The Second Million Is Easier
#4 Off Topic Contributor
- Investor
- Round Rock, TX
I read this article today on Investopedia:
Why The First $1 Million Is The Hardest
A couple of points in the article stood out to me and I figured some folks on BP may have some opinions about them:
1. Extra Wealth Means Extra Options - In other words if you're an accredited investor you can literally invest in things other people can't. Even with Title IV I don't see this going away any time soon because most promoters will still continue to use other exemptions
2. Risk Aversion - Those with more chips to play don't have to worry as much about losing some of them. Since risk and reward are positively correlated and linked the risk aversion at the low end of the wealth spectrum is an impediment to the growth needed to make the first million
Other points in the article abound in other places like it is literally easier mathematically to make the second million because of the power of compounding and the fact that the percentage change for each subsequent million is lower.
Any thoughts on the items above? Agree? Disagree? Does this same reasoning apply to folks on BP who may generally understand you can take MORE risk when you are worth less because you have less to lose and longer to correct mistakes if you're young.