In this solo talk, Leila Hormozi explains why the habits that make entrepreneurs successful—risk‑taking, long hours, hard work, and intense attention—are detrimental when applied to investing. She describes the common situation where business owners, after solving their personal money problems, are left with excess cash and uncertainty about how to allocate it. Hormozi argues that the best investors have low risk tolerance, minimal time commitment, focus on smart decisions rather than effort, and keep their attention away from daily market movements. She outlines a four‑point framework for entrepreneurs: (1) adopt low risk tolerance, (2) keep investing time low, (3) base actions on smart, decision‑focused analysis, and (4) avoid excessive attention to investments. She illustrates the pitfalls of over‑trading, especially in crypto, and emphasizes learning from seasoned investors rather than transplanting business success tactics. The talk concludes with a call to adopt these principles to avoid mismanaging newfound wealth.
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Today what I want to share with you is a conversation I had with one of our head coaches in one of our companies about investing and entrepreneurs. And so I want to share with you what I told him and then some frameworks to use to think about if you are struggling with, do I invest my money, do I not invest my money, should I— what should I be doing with it right now, right? And this is for people that probably haven't started investing yet, not heavily, and maybe you're not sure if you should, right? Here's what normally happens, right? So I was talking to the coach, trying And he was like, you know, a lot of them are just trying to make more money than they've ever really made in their entire lives. And so it's stacking up month after month, and now their whole focus is kind of going to like, what do I do with this money? This is something that I know all too well and something that me and my husband have had many sleepless nights over, because what happens is this, right? So you start a business and you usually don't have money before you start the business. You get good at making money, right? You get good at making money, and eventually you solve most of your money problems, meaning problems that occur because you don't have money, right? The problem of not being able to live in the house you like, and the problem of not being able to eat out when you want to eat out, the problem of not being able to fly when you want to fly, right? They're like small inconvenient problems. Money solves those money problems. After all of your money problems are solved, then what happens is money itself becomes a problem. Because you don't know what to do with the money. And so there's an excess beyond what you need to live, like, reasonably off of your means. And then you don't know what to do with it. And so it actually becomes a problem because people mismanage it. Okay. And it's really common with entrepreneurs. And here's why. Everything that makes you good at making money makes you bad at investing. And this is something I think is so interesting because I actually would say that I'm probably better on the investing side than the making money side. Just because of who I am inherently as a person. Like, I've had to do more training and practice on the make money side rather than the investing side. And so here's what I want to break down for you so that you can understand, and then you can understand also how to think about investing so you don't make poor decisions about it. Okay. So the first is that with business, right, what does it require in the beginning? Well, it requires risk-taking right now. If you've done any sort of research on investing, what you will see is that people who beat over time do not. They have a low risk tolerance. What does that mean? That means that they do not want to put a crap ton of money into something that they don't know will work, right? The best investors in the world, and I've gotten to talk to a decent amount of them, they do not put a ton of money into something that is extremely volatile. Yet for some reason entrepreneurs are like, they're like, and I had this one, one time he's like, I don't know, man, like, should I put half my money into this investment? Like, it's— I could lose it all. And I'm like, why on earth would you do that? You do not have to do that. Like, nobody's forcing you, and there's no problem. Like, what are you solving by doing this? You're literally just adding to your stress. Which sometimes I do believe that is actually the issue, is they just want to do more things that cause stress for them because they are just used to being stressed, right? But that's the thing, is that risk-taking makes you good at business because you have to take risks to start a business, and it makes you bad at investing because then you're probably going to lose more of your money than you need to, just out of the fact that you think You should be taking risk in order to progress, which is silly. You don't need to take huge risk in order to be good at investing. Most of the best investors look at like Warren Buffett, for example. Does he take risks? No, not in his mind. So that's the first piece of this. The second piece of this is long hours, right? Lots of working all the time. And so people think that once they have this money and they need to invest it, it should take a lot of time. And that the more time you spend investing, the more valuable and the smarter your investments will be. When in reality, that is not the case at all. You want low time commitment on investments, right? Anything that takes a lot of your intention— attention for investing, well, what is that going to do for a business owner? It's going to take their time away from running their business. That's the thing that you're good at. That's the thing that made you all your money. And so all of a sudden you say, oh, I should be good at investing. And so I see a lot of people do especially like some clients that we have, is then they start actively investing. So they've made a ton of money and now they're actively investing in things that are volatile risk, and then their attention for their business goes down. And so then they make less money and then they feel worse about investing because there is more risk at that point because you have less money that you're making. The third thing is just hard work, and you could kind of equate this with long hours, but I feel like it's worth talking about the two, which is hard work. And this one does not require hard work. What does it require is smart decisions. Okay. And so a lot of the times where business owners are when they get to the point where they feel like they should be investing is still the place where they're working hard. Right there. And that is probably why they are in a reactive state enough to think that working hard is also what you must do to have to be investing your money. When the reality is that investing is made off smart decisions. If you look at the best investors in the world, they spend a ton of time researching, analyzing, uh, making spreadsheets, doing all sorts of modeling, right? Because it's decisions that dictate if you're good at investing. It is not your amount of work ethic. There's not a work ethic in investing. Rather, it would be tolerance for less work, I would say. In fact, I think the people that I know that have the most money from investing don't work much at all. They. And that's why they're so good at it. And then the last thing I would say is attention. What do I mean by this? For your business to grow and thrive, right? You as a CEO typically have to pay a lot of attention to it, or at least a decent amount. I would say the same to be true with like raising a child, lots of attention versus over here, you do not want a lot of attention. Why do you not want a lot of attention, right? Because you're probably going to fuck with it. Okay. So if you put a lot of attention on your investing, You're probably going to mess up your investments. How often do we see this? People with stocks, right? This is something that our, one of our really good friends who's been doing this for, say, 40 years working with stocks. The people who make the most money off investing in stocks are the ones who don't look at it, right? Dead people do the best with stocks versus what most entrepreneurs do is that then they take the attention they've been putting on their business, they put it on their investments. And because of that, they're literally changing and moving stuff all day and doing trades and blah, blah, blah. And in the end, you don't beat the person who just let it be. And so I hope that this framework was useful for this breakdown for thinking about investing. If you haven't before, first understand these principles. If you are a business owner, you should be taking risk in your business, working long hours in your business, working hard in your business, paying attention to your business. If you start to look at investing and you're trying to think, how do I want to take upon investing? You should have a low risk tolerance. It should not take much time from you. It should only be focused on making smart decisions and it should not take a ton of your attention. Attention, however, I do believe is something that you can train because many people, if you look at like the crypto market right now, for example, people pay so much attention to crypto. Well, I just left my crypto in and guess what? It's gone up more than most others who have been trading it every day, all day. Right. And their businesses, half of them have gone to shit because they've just been trading crypto all day. Yet we bought crypto a while ago, let it sit, let it appreciate. It's up. Right. Am I like, oh, crypto, this and that? Like, I don't care about this stuff. Like, I just put some in because I want to see what would happen. But that is to say, if you're thinking about investing, remember, do not apply the same success principles from business to investing. It will not work. I have luckily learned this the easy way, which is I listen to people who are smarter than me and who have more money investing than me, and I just do what they're doing. Right? I have gotten to avoid a lot of downside of investing because I've heard this from the get-go and I believe it. And so I think that there is a phrase and it was something to the matter of humans are only smarter than animals because they can learn from other humans' mistakes and animals can't. And so I say take that to heart when it comes to investing. Do what really smart people do who make a lot of money in investing and put all those principles of success on your business. Do not equate them to success in investing. And so if you like this video, go ahead and hit subscribe. I will see you on the next one.
