Minimum Viable Financial Plan

Minimum Viable (Financial) PlanLast week I introduced the idea of a minimum viable portfolio based on the concept of the minimum viable product.

Today, I’d like to extend the minimum viable product analogy to your financial plan.

Your minimum viable financial plan, that is.

We’ve already defined the minimum viable portfolio as one with the highest return on investment versus risk.

Therefore, I’d like to apply the same definition to your financial plan . . .

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Minimum Viable Portfolio

Minimum Viable PortfolioIn the world of product development, there is a concept called “minimum viable product.”

Minimum viable product (MVP) is defined as the product with the highest return on investment versus risk.

Essentially, before a product development team sinks hours into research and development trying to achieve the perfect product to bring to market, they instead figure out the quickest path to get a working product into the market.

Then they let the market drive their product improvements, if any.

Here are a few examples of MVP’s that have become commercial successes. You may recognize a few of them.

Now let’s consider a different MVP . . .

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Change You Can Count On

CHANGEYou may recognize the title above from President Obama’s 2012 campaign.

“Change you can count on.”

Regardless of your political persuasion, this is a brilliant campaign slogan.

You probably also recognize this quote from Heraclitus:

“Change is the only constant in life.”

I’ve even tackled the idea of being prepared for inevitable change in your life before.

Yet so many financial advisors create financial plans that aren’t designed to be flexible and adapt to change. Assuming of course they’ve worked with you to create a plan to start with.

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Premature Prescriptions

Prescribe FirstUnless you’re going to see Dr. Nick, you assume your doctor is qualified and will look out for your best interests.

I think it’s also safe to assume that they will perform some sort of diagnostic before prescribing any treatment.

I learned firsthand that this isn’t always the case.

Back in 2002, I had this dull ache in my side that just wouldn’t go away. It hurt when I breathed. It hurt when I moved. It hurt when I was holding my breath and standing perfectly still.

Despite this, being in my early 30’s at the time, I ignored it and went with Elizabeth on a planned trip to Hawaii. Jumping off cliffs into the ocean and horseback riding were a lot of fun, and we had a great time.

But that trip wasn’t doing any favors for my aching side. Neither was that long flight.

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Amor Fati, Part 2

Quick History LessonIn last week’s article, I talked about “amor fati,” or the love of fate.

I shared my belief in the futility of focusing on things beyond your control and the trouble with rigid, inflexible financial planning.

However, I also appreciate our shared desire as homo sapiens to peer into the unknown and bring order and understanding to the things beyond our visibility.

We want to be prepared for whatever the future may hold, even though we can’t predict it.

The future is unknowable, but we still want to know . . .

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