Your Best Assets Should be Your Biggest Assets

I’ve read more personal finance articles than I can recall, and this topic we’re covering today needs to shout from the rooftops.

It seems obvious after you read it, but people don’t give it much thought.

So here it is –

Your best assets should be your biggest assets.

If we look back ten years, it is painfully obvious what we should have all invested heavily in –

Real estate in Austin, TX.

Amazon stock.

Tesla stock.

Look at any chart, and you can do the math.

But people miss out on this one when building their balance sheets.

Where our money is invested will tell us a lot about our future.

More than that, how much we have invested in that asset will tell us volumes about how much we will have in 5, 10, and 15 years.

I can hear you say – well, we don’t know the future; it’s impossible to know what will be up a lot.

Yes, that is true, but critically considering where the markets are going, where we are at, and planning the assets we want to grow substantially is an effort worth making.

Examining Common Asset Choices

Let’s look at where most people’s biggest assets are on their balance sheet.

First, their home.

Second, their 401k.

This is fine, but from a strategy perspective, it could be better.

Here’s why

While homes satisfy the core needs of humans, such as safety, shelter, warmth in the winter, etc., they still consume cash and typically grow at the rate of inflation.

If you live in a metro experiencing massive growth, it’s cool that your home is growing fast, but as you know, you can’t sell a portion of your home to buy a car.

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Where our money is invested will tell us a lot about our future.

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If you want a different home in the same city, you’ll have to buy a more expensive one.

Houses have extreme utility for life, but they aren’t the asset I would shoot for to have it be the biggest.

Our biggest assets should grow faster, provide passive income, and have an element of liquidity (easy access).

Learning from Bill Gates’ Asset Allocation

Let’s look at Bill Gates and see how he has positioned his assets because this will tell us everything we need to know about this concept.

Here they are -in order of size.

1. Microsoft
2. Berkshire Hathaway
3. Canadian National Railway
4. Waste Management

These total $30B. A staggering amount that most of us, including me, can hardly fathom.

It’s a significant amount for Gates, and there are a few notable exclusions: no start-ups, real estate, or private equity investments.

These allocations are not by accident.

This is where he wants them to be.

Gates is known for his wild investments in clean energy, next-gen tech, and life-changing medical care, but his real money, the core of his balance sheet, is in companies that we fundamentally could not live without—- unless you want to use a typewriter, insure our own homes, go to China to buy your next iPhone or take our trash to the dump.

With these holdings, Gates is saying that while he believes in start-ups and lets-change-the-world technology, he wants his big money in places that cannot be easily touched by competitors, software engineers, or changing human nature.

These assets are Gates’ best, not the most interesting or perhaps world-changing, but the best for him and what he wants his money to do for him.

Sit Down and Assess Your Biggest Asset

What is your biggest asset, and is it your best?

Are you on track to buy more of that?

What do you need to change to acquire more of your best?

In Summary –

1. Update your financial statement.
2. What is your biggest asset?
3. Is it good enough for what you are looking to accomplish?
4. Make adjustments to buy more of your best.