A Profitable Investment Is Not Always the Right Investment for You
By Diego Alcalá Harry Markowitz won the Nobel Prize for the theory that teaches us how to optimize a portfolio mathematically: how much to put in each asset to
By Diego Alcalá · Mon Oct 19 2026 · Investing
By Diego Alcalá
Harry Markowitz won the Nobel Prize for the theory that teaches us how to optimize a portfolio mathematically: how much to put in each asset to maximize return for a given level of risk. His work underpins much of modern finance. The irony is that when he had to decide how to invest his own retirement money, he did not use his famous formula. He split it equally between stocks and bonds. His reason? He wanted to minimize future regret and sleep peacefully. The man who taught the world to optimize chose peace of mind over the mathematically optimal solution for himself.
That story captures the difference between two ideas we often treat as interchangeable: profitability and suitability. An investment can be profitable and, at the same time, entirely unsuitable for you. Understanding why is one of the most important, and least taught, distinctions in financial life.
Profitable for whom?
When someone says an investment is profitable, our next question should be: profitable for whom, at what cost, and under what conditions? The number we are shown often comes without its context. Profitability does not exist in a vacuum. It depends on who receives the return and on their circumstances.
An investment can be highly profitable for its promoter, who earns a commission regardless of your outcome, and mediocre for you. It can be profitable under conditions you cannot meet: keeping your money locked up for seven years, tolerating leverage, or having enough cash to contribute more capital halfway through. It can work for an investor whose profile is different from yours. The return described in the brochure belongs to a set of circumstances that may have little to do with your life.
Good in the abstract, wrong for you
If I had to condense the distinction, I would say that profitability is a property of the asset, while suitability is a relationship between the asset and you. The first is impersonal; the second is personal and cannot simply be transferred from one investor to another.
The economist Paul Samuelson illustrated this with a wager. He offered a friend a coin toss: win two hundred dollars on heads, lose one hundred on tails. On paper, it was an attractive bet with a clearly positive expected value. His friend declined. The pain of losing a hundred weighed more heavily than the prospect of gaining two hundred. Yet he said he would gladly accept a hundred consecutive tosses. The same wager, attractive in the abstract, looked suitable or unsuitable depending on the setting in which it was offered.
Investments deserve the same treatment as a tailored suit. A cut that fits one person perfectly can feel painfully tight on someone else. An excellent business that demands your full-time attention can be a terrible idea if you already have three companies to manage. A ten-year opportunity is unsuitable if you will need the money in two years. There may be nothing wrong with the investment. It simply may not be right for you at this moment.
Your profile, your liquidity, your stage of life
That is why entering businesses that do not fit us is such a quiet, recurring mistake. In my view, three personal filters matter as much as the return.
Your profile. If an investment will keep you awake and make you sell in panic during the first decline, its theoretical profitability is irrelevant. You will never capture that return.
Your liquidity. Committing money you may need to an illiquid investment means buying a return with something you cannot afford to give up: access to your capital.
Your stage of life. The same aggressive investment that makes sense at twenty-five, when time is on your side, may be reckless at sixty, when you no longer have decades to recover from a mistake.
Suitability has several dimensions
We should stop measuring investments with a single variable. Profitability is a number; suitability has several dimensions. Return matters, but so do risk, time, control, and peace of mind.
I have already written that every financial decision is a trade-off: choosing stability can mean giving up potential return, and pursuing return can mean giving up stability. I am not repeating that argument here, but extending it. Suitability is the balance of that entire exchange as it applies to your particular circumstances. An investment suits you when the whole package, rather than the return alone, fits your life.
What this means when you invest across a border
For a Canadian or another foreign investor considering a business in the United States, the same distinction deserves attention before enthusiasm becomes a commitment. A business can look attractive as an investment and still require more time, supervision, or available capital than you are prepared to provide. The question is not merely whether the opportunity works for someone already on the ground. It is whether it works for you and the life you actually have.
I would apply the same personal filters rather than assume that an appealing opportunity becomes suitable simply because it is located in another country. How much attention can you give it? When might you need your money back? What degree of uncertainty can you live with? These are questions about fit, not promises about returns, immigration outcomes, or how a particular transaction should be structured.
Learning to say, “It is profitable, but it is not right for me”
Everything leads to a sentence we need to become comfortable saying: “Yes, it is profitable, but it is not right for me.” That is difficult because it sounds as though we are leaving money on the table. Our fear of missing out is powerful, and many poor investment decisions rest on that fear. I have argued before that every no to an investment that does not fit you is a yes to your peace of mind and your focus.
Saying this is a sign of maturity, not weakness. It recognizes that promoters and gurus can earn their money by convincing you that every profitable opportunity is meant for you. Almost none of them are. The best question we can ask never ends with, “How profitable is this?” That is merely where it begins.
Do not chase profitability as an absolute value. Filter it through who you are, what you need, and where you are in your life. The best investor is not the person who identifies the greatest number of profitable opportunities. It is the person who knows which of those opportunities are also right for them.
And you: how many times have you said yes to something simply because it was profitable, without asking whether it truly suited you?
Diego Alcalá · October 19, 2026
Educational content. This article does not constitute financial, tax, legal, immigration, or investment advice. Each decision requires an individual assessment.
Illustrative photograph: a tailor taking a client's measurements, by Tima Miroshnichenko on Pexels, used under the Pexels License. It illustrates the author's tailoring metaphor; it does not depict the author or imply endorsement by the people pictured.
Read Diego Alcalá's original Spanish article on Comprando América.