A large cash safety net can make investors reckless, chasing returns into bad deals that destroy wealth faster than inflation ever could. The fix: write down your investment thesis before you see any opportunities, so you're not tempted by a friend's random deal.
All heard that inflation is eating your money, but I can tell you what eats your money faster than inflation is investing in a bad deal. One of the things that most people don't realize about having a massive safety net in the bank is that we can actually start to become very cavalier about the way we invest. As I started to grow my wealth, I was looking for deals and not necessarily being as selective as I should have been because I felt this deep pressure to invest all of the money in the bank because there's a lot of ideas that if your money's in the bank, it's not doing enough for you. So we start chasing returns. You need to make sure that as you start building that investment fund and having investible capital, that you have a plan and an investment thesis before you go out looking for deals. That way you have guidelines and you have limitations as to what kind of deals you're going to invest in, so that when some random deal from your friend comes across your desk, you're not tempted to deploy that capital into something that doesn't actually fit your portfolio.
