The Brocoli and Pizza Portfolio Approaches

broccoli wikipedi freeThe enclosed article entertains while it describes the difference between investing as a means to an end, rather than the end itself. This article will very briefly describe how easy it is to get the two confused.

There are a lot of foibles that lead many to fool themselves that they can be above average and beat the markets. Maybe they did come out ahead once, but that tricks them into ignoring all the other cases where they did not. The real truth comes out in the end … can they really retire on time?

You see, the answer to that question should have nothing to do with how the markets are doing right now. If your ability to retire depends on what the markets just did, then that should be scary. That means you relied on the pizza approach (described in article below) based more on speculation than on a prudent plan. This also means that retiring, and staying retired, depends on the markets … and that’s scarier because that means you really depend on something you have little control over.

You can plan on retirement AND take part in the markets through prudent investing. Prudent investing is the broccoli portfolio. Not very exciting, but better for you in the long run. Why? Because prudent investing may help you retire, and stay retired, regardless of what the markets do. Yes, you may need to make small adjustments along the way. However, that is much better than having to go back to work, or keep working. What really matters? How much you save and how much you spend.

By separating the concepts* of speculating and investing in your minds, and by separating the portfolios that do each, you may be able to hold onto those bragging rights and still reach your goal of retirement (and staying retired).

 

*The profession calls this “core” and “explore.” Core would be broccoli, while explore would be pizza in the context of this article.

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