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Managing Your Money Like a Billionaire: Part 2

This is a continuation of last week's post. Read it first or this won't make much sense. One clarification from last week that several people pointed out is that my definition of Beta was too simple and a better definition is that Beta is the reward you get for taking risk. The end result is the same, though: diversify your risks to receive a somewhat steady reward while having the risks counteract each other as much as possible.

I also realized that I probably should have waited for this post before inviting comments, because several people pointed out why you wouldn't want to lever up in the current climate, which I address here.

Preserving Money

I was starting to understand the blueprint for managing finances. You want the most balanced portfolio possible, so that you can that add leverage to maximize the return for any given risk tolerance. As I delved into these portfolios and saw their historic performance, the graphs looked a lot more palatable than the index fund graphs that had previously turned me off.

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