regarding the nature of these assets, not because I want to gatekeep, but simply because I don’t know enough about it. Again, this is just my personal approach and an attempt to breakdown my own thoughts on the topic and how I invest my own money. None of this is binding advice, obviously.

first and foremost, when I talk about equities, I typically group those into 3 categories:

  • Index Funds

  • ETFs

  • Singular Stocks

Each one of these has a different risk profile that influences my investment strategy.

  • Index Funds are often seen as the lowest risk of the three groups. This is because they’re typically bought and sold at the end of the trading day when the dust is sort of settling. They are a what’s called a “mutual fund” and typically represent a market index. the key differentiator between an Index Fund and an ETF is when and how it is traded.

    • Index Funds are priced end-of-day based on a Net Asset Value

    • ETFs are traded throughout the day like a regular stock, which prices also change throughout the day.

  • this brings us to our second type of asset: ETFs. ETF stands for “Exchange-Traded Fund”, which, frankly, means very little to me. All I know is that they’re a designed to operate like a market index, while also being subject to intraday fluctuations. very similar to an index fund, just with a slightly higher risk profile because of the way it’s traded.

  • the final (non-crypto) asset I look at is your typical stock. this is what people stereotypically think about when they think about the stock market. companies issue shares, you can you buy those shares. super simple. this type of asset also comes with the highest risk profile of the three. given that you’re investing in a single entity, as compared to a weighted index of companies. the risk associated with your capital is much higher because you’re, in a sense, putting your eggs into one basket. this is why people talk so much about diversification. more on that later.

so those are the three (non-crypto) assets that I typically observe.

so, we have, in order of least to most risk, Index Funds, ETFs, and Stocks. ok, so where should you allocate your money? excellent question.

I don’t like high-risk things. I do not like gambling. I have a high need-to-know and a I’m terrified of making mistakes. I also flat out don’t know where to actively purchase index funds as a retail investor, so this leaves one target firmly in my crosshairs: ETFs.

they’re extremely accessible, similar to single Stocks, but they’re a weighted index, similar to Index Funds. in short, they have a nice risk profile for my personality. if you’re very early to the stock market and investing, this is where I would start. Index Funds are probably a better long-term play because they have the least risk of the three, but again, I don’t know the ins-and-outs of accessing those assets, so I don’t have much going on in that world, at least regarding the fund I personally am managing.

anyway, when it comes to allocating capital, I typically like to do what’s called a barbell approach (at least that’s what I’m calling it). By definition “The barbell strategy is an investment concept that suggests that the best way to strike a balance between reward and risk is to invest in the two extremes of high-risk and no-risk assets while avoiding middle-of-the-road choices.”

This is very appealing to me for a variety of strategic reasons, but simply put, there’s no point in mid-grade risk. I like either low risk or high risk. to be more specific, I like 80% of my portfolio to be in low-risk assets, and the remaining 20% to be in high-risk assets. In doing so, I’m able to keep the stability offered by low risk, while still having exposure to high-risk-but-higher-reward assets. Side note: AI is a great tool for helping to balance a portfolio this way. Obviously, you have to ask the right questions, but in general, I’ve had success by saying “I have X amount of money, and I’m interested in these Y companies. How can I divide this money up so that 80% goes to These Companies while the other 20% goes to Those Companies?” You’ll obviously have to tinker a bit, but this a good way to organize information quickly and get a nice start.

So far this has mostly been about entering markets and gaining exposure to assets. But what about exiting? this is something I frankly struggle with. I have bad FOMO about missing out on more gains. given that I’m playing with relatively small amounts of capital compared to bigger funds, this isn’t too big of an issue. I’m ok with leaving my position in META alone for now, despite being up 600%, because I think there’s still room to grow with how they’re positioned themselves in the AI market. now, would I do this if I was working with millions upon millions of dollars? probably not, because with increase scale comes increased risk.


Don’t forget to think about timespans too.