You go down to a financial house. They plug your numbers into software. Out comes a pie chart, a graph, and a lecture about balance and diversification.
That is not asset allocation in investing. That is park and pray.
Real asset allocation is diversity across assets, not diversity of tickers within the same stock market. It’s gas and oil. It’s aviation, where you actually get the depreciation schedule. It’s water rights, mineral rights, RV parks, laundromats, franchises, and owning your own company. If your entire plan for asset allocation in investing is a mix of mutual funds, you don’t have a plan. You have a hope.
“Don’t be lied to by conversations like ‘leave your money and let it be.’ That’s not the right conversation right now.”
Why One Asset Means One Problem
Think about diversification like this. If you own one asset and something happens to it, you have a 100 percent problem.
This past summer, a drunk driver plowed straight through one of my apartment buildings. He took out 23 units and the entire side wall. That building was generating cash flow for me. If that had been my only asset, I would have had a 100 percent problem sitting in front of me.
Instead, I had a 10 percent problem, because that property was one of ten different things my money was working in. That’s the blended return and the blended risk. One asset drops, and the rest of the portfolio carries you through. This is the entire argument for real asset allocation in investing: not spreading a little money across a lot of stocks, but spreading real money across real, uncorrelated asset classes.
I see high performers make this mistake constantly, especially in real estate and other high-income fields. You’re making a ton of money; you don’t have time to invest it, so you keep shoving it back into the one asset you already have. Your business. Your building. I’ve watched this happen with window-washing companies, landscaping companies, and pest control companies. Every dollar goes back into the one thing, and the one thing becomes the whole net worth. That’s not asset allocation. That’s concentration wearing a nice suit.
Direct Asset Allocation, Not Park And Pray
In my book, The Millionaire Maker’s Guide to Wealth Cycle Investing, I break asset allocation in investing into three pieces: direct, asset, and allocation.
Direct means no intermediary. You find the asset you want, and you put your money into it yourself. Instead of owning an anonymous slice of a public company through a broker who never picks up your call, you own a piece of a private equity deal where you know the operator and the operator knows you.
An asset is something you can see and touch. Real estate, oil and gas wells, business ventures, private debt. It’s not a fund. It’s not a symbol on a screen.
Allocation means you spread that direct ownership across classes, yields, locations, and time frames, not just across a dozen stocks that all move with the same market on the same bad Tuesday.
Companies get the best tax strategies. Individuals get the worst. The same split shows up in investing. The people with a team and a plan get access to direct deals. The people without one get a pie chart and a prayer.
Even If You’re Still In The Stock Market
I’m not telling you to abandon the stock market overnight. I own stocks. I manage them myself, not through a broker. But even in the market, most people follow a strategy built for someone else’s benefit, not theirs.
In 2020, most investors lost close to 30 percent of their portfolios. In 2022, the collective loss was steep again, while I lost 2.87 percent because I use AI-driven software that pulls money out before a drop, not after. Your old-fashioned financial planner will tell you to sit tight; you’re in it for the long haul. But if you just lost 58 percent collectively, how many years does it take to recover that, if it’s even recoverable? You’re not here to make it, lose it, make it, lose it. You’re here to compound on a trajectory that goes up, not to take deep dives you could have avoided.
“High-income earners don’t park their money and let it sit. They invest it directly.”
Asset Allocation Has To Be Linked To Your Tax Strategy
The piece most people miss, and the piece your CPA legally cannot give you, is which assets to buy. CPAs are historians. They record what you already did. They don’t forecast what you should do next, and by law they can’t tell you where to put your money.
So you have to build a team around the actual asset allocation decision: what you buy, in which entity, and how it feeds your tax strategy at the same time it feeds your net worth. Depreciating assets like real estate, gas and oil, aviation, and water rights aren’t just investments. They’re a trifecta. You get cash flow, potential appreciation, and a depreciation schedule that lowers what you owe the IRS.
Here’s a number that should bother you. Overpay $10,000 a year in taxes for 20 years, and you have handed the IRS 1.1 million dollars. That’s $ 1.1 million that could have been working across ten asset classes instead of sitting in a government account earning you nothing.
Start Today
- Count your assets, not your accounts. If everything you own rolls up into one business, one property, or one account, you have a 100 percent problem waiting to happen.
- Pick one asset class outside your comfort zone. Oil and gas, a small piece of private equity, a promissory note. Start researching it this week, even if you don’t buy in yet.
- Ask your CPA what they cannot tell you. If the answer is “what to invest in,” that’s your signal to build the rest of the team.
- Run the real math on your overpaid taxes. Ten thousand a year for twenty years is $ 1.1 million. Find out what your number actually is.
Find your number with the Gap Analysis Worksheet.
I’ve been doing this five days a week, face to camera, no script, because this is the work. Asset allocation in investing isn’t a pie chart. It’s a decision you make on purpose, backed by a team, pointed at ten different things instead of one.
Go to AskLoral.com. Ask a question, make a request. We’ll be back tomorrow.
