Anyone reduce their risk rather than buying more?

[Jack B.]

Buying more real estate may increase your wealth faster, but at additional risk. Once you have money, even if just over a million, could it be better to reduce your risk rather than adding more risk by going into more debt?

Consider Dave Ramsey and all of his loans getting called. Technically investment property loans can be called at any time if you read your contract. One can also have a major natural disaster affect their area and have all of their properties ruined. I know some will scream that insurance will cover you, but not always...They can deny your claim and taking them to court over it may add to your problems if you lose and have legal expenses now to boot. Or you might not be able to get earthquake insurance in some areas for example. 

Paying off some or all of your properties may not make you the most money but it reduces your risk. You may still be exposed to civil liability risks, but it would make sense that you are more likely to be sued when you have 100 units than you would if you have 10, as you are far more exposed to liability with 100 people.

Then again having more money by taking one more risk may insulate you financially a little bit. If you end up worth 5 million and get sued for 1 million, you're still doing OK...But if you have only one million and get sued for 1 million, well...

[Russell Brazil]

This is an interesting question, because in 2009-2011 I took a lot of risks, by buying in the face a collapsing economy. Then I shifted towards reducing my risk as my goal shifted from wealth creation to wealth preservation.  But I was just discussing with @Brendan Lawrence just last week, that now with a certain amount of wealth, maybe it is time to shift towards taking on some more risk in the portfolio after getting over a hump of a getting to a net worth with a certain comfort level.  If Im to hit my net worth goal I have for age 50, I likely do need to add a little bit more juice back into the equation.