The Best Investment Strategy for Retirement

If you plan to retire sometime in the future, you must start saving and investing as soon as possible. The first few years in investing is spent with learning and gaining experience. That means, you will make some mistakes and lose money.

The best way to minimize losses is to start small and start virtual. By virtual, I mean practicing in virtual exchanges with real world, real time stock exchange data. That way you avoid losing money while you are gaining experience.

Hindsight Bias

When you first start investing, you look at the price charts and you think that you can buy at the lows, sell at the highs, and make a living doing that. What is the best investment strategy based on that assumption? Find an instrument that will make the greatest price move in your favor and go all in on that.

Nothing can be further from the truth. This is a perfect example of hindsight bias. Trying to call the tops and bottoms of a market is a typical novice mistake.

In real time, it’s impossible to correctly predict which assets are going to increase or decrease in value, and which levels are the top and bottom. The prices might seem to be too high and they can go higher. They may seem to be too low and they can go lower.

Now, stop reading and think about the sentence above and the following question.

What is the best investment strategy based on that fact?

You might come up with the following answer. “If it’s impossible to know which asset will appreciate or depreciate in value, then it’s better to not invest at all.” That answer would be correct, if your base currency, USD or euro, would retain its value over time. It doesn’t. Inflation is the official policy.

If you keep all of your savings in USD or euro, you are guaranteed to lose value over time.

Let’s go over our assumptions again.

  1. Savings in USD or euro will lose some of their value over time.
  2. We can’t know which asset will appreciate or depreciate in value.
  3. We can’t know which levels are the tops and which levels the bottoms.

What is the best investment strategy based on those assumptions?

The best strategy based on those assumptions that I came so far is to hold a diversified portfolio. That includes index etfs, individual stocks, commodity etfs, some cash, and so on. I hold even some bitcoin in my portfolio. My current bitcoin holding is 4-5% of my savings.

My goal is to be never satisfied with the performance of my portfolio but also never be disappointed with it. I don’t try to be the investor that makes the most money from their investments. My aim is to be the investor that retains the value of their investments and make some profits on top of that. This might not be the sexiest investment strategy. However, it’s a realistic one.

I’m never 100% in a single asset, including cash. That would mean I have some superhuman intuition to see the future and predict the asset that would increase the most in value. I don’t have that kind of intuition. I don’t know any other person that has that kind of intuition.

Sure, there would be people who are 100% in a single asset that would increase at least tenfold in value. They will look like geniuses after that price increase. That’s again another example of hindsight bias. Every few weeks, there’s a person who wins the jackpot in the lottery. Does that mean that the person had the best strategy to spot the correct numbers in lottery?


Savings in USD and euro will lose some of their value over time. The retail investor can’t spot the tops and bottoms of the market. The best investment strategy based on those facts is to build a diversified portfolio over years.


This post is for information purposes only and not intended to be investment advice.