Posted by Tim Stobbs on July 25, 2012
Mmm, I’m a bit unsure on how to best describe something that tends to be so far reaching, but I will make the attempt. New Escapologist (NE) magazine, which by the way also has a blog, is best described by its introduction:
New Escapologist is a magazine for white-collar functionaries with escape on the brain.
Drawing from philosophy, literature and original humour; we discuss practical escape routes from the present-day predicaments of demeaning work, status anxiety and urban lethargy.
Each issue is a compendium of funny and practical essays on the subject of escape. We promote freedom, anarchy and the absurd.
So while the Canadian Dream blog tends to fall into the financial independence and early retirement bend, NE takes it a step further of getting out as soon as possible. How? Well in issue #3 which deals with the practical issues it suggests the following format as an option.
- Cut Expenses – Any going for FI would have already done this, but its good to start with stop buying crap that doesn’t make you happy and doesn’t serve a purpose.
- Save Like Mad – The more you save the sooner you can get out.
- Beef Up Your Skill Set – Use work as a training ground to learn as much as possible on different skills sets.
- After Developing a Escape Fund, Quit – Yes, rather than going for full FI, get a beefy escape fund and get out now.
- Enjoy your Escape – Consider it a sabbatical or long vacation rest and recharge from the horrors of work with up to half your escape fund.
- Seed Money – Use the remainder of your escape fund to start your own cottage industry or small business. The idea is to have a business the covers your basic expenses leaving you time to actual enjoy living your life.
Overall I rather like the concept as it mirrors somewhat my current plan to some degree, but it just gets you out the door sooner. It’s more of FI by starting your own business route, but that isn’t the only way ‘out’ and points out what others have done to escape the odd world of work in a cube. I should note that they just released the entire back catalog as a PDF, so I got all six issues for $40 and highly enjoyed reading them.
Since the issues also look at the somewhat absurd things it is a fun read which I often felt was very well written. Some examples include essays on the absurd things they teach us in school in the theory of getting a better job (which of course doesn’t get used at all), on the practical side a report card on someone’s escape just one year into their plan, and even a essay on the digital bohemian.
If you have any doubts on if you would enjoy it or not I would suggest reading the blog as you can get a good feel for the publication by the posts. I personally enjoyed the entire back catalog and read all six issues in just a few days, but do keep in mind the publication isn’t serious all the time. You have to laugh sometimes just to get through the day.
Posted by Tim Stobbs on July 19, 2012
Well during the summer I’ve got a little bit more reading done so expect a few more book reviews in the next few weeks. First up is The End of Growth by Jeff Rubin.
Jeff points out that modern society is based on cheap energy and when oil breaks $100/barrel the cheap part vanishes quickly as prices keeps rising. What is really interesting is just how dependent is the world on cheap energy to fuel growth, which Jeff demonstrates fairly well in the book. So with huge sovereign debts all around the world Jeff is predicting the basic fundamental of economics endless growth might actually shift to a zero sum growth world. Where China could grow, but perhaps at the expense of the US for example.
After this point Jeff pointed out an interesting idea that the current economic theory doesn’t include oil prices and thus keeping interest rates low won’t help stimulate growth like in previous times if oil prices are too high (big deficits aren’t helping the situation either). The rules have changed, but the central bankers haven’t caught up to that yet. The new rules of the central banks should be to keep inflation in check and accept the lower growth. He also argues that in some countries that artificially keep energy prices low won’t help in the long run, people have to start adjusting now.
The bad news is your retirement planning projections of growth of your portfolio will need to shrink if Jeff is right. This is a huge shift on the standard assumptions of growth since if you are truly in a zero sum game to get any growth in a portfolio is going to take more than just using index funds.
Rather that dwell on doom and gloom of this situation, he points out that prices of energy supply might even help society. After all who needs a carbon tax when your basic price of power, gas and natural gas are high enough to shift energy patterns towards conservation like in the Netherlands where power is like $0.30/kwh or three times what I pay because of carbon taxes. My bill is low now because I don’t waste power, but at those prices a lot of other people would get serious about conserving as well.
So how do you take such a huge macro issue and bring it down to personal situations? Well on the personal side Jeff advises that you pay down your own debt ASAP. He also suggests that the new jobs will be in local manufacturing when it costs too much to ship things over seas and back. You might want to have many streams of income from different gigs to support you better if you lose a job in an industry in a down swing. Then at the end he suggests that perhaps less growth won’t be bad as we can have more time to slow down and breath again.
Of course in my mind all that advise sounds damn similar to what I’m trying to do while I’m going for financial independence. It could be interesting if society as a whole starts to learn to live with less stuff, smaller homes but more free time.
Regardless of if Jeff’s view of the world comes true or not, I did enjoy this book. It was a quick read and pointed out several interesting ideas for me to ponder. Also I give him credit for taking fairly complex economic ideas and presenting them in a easy to understand fashion.
Posted by Dave on July 3, 2012
This is a guest post by Dave, who is also looking to retire no later than 45, but unlike Tim has no kids and doesn’t want any. Dave is from Ontario and is working towards his CGA certification.
I have been doing some reading in a quest to learn how I will invest my retirement fund, once my house has been paid off (which at our current pace will be in about 2 years). One book that I recently read, and found interesting was titled “A Maverick Investor’s Guidebook” – written by Mal Spooner. Spooner is a money manager and founder of a former mutual fund company, Mavrix Fund Management Inc. I liked the way the book read, and like most books of this nature gave me some information that I can use in the future, but also left some questions when I was done reading it.
The entire book pushes the reader to become a Maverick investor (or really, to become a Maverick in all facets of life). He is very much against the “herd mentality” that is prevalent in investing and goes into the way of thinking that is needed to become a Maverick. A lot of the book is spent explaining what a bubble is and when you can tell you’re in the middle of one (and how to stay out of it).
There was one chapter that the author wrote about diversification that seemed particularly different than most investment books that I have read. The focus of the chapter is on diversification of stocks. The author does not believe that diversification reduces risk. In fact, his methodology of diversification closely resembles a method of card counting used in Blackjack, when the “count” is ideal, you significantly increase your bets. Spooner’s “Maverick” methodology would be as follows: Start with a portfolio of 50% stocks and 50% bonds. In the event that the stock market decreases significantly (which generally increases the value of bonds), you would take the bonds which are selling at a premium, and increase purchases of stocks, which are now on sale, which isn’t really a method of diversifying at all, it is more a method of market timing.
What I appreciate about Spooner’s investment style, which doesn’t necessarily mean I will follow is the aggressiveness that he pushes. While I don’t really know if I would basically push “all in” as is advocated, there are very few books out there (that I’ve read) which would tell an investor to leave their “safe” holdings and invest in what is currently tanking. The main risk of the strategy is that you will time your purchase or sale decision improperly.
When the investment portion of my retirement plan begins, I would like to think I will employ some aggressiveness to my decision-making, but given my level of risk aversion and feelings towards losing significant amounts of money, this may be wishful thinking.
I’m wondering how you developed your investment strategy? Did you learn from someone else (a book, or website)? Your own mistakes?