Pages Menu

Posted by on Jun 14, 2017 in ETF Strategist, Featured

Retirement Reading Roundup

Retirement Reading Roundup

By Roger Nusbaum, AdvisorShares ETF Strategist

The daily email from Seeking Alpha on Sunday (the one with the links) included an article with a catchy title that amounted to the author spelling out his approach to investing and spending as a retiree in such a way as to convey the sense that he has a good handle on his needs and emotional makeup.

Knowing yourself (or your client if you’re an advisor) is a crucial point for success and something I have been writing about for years in a retirement context. This is very simple; if you understand your emotional tolerance you are less likely to make (or repeat anyway) investment mistakes and if you understand yourself well enough to know what you really need to be happy you might be less likely to waste money like thinking you must have a $100,000 Porsche when you might actually content to drive a ten year old pickup truck.

A big part of emotional wellbeing is learning how to not worry about things beyond your control. Quartz has more. It admits that this is easier said than done and while no one is infallible the investment context is, again, simple; we have no control over the ups and downs of the market. We have a whole lot more control over spending and saving habits and we can train ourselves to be less emotional or better said, train ourselves to avoid succumbing to emotion.

The above Quartz article is really about Stoicism as is a recent WSJ piece titled Rules For Modern Living From The Ancient Stoics. It is a checklist that appeals (pretty sure I’m a Stoic). Included in the list were to contemplate the big picture and think about the challenges you will face during the day. Turning these into investing and retirement concepts is pretty easy. In the big picture, any investment portfolio will have strengths and weaknesses; what holding your best performer this year, which one is your worst? More broadly, investment styles will rotate in and out of favor. Value is way behind growth this year which is a huge reversal from last year (this is likely due to the flattening yield curve). After years of lagging, foreign is now coming on strong against domestic. Value isn’t invalid, nor is domestic, nothing can always be the best and as simple as that sounds, this is where impatience can stem from which then can lead to very bad decisions. Your portfolio, or the one you build for clients will always face challenges. Investing becomes a lot easier for people who can accept this as true.

Ben Carlson had a related article titled The Problem With The Relentless Pursuit Of Happiness. Ben starts with laying out a path to happiness that seems to get there (mostly) by removing obstacles like a daily commute, paying less attention to the news, spending less and retiring and finding balance (he cites an example of exercising regularly to balance out junk food consumption). I take these comments as being about the importance of removing stressors. Some people thrive under stressful situations which adds an element of knowing yourself. Removing stressors resonates with me over choosing to be in stressful situations which might sound ironic given my involvement with firefighting but I view the calls we go on as opportunities to help people and our little department has a very low call volume and the likelihood of stress compounding like with busier departments is much less.

Maybe less related but still a good read is from the Charlotte Observer, weighing in on how far $1500 will get you retiring in Ecuador. This is a fun topic to write about. It is interesting to many people on some level even if not a serious consideration for many. My thought on how this might work has evolved. As opposed to planning to leave forever, I could see this being a temporary thing for young retirees who maybe have not accumulated as much as they would have liked, going for five or maybe ten years. A married couple whose house is paid off at 65 could rent it out. Their take after paying a management company or the like, plus just one spouse’s social security could easily be well north of $1500 and of course the second spouse could also take it if need be. In the five or ten years the portfolio could grow unwithdrawn upon and one social security benefit allowed to increase (maybe). Then this couple would be able to come back and obviously not have to worry about getting back into the housing market even if they would have to spend some money cleaning up after those years of renters.