My First Million
The best business ideas come from noticing what's working and doing it better, faster, or for a different audience.
For entrepreneurs who achieve significant exits, extremely conservative index fund strategies (70-80% allocation) are optimal for wealth preservation despite appearing overly cautious.
The Reasoning
After achieving financial independence through high-risk entrepreneurship, the psychological and practical benefits of guaranteed security outweigh potential higher returns from active investing.
What Needs to Be True
- Exit amount is sufficient for 3% withdrawal to fund lifestyle
- Investor has separate income streams for current needs
- Investor values stress reduction over return maximization
- Historical market returns continue long-term
Counterargument
This approach severely limits wealth growth potential and may not keep up with lifestyle inflation or economic changes over decades.
What Would Change This View
Evidence that conservative investors consistently underperform in long-term wealth building or that active management provides better risk-adjusted returns for this demographic.
Implications for Builders
Focus on achieving one significant exit rather than multiple moderate successes
Plan post-exit strategy before the exit occurs
Consider wealth preservation as a legitimate business strategy
Don't judge others' conservative approaches if they've already 'won'
Example Application
“Entrepreneur who sold company for $20M puts $15M in index funds, continues earning $500K from new ventures, never touches the index fund principal despite it seeming 'boring' to other entrepreneurs.”
Related Knowledge
Wealth Preservation Framework
A conservative investment approach focused on maintaining purchasing power and reducing stress rather than maximizing returns, typically used after achieving a significant financial milestone.
Second Derivative Spending Rule
A cash management principle where you never spend business income directly, but only spend the investment returns generated from that business income.
Investment Thesis Litigation Framework
A systematic approach to evaluating competing investment or business theories by collecting multiple expert perspectives and weighing evidence like a legal case.
Systematically evaluate and optimize personal investment allocation through peer feedback
Clear understanding of current allocation, identification of blind spots, actionable feedback from trusted peers, and refined investment strategy aligned with goals.
Convert entrepreneurial success into sustainable long-term wealth
Financial independence where investment returns can fund lifestyle indefinitely without touching principal, plus continued income from new ventures.
Personal Capability as Safety Net
Viewing your own skills, knowledge, and earning ability as the primary financial safety net rather than relying solely on savings or investments.