I personally don't think so.
For us, we saved my AUM while working. So every few months, we would just buy some stocks and slowly built up our portfolio. It was simple to manage cos it wasn't a lot of money every few months.
I started feeling some discomfort when I was rebalancing our portfolio a few years later. I was selling down some stocks and consolidating our positions in other stocks when I noticed that I needed to make large purchases to consolidate. It wasn't just a bit at a time anymore. That was when I realized that handling larger sums of AUM wasn't as easy as it sounds. I was fortunate that I accumulated it slowly cos it allowed me to get used to the numbers gradually and that made me confident in making larger orders cos percentage wise, the numbers were still correct.
If it's 10% City Dev then it's 10%
So $5,000 or $50,000. If I used to buy $500, well, now is going to have to be $5,000 allocations. Ok maybe I might do $2,500 in City Dev and $2,500 in Capitalnd, but no way would I be doing 100x $500 different stocks right. So the numbers which I was used to just had to be scaled accordingly.
I was talking to my friend recently. He made a huge chunk on a risky leveraged bet and got some crazy returns. We were discussing about being ready to handle large amounts of money and he admitted that it wasn't easy to get used to it. He's a close friend of mine with some financial discipline so he said he locked up the money for a while and took out only what he was used to. He's planning to sit on the funds for a bit before taking them out for reallocation. I think that's pretty wise. Cos the mind might not be ready for the sudden fortune. Everything needs to scale up accordingly but the mind is not ready to suddenly scale everything by whatever multiple that sudden fortune has brought.
So if you think that you are ready to handle a sudden fortune, you may want to think about it again. Am I ready? I can truthfully say, "I do not know." Let's say I win the toto Chinese new year ang bao draw. Suddenly I have $10m in my account. I will likely follow my friend and sit on the funds for a bit before deciding on what to do with it and how to allocate it. Maybe I will look at my bank statement daily, until I get used to the numbers that I am seeing before deciding what to do next.
You may think that as a frugal person it's not so easy to go astray, but I'd prefer to err on the side of caution. Maybe I might increase my spending by just a little bit, go to further places for my holidays, or get that Mercedes which I was hoping for, then... Since I have so much money, I might want to get a new Mercedes instead of an old one. And before I know it, I maybe down $5m. Hey you never know... So I'd prefer to minimize the probability of that happening. Cos there's a high chance that I would loosen my spending a bit if I encounter a sudden fortune.
Hey... Come on... I'm only human.
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