Comments on: Margin of Safety http://blog.canadian-dream-free-at-45.com/2009/04/08/margin-of-safety/ A Blog About Early Retirement and Happiness Thu, 09 Sep 2010 12:44:27 +0000 http://wordpress.org/?v=2.9.2 hourly 1 By: Canadian Dream http://blog.canadian-dream-free-at-45.com/2009/04/08/margin-of-safety/comment-page-1/#comment-23256 Canadian Dream Mon, 13 Apr 2009 13:23:38 +0000 http://blog.canadian-dream-free-at-45.com/?p=665#comment-23256 Adam, Good point. That is part of it. Hazy, I actually usually treat backup plans separate from the margin of safety. I consider back up plans like down sizing your home, or working part time. They are typically things you don't want to do, but can if you need to. Margin of safety is mostly about extra cash. Chad, I don't understand your question. MFD, Good point. Being conservative does have the advantage of you typically won't be disappointed by working longer than you thought. Tim Adam,

Good point. That is part of it.

Hazy,

I actually usually treat backup plans separate from the margin of safety. I consider back up plans like down sizing your home, or working part time. They are typically things you don’t want to do, but can if you need to. Margin of safety is mostly about extra cash.

Chad,

I don’t understand your question.

MFD,

Good point. Being conservative does have the advantage of you typically won’t be disappointed by working longer than you thought.

Tim

]]> By: mfd http://blog.canadian-dream-free-at-45.com/2009/04/08/margin-of-safety/comment-page-1/#comment-23142 mfd Sun, 12 Apr 2009 13:45:08 +0000 http://blog.canadian-dream-free-at-45.com/?p=665#comment-23142 I am definitely one of those with a conservative margin of safety. I calculate my returns at 5% and inflation at 3%. I don't think its fear that causes me to do it. I figure if I can over come the challenge of achieving my goals in a worst case scenario (high inflation, low returns) then if things turn out better I may be able to retire sooner or be able to start spending a bit more money. I am definitely one of those with a conservative margin of safety. I calculate my returns at 5% and inflation at 3%. I don’t think its fear that causes me to do it. I figure if I can over come the challenge of achieving my goals in a worst case scenario (high inflation, low returns) then if things turn out better I may be able to retire sooner or be able to start spending a bit more money.

]]> By: chad http://blog.canadian-dream-free-at-45.com/2009/04/08/margin-of-safety/comment-page-1/#comment-22775 chad Thu, 09 Apr 2009 03:15:55 +0000 http://blog.canadian-dream-free-at-45.com/?p=665#comment-22775 with gic rates so low does that mean the margin of safety is riskier being in the market? with gic rates so low does that mean the margin of safety is riskier being in the market?

]]> By: Hazy http://blog.canadian-dream-free-at-45.com/2009/04/08/margin-of-safety/comment-page-1/#comment-22760 Hazy Wed, 08 Apr 2009 23:45:31 +0000 http://blog.canadian-dream-free-at-45.com/?p=665#comment-22760 Isn't having a backup plan and having extra cash basically the same thing? Both could reduce the fear of failure and provide a margin of safety. Sounds like risk management to me...a good good thing to do. Isn’t having a backup plan and having extra cash basically the same thing?
Both could reduce the fear of failure and provide a margin of safety.
Sounds like risk management to me…a good good thing to do.

]]> By: Canadian Money http://blog.canadian-dream-free-at-45.com/2009/04/08/margin-of-safety/comment-page-1/#comment-22752 Canadian Money Wed, 08 Apr 2009 21:44:42 +0000 http://blog.canadian-dream-free-at-45.com/?p=665#comment-22752 Part of reality is the surprises we were not even thinking about. Taleb calls them Black Swan events. For example, when I safety margined my income for retirement I did not know that 5 years into retirement the market would crash as much as it has. As a result, I have a dependent that may remain a dependent longer. In addition, my pension fund recently sent out a letter warning that pensions have the potential to be reduced if the fund loses a larger amount than 'their safety margin' allowed for (my words not theirs). I think it is always good to have a healthy safety margin in all things. I always look twice when crossing the road and when changing lanes. Every decade or so that habit has kept me from having an accident. So safety margins are applicable with non-dollar issues as well. In one instance, I would have been killed crossing the street by a speeding car going through a stop. It was intially hidden from my view by a bus at the stop sign who allowed me to cross in front of it. I came close to dying about 2 years before retirement...that would have been a bummer! Part of reality is the surprises we were not even thinking about. Taleb calls them Black Swan events.

For example, when I safety margined my income for retirement I did not know that 5 years into retirement the market would crash as much as it has. As a result, I have a dependent that may remain a dependent longer. In addition, my pension fund recently sent out a letter warning that pensions have the potential to be reduced if the fund loses a larger amount than ‘their safety margin’ allowed for (my words not theirs).

I think it is always good to have a healthy safety margin in all things. I always look twice when crossing the road and when changing lanes. Every decade or so that habit has kept me from having an accident. So safety margins are applicable with non-dollar issues as well.

In one instance, I would have been killed crossing the street by a speeding car going through a stop. It was intially hidden from my view by a bus at the stop sign who allowed me to cross in front of it. I came close to dying about 2 years before retirement…that would have been a bummer!

]]> By: Adam http://blog.canadian-dream-free-at-45.com/2009/04/08/margin-of-safety/comment-page-1/#comment-22740 Adam Wed, 08 Apr 2009 19:40:33 +0000 http://blog.canadian-dream-free-at-45.com/?p=665#comment-22740 It's all about how big a bullseye you want. It's always easier to hit a larger bullseye. It’s all about how big a bullseye you want. It’s always easier to hit a larger bullseye.

]]>