Pennywise Poundfoolish Concept In Finance [The Wisdom Of Efficient Portfolio Management]

7 mo
4 Min Read
731 words


“There is one who scatters and increases more, but there is one who withholds than is necessary yet becomes poor prov.11:24…..what an irony”

“The penny wise pound foolish is an idiomatic expression that originated from the great Britain as it alludes to their currency, it means one that very careful in spending small amount of money or say rather stingy with little amount of money but is wasteful when it comes to bigger amount

Okay here’s a fact about this, over the years i use to be like that, i would rather safe up for a long period of time to buy some very expensive stuff, but meanwhile i was very carefree about the little things that were necessary, so i would be stingy with myself about little stuff which i over looked, but i would rather spend on expensive things over time i realize how important they are

We're all looking out to acquire some big stuff to make us feel comfortable or maybe to measure up with trends in so doing we push aside little ones that over time become pile to become heavy expenses

These are very common with most family men and women say you wish to get something big but doing that at the expense of minor little things that really matters


If that is the case then what do we do, with managing those little foxes that tends to become wolfs in no time, this brings us to the aspect of financial management,

A wise man ones said that you began spending from the very moment you wake, this cost must occur as far as we utilized certain things…. they are necessary aspect of daily living, but we must know how to properly manage our personal finances so that nothings suffers or becomes a burden in the long run

“There is he that scattereth, yet increases but there is he that withholds than is necessary yet turns to poverty”

First of all you need to understand how efficient portfolio works
As an investor you probably would wish to maximise return on investment which is a sole aim , but this varies between investors as some would target high risk return, no matter the risk involve they are willing to dive in but with a reasonable level of Guaranteed
Efficient portfolio works in opposite direction “efficient portfolio target greatest possible return on a given level of risk or return on investment (ROI) on a reasonable level of risk

What this means is that an efficient investor will likely to spread his investment in different industries and companies that are inversely co-related such that in any case scenerio he is definitely sure of his return …the wisdom behind it is that if say an investor has investment in four companies A, B, C and D……. if Company C and D crashes, loss value, decline in market share and as a result shareholders dividend is at stack… While company A and B increase in market value there will be that offsetting effect of dividend yield from company A and B

Deriving facts from the introductory statement above “He that scatterth, yet increases but he that withholds than is necessary could become poor expansiate the efficient portfolio management principles of building portfolio of asset from different source such that they are inversely co-related if one scatters investment in different source there is that assurance or guarantee that definitely in any worse case scenerio there is that surety of (ROI), but he that withholds more than is necessary(The Aggressive investors) seeking high return on high risk investment opportunities Investing all in one source, just to yield high return could lose it if the worst occurs, its a 50-50 chances at stack,


He that scattereth will increase, if you invest in multiple financial asset you will definitely reap in multiple folds no matter how small, those smaller amount in no time will sum up to bigger amount, but investing in one heavy source is risky…. there’s a saying that goes thus,,,”Don't put all your eggs in one basket”* it is pennywise to put them in separate basket and pound foolish to put them all in one basket*”

Thanks so much for the few moments and i really do appreciate the kind-hearted thoughts that proceeds here after….

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