Posted by Dave on March 11, 2014
The basis of my entire Early Retirement plan is that I will be able to achieve enough in the way of investment returns over 10 and a half years to live off for 55 years (which will bring me to age 100). Both my wife and I realize that this goal is aggressive, and may not be doable – depending on both our investment returns, as well as our spending patterns over the next decade. If either differs significantly, our plans could change.
Although our day-to-day life is relatively stress free, due to my inherent nature as a financial worry-wart I do get concerned at times about our ability to maintain the lifestyle we want to have after retirement. I get troubled about the possibility of health problems, of market crashes, and many other things that could possibly go wrong – sometimes in excess.
The thing with most of these negative thoughts is they would be an issue whether I was retired or not. I don’t get insomnia from these kind of dark thoughts, they just exist at the back of my mind sometimes – a part of my “personal finance” brain that won’t shut off. I have (to a certain extent) included contingency plans into my financial “base”.
I haven’t included either my work pension or any government money into my financial plans. My defined-benefit work pension is not inflation-adjusted, which will obviously leave me much less buying power at retirement. I would prefer not to depend on CPP coming through, as I don’t have a lot of faith in my government to pay up 30 years from now (whether right or wrong – as noted I’m a bit of a pessimist).
Either of these sources of income will provide a boost to my available dollars from age 65 – 70 onwards. This is the period of time that I am most concerned about – an age where it would be much more difficult to find a job anywhere, at any pay, and also an age range where the probability is high that health problems will become an issue and an additional boost to retirement funds will be welcome for peace of mind.
Both of these pension plans act as a savings plan that I really had no choice but to become involved with. I would have preferred to have control over either of them to do as I liked, but as a part of my overall plan, it seems like this buffer will add some insurance to my overall aggressive plan – beyond the obvious working for additional years.
Do you have a contingency in your personal finance plan?
Posted by Dave on March 4, 2014
About a month ago, my workplace laid off around 15% of the employees in my 400 person company, with no warning to the staff of the company (as is usual in these type of circumstances). I was not affected by this move, but it created quite a lot of anxiety internally with my company, as there were very few departments which weren’t impacted by the corporate “shuffle”.
Due to our fairly low monthly spending amounts, compared to the amount of money we bring in, my wife and I are able to cover all “fixed” expenses through either one of our salaries. We set up our budget like this purposefully, as in the past, my wife has had a couple of terrible jobs. I would rather she (or I) have the flexibility and freedom to leave this kind of situation, instead of feeling stuck due to our lifestyle requirements.
Stressing over money (or anything really) isn’t healthy. I recently read a book called “The Cholesterol Myth” – in it, the author described two kinds of stress. The first kind of stress is the kind you’d get being chased by a lion – once you lose the predator, the stress is removed from your life and you go back to “normal”. The second kind of stress is the dull, persistent stress experienced through work and personal relationships – the kind of thing that doesn’t have an easy fix and stubbornly nags at the back of your mind. It’s the second kind of stress that leads to health problems and is one of the main drivers of heart disease today (besides terrible diets being consumed by most people).
My wife and I would rather not have to worry about money. We think it’s healthier for our relationship and allows us to enjoy our daily lives much more. There are some things we do that would seem ridiculous to others – like having a bunch of money sitting in a high interest savings account rather than being invested, but these are done to reduce the impact of major life occurrences to our normal spending “curve”.
We are also responsible only for ourselves – we don’t have children, or even any pets that are dependent on our ability to create wealth in order to eat every day. This type of arrangement also offers some additional flexibility in our financial decisions – we can act more selfish in our spending and saving.
I am by nature a bit of a worry-wart when it comes to money, perhaps borderline paranoid when it comes to the possibility of extended unemployment. The benefit of our goal of Early Retirement, is that even if we only get part way to the goal by the time we reach age 45 (our hopeful date of financial independence) – we will hopefully continue to live a financially stress-free life.
Do you stress about money? Have you in the past?
Posted by Dave on February 25, 2014
I saw this book at the library a few weeks ago, and decided to pick it up. The title drew me in, because really, who wouldn’t want to “Strategically” invest – maybe the alternative is an elaborate dart-board system, where you only purchase stocks on a full moon? Without reading this book, I think I would still have a strategy – it just wouldn’t perhaps be as organized as is laid out in the 163 pages.
With both personal finance and fitness/diet books, a significant amount of the book is spent selling the reader on why the author’s way of thinking is different or better than everyone elses, and why you should employ their way of thinking on your life. This book is no different – 92 of the previously mentioned 163 pages are spent going into the history of the stock market and how messed up it has become in the last couple of decades. The author builds his case on why dividend-producing stocks are the best investment vehicle available. Given the title of the book, I would think that if the reader has gotten to the point of actually picking up the book and leafing through it – they are probably already sold on dividend investing and just looking for insight.
The last third of the book is the reason why I will be purchasing an e-book for future reference in my investing “career” ($13.16 on Kindle, $19.50 on Kobo….not sure how Kobo can sell for 50% higher) . There is a possibility that I haven’t read enough books on investing, but the way the author provides insight on stock analysis both from a technical perspective as well as what should be looked for off of the financial statements made his message easy to understand.
For someone interested in investing for cash-flows as I am, the book provides a long-term, sustainable investment strategy. A useful screening process is provided, which will provide a good starting point at identifying potential investments. Also provided by the author is criteria that can be utilized when deciding on whether or not to sell the stock, outside of the price – which I also found very incitive.
So, that’s my sale on this book. The author – Daniel Peris has a second book out that I will be reading in the near future. The “Strategic Dividend Investor” isn’t huge, is written in an understandable manner and provides good information – all qualities I enjoy when looking at a technical non-fiction book.
I am a fairly voracious reader, always looking for book suggestions. Do you have a go-to investment book that you keep on your shelf?