We know more risk = more reward but not all of us are comfortable with that equation. Risk is both good and bad. It’s the chance that things will go better than you thought or worse than you thought. We’re totally willing to take on risk to get that reward – but up to a certain point.

The barbell strategy is a really great way at making sure you’re taking risk – in the right areas. Just like the actual barbell you lot use in the gym (lol, i’m light years away from using this equipment) there are 2 weights on either side of the pole and nothing in the middle. 

How the heck does the barbell strategy apply to investing and life? 

Barbell is all about putting the weights where you want (and need them). It doesn’t mean taking a lot of risk in all aspects of your life, rather it’s about being super-selective about how you go about it. 

It’s easy to understand when it comes to investing. This is all about having a % of your portfolio in those high-conviction, riskier places. If they blow up, you won’t blow up with them. But if they boom, you’ll be booming too.

These are areas like bitcoin (psst: here’s why you might want to consider owning a % in – and not for the reasons you think) and start-ups/VC investing. Super-speculative, high-risk stuff. 

Having 50% of your portfolio in any of these areas is dumb. For most people. And definitely the wrong move. But bitcoin, for ex, has a high risk-adjusted reward and adding even 5% of your portfolio to the coin can increase your returns. With start-ups – the payoffs can be huge.

Investing early in some of the names we know and love could mean retiring at 30yo. But we can’t afford the risk of it failing if we have too much allocated to the area. That’s how you find your sweet spot. Think what % makes sense for you and use that allocation to explore riskier areas with the chances of higher payoffs. But that if they fail, you won’t fail along with them. 

How I applied the barbell strategy as soon as I started investing – and how you can too 

I had a bizarre start to investing. Disclaimer: it wasn’t planned!! I was 19 and came across these 2 start-ups. I loved both of them (in equal measure) and so I decided to pretty much gamble my life’s savings on them.

Which, if you can guess, wasn’t exactly a lot. I then realised that whatever investments I make after that point (after working to earn £££ and replace what I had chucked into those biz) would have to be safer, more normal investments! 

Basically, boring old funds. They’re a basket of stocks spread across many different areas so they’re safer than stashing it all in just a handful of stocks. So I invested in income funds (those that pay a % as a dividend) as well as growth-y funds including a massively overlooked area that you might wanna look into! 

Invest 10% of your time in something totally wild 

Our jobs are the part of the barbel without any weights on them. They’re what we hold onto. They give us stability, and a paycheck every month. Though our 9-to-5’s are anything but guaranteed – here’s how the harsh Xmas layoffs are affecting jobs from banking to tech.

But anyway, our 9-to-5 for structure, routine stuff. We know what we do and we hopefully do it well. Sure, you can experiment but its parameters are defined. You can’t exactly wake up one day and convince C-suite to adopt your crazy idea. I mean, you can, but you’ll probs get laughed at (unless of, course, you’re someone super senior).

So, the solution to your cool ideas and pent-up creativity? Channel it into something of your own. Use 10% of your time to work on something totally wild. That’s just yours. Put your all into it. Stick with it for at least 10yrs and do not ever give up. That’s your recipe for success.

But the beauty of the barbell is that if it flops on its head you won’t have lost much. Not your rep, time, energy – or money. It’s not like you quit your job to do something then have it fail and then have to start over. 

You’re spending some of your free time on something and you should be enjoying the process. And if it doesn’t work? Don’t you worry. You’ve still got your job to go to and your bills will be paid. Barbell, here we come!   

The younger you are, the more risk you can (and should) be taking 

There is a time and a place for everything. At some point in your life, you might be slapped in the face by a dose of reality and you might wanna take a massive risk.  And that will be the right thing to do.

Weigh it up and don’t be scared to add more weights to your life and pump up the “risk” to get yourself more reward. But also the chance of more risk. So be aware of what could happen if things go wrong and figure out whether you’re finances would be able to handle it. 

A friend of mine wants to start their own biz. They’re currently working a high-paid tech job and he’s using that salary to build up a cash buffer so he can quit and know that if his venture fails (which I doubt it will!) then he won’t go to ruin!

He’ll still have the means to pay his mortgage and pay all the other very important bills that need paying. He’ll be fine if it fails and knowing that means he can give it his all. 

Audit the risks that you’re currently taking in your life and see where you need to adjust

In reality, we think we take on more risks that we actually do. 

Be real with yourselves. Are you taking on enough risks at work? Are you putting yourself out there? Do you have some side hustle/passion project you’re working on? This should help you spot the gaping holes. If you’re answering No too many times, you know what to do. 

Then, have a look at your investment portfolio and ask yourself where you can take on increased risk. Because we always think we’re taking on more risk than we actually are. Or worse, we think we can handle more risk than we actually can. 

If you’re young, you need more risk in your portfolio – and in your lives. Whatever you may tell yourself. There’s no better time than when you’re young. Few people know us so if we fail, our reps will still be intact!

And if you’re living at home (and rent-free), then do more with your money and with your time. Whatever you think is best for you and will give you more opportunities later in life. 

Fast forward the clock 10yrs and ask yourself where you wanna be? Then see if what you’re doing now will get you to where you wanna be. If you’re stuck, here are 4 of the most uncomfortable things to do now that will give you wealth (and time) when you need it most.

Risk is nothing to be afraid of. We think it’s the chance of bad things happening. The chance our biz will fail, the fact that the internet will ignore you or that your investment will go sideways (or worse, south).

But it’s also the chance of total success. And remember, every failure is a step closer to figuring out what you want. It’s just a loud (and sometimes expensive) way of saying “try something else” or “do this differently”.

If you’re in your 20s, use this time to figure out figuring it out. No one has a clue what they’re doing. Not not really, anyway. 

Disclaimer: This blog is not investment or financial advice. It is my opinion only. This blog is not a personal recommendation to buy/sell any security, or to adopt any such investment strategy. Always do your own research before you commit to any investment.