2. The wealthy can take on more risk

People who have millions upon millions of dollars to their name are apt to have an easier time dealing with significant losses than the average investor. As such, they can take on more risk in their portfolios -- risk you may not be in a strong enough position to bear. Imagine you were to lose $10,000 on a bum stock. For you, that might be catastrophic. For someone with millions of dollars, it's probably a non-event. As such, if you're an average investor, you're better off buying stocks with a proven performance history, strong earnings, and a clear competitive advantage. Let the wealthy invest in speculative stocks that could deliver strong returns, but could also crash and burn.

Investing in real estate or art can be a great way to grow wealth. And the ultra-rich may have the means to tie up $1 million in an income property or $500,000 in a painting, both of which aren't as easy to sell as a stock or index fund. You, on the other hand, like the typical average investor, may not have the ability to tie up even a much smaller amount of money in an investment you can't unload quickly, which is why you probably can't afford to broaden your horizons the way the wealthy do.

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4 Reasons You Can't Afford to Invest Like the Wealthy - Mooresville Tribune