Monday, as I was finishing my workout and unloading the barbell, I noticed something interesting.
I had accidentally unloaded the bar unevenly on the squat rack.
So here’s this steel bar sitting horizontally on 2 hooks about four-and-a-half or so feet up off the ground… with 100+ lbs loaded on one side and nothing on the other side.
The bar itself weighs just 45 lbs so there’s not much balancing that 100lbs.
And yet, the bar stayed balanced on the hooks in the squat rack. It did not fall over, even though it seems like it should have.
If you think about it, that’s quite amazing.
It’s just physics.
It got me thinking about a financial concept called “the barbell strategy” where a low risk asset is balanced by a high risk investment.
Traditional investing doesn’t apply in this strategy. There’s only a conservative, stable, asset and then high risk assets are used to rapidly grow the savings.
The key to making this strategy work is to have the right balance of safe money and risky money.
But assuming you do it correctly, you have an investment strategy that potentially produces double digit returns with very little risk of your barbell “falling over”.