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Don’t Make Me Say I Told You So 269

growth over time. The growth is necessary to offset the effects
of inflation and taxes over the course of what may be a lengthy

retirement.

It would be great if investing for retirement was as easy as
buying federally- insured investments like certificates of deposit
(CDs) and Treasury bills, but, as we’ve seen, it’s just not that

simple. Over time, these fixed-income investments have not

provided enough growth to accumulate a nest egg that would
have generated the income necessary to fund a long retirement,
at least for most retirees. For the vast majority of investors,

the need to have a growing investment portfolio means that

a significant percentage of their investments will have to be
allocated to stocks. To invest in a diversified portfolio of stocks,
it usually makes sense to build a portfolio by investing in mutual

funds, ETFs, a stock index fund, an individually-managed stock

portfolio, or some other form of diversified, professionally-
managed fund.

Investing in stocks, however, is not the same as going to
Las Vegas and putting all your money on black on the roulette
wheel. Investing in a diversified portfolio of stocks, using one of

the vehicles I just mentioned, has historically provided returns

that have outpaced the corrosive effects that inflation and
taxes have on a retirement nest egg. A significant percentage of

Chapter 6: Your Action Plan