Where Rich Investors Go Wrong: Beware of the Country Club Portfolio
It may seem surprising, but one of the biggest challenges facing many investors is the social pressure from their community and circle of friends. It’s quite common for people to exhibit conformity bias — where they behave according to, and make decisions based on, what others around them deem acceptable. However, adapting your investment approach to be similar to that of your friends and family can be detrimental to achieving your financial goals, since every person’s goals and financial situation are different.
From my experience, wealthy investors are the most susceptible to falling into the conformity bias trap. Looking at their portfolios quickly confirms this. There are certain investments that are more easily accessible to high-net-worth individuals. Those opportunities sound exclusive, exotic and generally require high initial investment minimums in order to participate. They also make wonderful conversation at the country club, golf course or other venues
