Let me introduce you to the Investment Pyramid. Understanding this pyramid was a game changer for me.
Decades ago, a wealthy family friend urged me to invest in a Limited Partnership, calling it a “an exciting opportunity.” I didn’t know that a Limited Partnership was illiquid and I couldn’t sell my shares, even as I watched the company go bust.
When I told my accountant this story, he drew a triangle, divided it into 4 levels, explaining this represented the whole world of investing. My mistake was starting at the top.
This post originally appeared at Saving Advice.