Posted by Canadian Dream on October 12, 2011
In retirement planning perhaps one of the most common issues people come up against is doubt. They doubt that their plan will work, they doubt that they can actually save enough, they doubt their ability to invest or even doubt why they should save at all. If you have ever felt this way about your retirement: congratulations! You are in fact still human.
I would be seriously worried if you have never doubted yourself or your plan when it comes to retirement. You see people really aren’t hardwired to plan that far in advance so a lack of doubt to me would indicate your are either brutally over confident or your plan is seriously missing a few things.
I personally doubt my plan at least once every few months. It could be triggered by poor investment performance, or a few additional expenses that come up that I wasn’t expecting. Regardless of the reason I end up with that empty feeling in my gut and a worried expression on my face. Yet after this happening a few times I’ve learned that doubt is actually a sign to learn more.
Doubt usually exists in a situation where you feel off balance from a lack of information or confidence in the information you already have. So for me I usually treat doubt as a sign to go out there and learn more about what is bothering me at the moment. So if I have unexpected expenses I will ask: why didn’t I see this coming? Do I have enough money in my plan to cover something like this in the future?
I find answering these questions and writing down my issues puts my doubts back into a reasonable context where I can make a valid decision on the risk of the event occurring again. From there I can look at the overall risk management of my plan and decide if I need to adjust anything. For example, in my last run of retirement calculations someone brought up a point that I didn’t have enough in for home maintenance, which after a little research I agreed with them and increased the amount.
Perhaps the only really bad reaction to doubt is to give up on your retirement plan and stop saving for it. This isn’t to say that you can choose to save less if you need to, but giving up entirely is dangerous. Why? Because by stopping that momentum you might never get back onto that track again. So while your foot is just fine today, you might have just blown off one of your future feet ten years down the road. The only wrong choice with your doubt is to give up entirely.
So what do you do with your doubts? Write them down, talk to someone about them, read an inspiring book or what works for you?
Posted by Canadian Dream on August 10, 2011
As this latest slide in the markets I keep reminding myself of what happened in 2008. I got nervous and I was really pushing the limits of my comfort zone with the losses in my equity part of my portfolio. Yet I still recall the one real benefit of 2008: I bought all the way down and made a nice profit in 2009 from it.
So this time around I significantly more at ease with the entire ‘panic selloff’ that recently occured. I ask myself the following questions:
- Has the fundamentals of any of the companies I own changed that much from last week? No.
- Has the debt downgrade of the US really going to gut all growth around the world for the next decade? Likely not.
- Is the market then likely reacting more out of emotion rather than real issues? Almost certainty.
So I have changed my plans a little bit for this year. It was looking like I might exceed my mortgage goal by a bit, but I decided to instead leverage the amount of money and borrow some money from my line of credit to invest. So I’m just waiting to finish moving $5000 over to our TFSA accounts and pick up some more shares of companies that we already own. Yes I know this means I can’t write off the interest as a tax expense. I’m ok with that as I can easily make more than the 4% that I can borrow the money at.
While I’m not ignoring the risks to the global economy, I do think people are significantly over reacting. Yes there is debt issues with many countries and I do expect a lot of volatility over the next few years from it. So while this sucks to live through you should consider the fact that drops like this might get a bit more common over the next decade.
Perhaps the only advice I have for anyone who is near retirement is…don’t keep so much in equities if you are now thinking about pushing off your retirement now. I keep saying it, but perhaps it will sink in this time. You don’t need 50% or more of equities when you are within five years of retirement. In fact you should consider keeping the number closer to 25%. I know it goes again the advice of a lot of people, but I keep saying people grossly over estimate what they need for returns and keep way to much risk of losing their capital when entering retirement when you have no means of replacing it.
So how have you handled the last week or so on the markets?
Posted by Canadian Dream on July 6, 2011
So what happens when you apply economic principles to your marriage? Well beyond getting a fun book to read, like Spousonomics (by:Paula Szchman and Jenny Anderson), you also get some surprising answers to some of the most common areas of conflict in a marriage. So regardless if you just want to have more sex, argue less over the dishes or finally get your spouse to fix something that they promised six months ago you need to read this book.
I will confess here, that my wife found this book and laughed so much while reading it I had to pick it up after she had finished. While the book didn’t provide any earth shattering insights into my own marriage I never the less learned a few new tricks and approaches on how to deal with issues in a more proactive approach.
I personally like the advice on sex…you need to consult your standard negative sloping demand curve. Pardon? In a nut shell, sex always has a cost with it. You don’t pay in cash for it with your spouse, but depending on the amount of energy discussing it, debating it or planning for it. For example, are the kids in bed? Did you have to buy a gift to finally have some? Or do you only get some on a vacation without the kids? So the higher the energy cost associated with sex the less likely you are do it. So to have more sex, you need to make having it easier and reduce the cost. Rather simple when you think about it, so next time you want some more sex with your spouse make it easy to do.
Perhaps the one theme that comes up over and over in the book is you have to communicate with your spouse. Yes, talking to your spouse about your life and keeping them informed can prevent hurt feelings and misunderstandings. I suspect this is why I’m still with my wife after 10 years. We always talk about everything: the funny, the frustrating, and even the ‘I don’t really care about this, but you do, so I will listen.’
So why is a blog about personal finance and happiness talking about marriage? Well in a nut shell if you are married (or even common law) let’s face the facts: your odds of getting a divorce is high and it is expensive as hell to do. Also a lot of your happiness will likely flow from a good relationship with your spouse. In a nut shell: staying married is good for your wallet and your heart if you can make it work and it is a good risk management tactic. I’m not saying all relationships should stay together, but you should give it an honest try.
Overall I do recommend reading Spousonomics as I found it funny and an enjoyable read while managing to teach me a few new tricks.
