Diversification doesn't work for everyone.

One of the things that I heard a lot is diversification, where wealthy individuals say they diversify their portfolios to hedge against sudden market movements. In the case of rich people like Elon Musk and Bezos, diversifying is a good thing because they made their billions with one stuck alone. They need to diversify because they need to move their newfound wealth into other assets if their companies start to dump.

If the rich have too much wealth in one company or two, it will be okay to diversify, but that advice is not for everyone, especially those starting to build wealth. Let me start by saying that $100k is not wealth is just a reasonable sum of money, and in some places, it could be a lot of money, but not enough wealth, especially if you are looking to leave your job and live off your investments.

Suppose you start with as little as $100 up to $100k. In that case, you could do better by parking your money in just a couple of investments instead of many assets at the same time, I will omit the stock market, and I will think that the small investor is coming all-in into cryptocurrencies. If you have, for example, $5000, you will be better off investing in the top 10 cryptos and waiting for them to pump.

In the case of the first ten currencies, Bitcoin Cash is one of the coins with much higher potential because it is a genuine peer-to-peer currency. It will add programmable money and become the ultimate store of value in the short future. It makes altcoins like Litecoin, XRP, Bitcoin BTC, and Ethereum redundant.

But you can choose other assets. For example, if the coin you selected goes 100 times up in value, you would have accumulated a lot of money with your initial $5000 investment having around $500,000.00. It would be best to consider diversifying because you already have half a million dollars, which is a sum of money not easy to accumulate.

Converting $5k into $500k is an investment well played, and at that point, I would consider diversification because you would not want to lose your newfound wealth. With that amount of money, you could invest your money into a home, precious metals, or something else, but not the same asset as the one you made your wealth with, and I would leave a good chunk of that money to buy back again once such assets go down in value again.

If you have less than $1000, it will make a good gamble if you buy an altcoin below position 1000. Those coins are known as shitcoins because they don't have much market cap. Still, those altcoins can pump harder than many other altcoins, and the only problem is that it will be like playing the lottery with your money. You will never know if your altcoin will be picked up by a giant whale and pumped or if you will lose your $1000 investment because your altcoin is removed from exchanges.

Also, those small market capitalization coins that often pump and dump, and you only hear about them when the pumper is doing the pump, and you will buy the top and end up with a bunch of coins that have lost their value since you purchased them.

In general, diversifying only works if you already have a lot of money or wealth and try to preserve that wealth. Still, if you are trying to build or make your wealth, you will have to concentrate your capital on a few assets so that if the help you bought goes up in value, your whole portfolio goes up as well a lot because most of your wealth was parked in just a couple assets and not all over the place.

If you want to build wealth, you are better off with just a couple of assets and choose those with better fundamentals and upside potential. If you already have wealth, you will be better off diversifying your holdings into many other assets that are proven to last, and for that, you may need a financial advisor.

And when it comes to diversification, you should also watch the following YouTube video for a different opinion.