💰 How I invest in real life

Learn the "scoop" method.

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The Really Rich Journal

Risk comes from not knowing what you are doing.

Warren Buffet

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The Weekly Tone

I want to share with you my actual investing approach—as in—what I practice in real life. This won’t be a cute, 30-second sound bite. If you don’t care about this stuff, feel free to skip this email. Oh, and you better believe I gave my strategy a funny name.

I call "scooped risk” and you’ll see why in a moment.

And before I get sued, this is not financial advice and is for educational purposes only.

This involves taking maximum risk in startups or small business investments (or what you can call “private investments” as a whole)—where you have specific knowledge—hedged with principal-protected assets (as you know by now, I own annuities).

I ignore the lukewarm middle ground of stocks and bonds; and go full throttle at the “tails” where the real action happens. The “scoop” refers to the shape of my risk curve - lots in safety, lots in risk, with little-to-nothing in the middle. Experts may also call this a “barbell” strategy. You need heavier weight in safety to hedge the volatility in risk.

No, this isn’t diversification, rather it’s hedged and stable in it’s extremes.

Why Most People Are Stuck in Middling Risk

Most people have their retirement savings spread thinly across an arbitrary mix of stocks and bonds (or fee-laden funds of such), which neither offers stellar returns nor complete safety. The end result? Mediocre at best, retiring in poverty at worst.

And it’s not your fault either—these were the options given to you during 401k benefits elections.

You probably have this “humped” risk—with a ton in the middle and little at the tails. If this is you, you’re better off reducing the middle for far more weight at the bottom (safety) and sprinkle in a touch more risk depending on your age.

Because of this, a staggering number of Americans are retiring with far less than they need.

Let’s look at the data:

  • Outliving Savings: According to the Employee Benefit Research Institute, nearly 50% of older Americans are at risk of outliving their retirement savings! [^1]

  • Middle-Class Struggle: A Wall Street Journal analysis shows that many middle-class retirees have less than $150,000 saved, a sum that is woefully inadequate given today’s life expectancy and living costs.[^2]

  • Declining Social Security: With the future of Social Security uncertain, relying on it as a primary income source is risky.

So, what can you do to ensure you’re not part of these sobering statistics?

Enter the scooped risk approach.

Max Risk: The Power of Startups & Going Local

Startups and small businesses are the supercar of your investment portfolio—fast, exciting, and full of potential. But they can also lose traction in a fabulous way and slam into a guardrail. Now, this doesn’t always mean Silicon Valley tech. The high-growth dry cleaner in town may catch your eye. This is your call. Do not ask me (the author) what specific business to invest in.

But here’s the catch: focus on areas where you have specific knowledge, not what’s hot. Why?

  • Leverage Your Expertise: You're more likely to make informed, winning bets if you're investing in industries you know inside out—be it tech, healthcare, or renewable energy. Don’t invest in blockchain if you can’t write the code. Get it?

  • Potential for Monumental Returns: While risky, the rewards from successful startups can be astronomical, far outweighing the tepid returns of traditional stocks and bonds.

Maximum Safety: The Stability of Annuities

While you’re gunning for high returns with startups, you’ll need a reliable safety net—enter annuities. These are your financial seatbelt, providing zero-risk, guaranteed income streams. They need to be A+ rated. These indexed annuities are no- or low-fee; not what Uncle Bob got scammed on in the 90’s.

  • Guaranteed Accumulation & Income: Annuities compound without losses or taxes and can be harvested to ensure you have a steady stream of income for life, a safety buffer that mitigates the risk of outliving your savings. You can’t die poor with an annuity.

  • No Investment or Timing Risk: Unlike stocks and bonds, annuities don’t lose money. This offers an unshakeable foundation upon which to build your high-risk investments. You can’t take a distribution in an unfortunate down period. Think: what did retirees do in 2008? Right, they just didn’t retire.

The Numbers: Comparing a 60/40 Retiree with a "Scooped Risk" Investor

Let's break this down and compare the traditional 60/40 portfolio with a "scooped risk" approach, where the investor takes significant risks in startups but balances it out with the security of annuities. I will skip showing my arithmetic, but trust me, the math maths.


An initial investment of $100,000, no additional contributions, a final-year market downturn of -3% for the 60/40 portfolio (for timing risk), and a startup return of 10x realized (this will likely be far higher, but I’ll stay conservative) in year 15, with those funds then reinvested into the annuity.

We’ll compare these over 30 years. That’s your career.

Annual Rates of Return:

  • 60/40 Portfolio: 6% (weighted average of historical stock and bond returns) with the possibility of losses. Takes small loss of 3% in final year due to timing risk.

  • Startup Investment: 25% of the portfolio, with 5 bets of $5,000 each. Only one out of five bets returns 10x. Reinvest at year 15.

  • Annuity: 75% of the portfolio with a consistent 8% return (taking annual effective equity indexed returns over last 10 years), no losses. Adjusted for 1% fee.

Now, let’s race over a 30 year career (yes, this is a slow race). Drumroll please. Who wins?

  • Traditional 60/40 Portfolio - Final Value: $525,938

  • Scooped Risk Approach - Final Value: $913,959

Shocking isn’t it?

Wait! I can hear it already.

Nick you forgot something! What about the S&P500 purist who rides the tide in low-cost equity ETFs for 30 years?

They’d have $738,390. Womp womp.

Oh, if you’re Scooped and all your startups fail (which is likely) you’d still have $820,275.



By dividing the investments into high-risk startups and low-risk annuities, the scooped risk investor significantly outperforms both the traditional 60/40 portfolio and ETF purist—resulting in almost double the final value of the most common portfolio prescription.

This strategy ensures a robust safety net while still allowing for the possibility of outsized returns from smart, informed risks.

OK, no more math for today. Get moving, it’s Monday.


[^1]: Employee Benefit Research Institute, 2021 Retirement Confidence Survey. [^2]: Wall Street Journal, "Middle-Class Retirees Struggle with Savings," 2022.

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