Take profits. If an investment is up, sell, take the profit and reinvest it. But reinvest with a plan. If we make $100,000 on a deal, we’re not putting all $100,000 into the next deal. We might put $20,000 into each of five different deals to diversify.
We also move part of a windfall into safer bets. After a big pre-IPO profit, we’ll typically put the principal into a new pre-IPO deal along with some of the profit. The rest might go into real estate or debt transactions where the money feels a lot safer. Over time, taking profits and reinvesting them carefully and methodically builds a more stable nest egg.
Key points
- Take profits when an investment is up, and reinvest them.
- Split proceeds across several deals instead of one, such as $20,000 into five deals.
- Put the principal back into the same asset class and move part of the profit into safer investments.
- Real estate and debt deals can help build a more stable nest egg.
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