If you had another $1 million or two beyond the $1 million or two you already have, would your life, happiness, or financial security be greater than it already is today? At what point does ‘marginal utility’ kick in, making those extra dollars not worth chasing or having?
That’s a question each person will answer differently. But I find myself increasingly wanting to downsize and to simplify, to drop out of the investing game entirely, and to be content with what I already have rather than try to acquire more.
A market correction is likely. If this were not so, gold wouldn’t be rallying. But if present assets are sufficient to absorb likely projected losses, then why double, triple, or quadruple defenses in anticipation of an event that might not happen soon?
The US now finds itself having to borrow money to pay the interest on money it borrowed and then spent on its foreign follies. Thus, a correction is evitable, as is much higher inflation. No matter whether the Fed cuts, raises, or holds tight at the next meeting or two or three, higher inflation is the likely result as the $US dollar increasingly loses use in global trade settlements.
I’m inclined to think that if my parents survived the last Depression, I’ll be able to survive the next one, and that my time is better spent on a daily bike ride or building another boat rather than building more paper wealth.
For us, we used a few retirement calculators. They all said we would be fine. I even ran them assuming NO social security (since that’s a government program that could, in principle, be taken away). Still fine. Another million or two would certainly create a greater sense of security. After that, it’s just keepin’ score.
We had health issues five years ago (both of us). Sort of a wake up call. Do we really want to die at our desks? Once we were clear of the scares, and I had done my homework about our security, we retired. While we were still able to enjoy our retirement. Because, one day, we likely won’t be able. For now, we can go to places like Iceland, hike up to Delicate Arch (the famous one) in Arches NP, go snorkeling, or whatever. So we did. In ten years, it’s a good chance the hike to the arch wouldn’t be on the table.
At a much younger age, my daughter made the same decision to act now and to save later. She did the Camino, hiked the AT from Springer to Katahdin, the PCT from border to border, and spent a year in Antarctica, even running a marathon there on New Year’s Day. How cool is that? Now she’s back at a desk, working for the VA, saving for retirement, and planning her next adventure.
Me? I took a different path. Did kick around Peru in the '70’s, teaching English. But my adventures were of a more mundane sort. I made a living overhauling marine machinery, everything from sea valves on fish boats to main propulsion systems on US carriers. These days, just a daily bike ride rolling through the neighborhoods is fun enough and the annual Family Boat Build our club does.
I’d likely be out today if the Mrs. hadn’t created an artificial number for me to hit to be done early.
I’d rather risk the market than her ire if I were to get out and retire now. Only 20.9% more to go.
The performance of gold is divorced from any rational metrics. Gold rallied AFTER the financial crisis of 2008 far more than it did before primarily due to inflation concerns. Gold should be falling now as inflation eases but it continues to spike (FOMO, sovereign purchases, and sell America trade being the primary reasons).
The market can stay irrational longer than we can stay solvent. Betting against the market (new all time high today) is a risky bet.
This isn’t really on-topic, but I’ve always questioned gold as an investment. IMO, it’s not an investment. It’s a medium of exchange (or it used to be). It has some unique properties (like it doesn’t alloy with anything else, so it doesn’t oxidize, it’s a great conductor, etc). But it has no intrinsic value beyond that, unlike an actual company creating an actual product or service.
Which is why I stick with equities. Easily quantifiable with several metrics (e.g. earnings, debt, etc), and not subject to arbitrary whims. The price of gold (or silver) has no such metrics. It’s worth what people say it’s worth, with no underlying basis (like earnings or debt or capital outlay).
The chief reason gold is rallying is that central banks are buying it by the ton as they react to the US weaponizing the $US dollar. That’s not speculation on the part of a few traders. That’s a rational global response that’s likely to continue, because the US is doing nothing to fix its financial problems, which are too much deficit-spending funded by too much debt. That policy recklessness is eroding use of the $US dollar in trade settlements.
The rally in silver is just a commodity play. There is more demand for silver as an industrial metal than there is supply. The gold bugs/precious metals bugs try to link the two and talk about historical ratios between the two. But the gold rally and the silver rally really are separate things that now happen to be walking the same path higher.
But those rallies are feeding back into the former problem of too much debt. In the past couple of weeks, the Fed bailed out the silver shorts to the tune of $40 billion dollars. It printed money to provide them with liquidity, choosing to trash our currency rather than let their buddies go under, just as every Fed head has done since Easy Al bailed out LTCM. But the net-effect of those bailouts will be higher inflation.
Yeah, one response might be to start selling short. But I’m not going to, because I really am done with scrambling for a few more dollars. If that means that my scorecard declines a bit, so be it. The gains were phony anyway, more the result of the Fed’s money printing than shrewd financial decisions on my part. What matters to me now is that everything is paid for and that my income streams --even under duress – are multiples of my expenses. As the pop song goes, “I will survive.”
My conclusion is that it’s time for me to walk away from markets and do other things. What others choose to do depends on their own circumstances, such as a worried spouse.
I get that. When we first were looking at retiring, she was very concerned about nest egg size. I showed her the calculators (like Fido’s and FIRECALC.com), even without SS. That might not have been enough to convince her on their own, but our two health scares (hers was VERY serious) I think affected her conclusion. Like me, she wanted to live her life while she was still able.
Nothing like a brush with mortality to adjust your perspective.
Stocks are far more subject to whims than commodities.
The conventional fiction told to would-be investors is that stocks are factional shares of an underlying business. But unless you’re a 5% owner or better, that piece of paper you bought in the old days --or its digital equivalent today-- is an exchange-traded derivative that often has a very tangential relationship to its underlying. Else, as Ben Graham asks, Why do stocks become over/under sold?
For sure, anything traded in any market or on any exchange tends to over-trend in both directions as investors get swept up in the euphoria or the despair of the moment. So this question has to be asked, “What is the normal pricing pattern between equities and precious metals?” Ans: “Typically, one is an offset to the other.” But today, what happened? Both rallied.
So what’s really going on? If both rallied, did their fundamentals change, or did the denominator change? Well, yes it did, which is what Trump wants, a cheaper dollar, which means higher inflation for us common folk.
So, talking about gold/silver in the context of retirement planning/management is very on-topic, because inflation is the typical retiree’s most important problem, second only to health management.
Maybe — particularly if the money were “easily tappable”, as in sitting in a format with little friction or tax costs. My biggest financial mistake was investing aggressively in qualified retirement accounts and neglecting ordinary investing accounts until recently. A magical million with no timing restrictions or tax consequences would make future planning a lot easier.
Financial dynasties rarely last forever. Even the richest families have easily wasted wealth once they stop respecting it. That said, “enough” to me can be a pretty wide range, and frankly, I’m likely to end up closer to the lower end than the higher end. “Fly coach, stay two blocks off the ocean” vs. “fly private, stay in an overwater bungalow” both get me a beach vacation, and one requires a whole lot less to go right than the other for me to make a reality.
I doubt that I will ever “drop out entirely”, but I could see myself eventually shifting to a more conservative allocation and a more automated and index-based approach. At this point, given my current age and asset mix, it will take years-to-decades of some level of active portfolio management to make things work both comfortably and efficiently. (Hence the point on the “magical million”.) It’s not rocket science, but it is investment management work that needs to be done.
I’d distinguish between the high effort and high stress that comes with trying to increase financial assets versus the often daily, but low-stress, low-effort maintenance work that needs to be done once those asset are acquired.
I used to think I’d still be trading on my death bed, because I enjoyed the game. But investing/trading is no different than fishing. When you’re on a stretch of water, reading it correctly, casting properly, and raising fish, why make the next cast? What’s the point? Why not just break down the rod, stow the gear, and have a leisurely hike out of the canyon?
Or if you’re fishing still water, once the catching problem for the day has been solved, why not quit fishing and be content to become part of the late afternoon as shadows lengthen and have leisurely row back to the dock?
I think that accepting that one has ‘Enough’ and that ‘More’ really isn’t “more” is hard for us Americans, for not being a part of our culture the way it is in other traditions.
Great question. I retired 14 years ago at 57. Thanks to years of diligent savings and investing discipline, I was able to consider retiring as I had enough for a good but not extravagant life if I stopped. I was well paid for my work (I’m a writer), but after 30 years of mostly 7 day weeks, I was burned out. I thought I’d take a year off and travel, which I did., and then go back. But I kept finding reasons to turn down projects until I finally decided I was done. It was one of the hardest decisions I ever made, but it was the right one. In hindsight, it wasn’t an easy process. It took 5 years of thinking I’d eventually go back or maybe do one last project. I also intermittently prayed a black swan event wouldn’t wreck my plan. Mercifully, that never happened, and I finally surrendered to the reality that I was fulfilled and happy without the work. Instead of a job, I spent much more time learning and working on my investments and really enjoyed it. Luckily, the last decade of great returns, even with the market downturns, really helped me out. I now have 4 times as much money as I did the day I stopped working, and I have been taking out money every year. My only regret is the few years of torture I put myself through wondering if I had made the right decision. I could not be more happy than I am today with my life. And for that, and all I have learned from everyone on these boards and in other forums, I am incredibly grateful. At this point, I don’t need another million or two. Thank goodness for that.
Yep, I retired more than 30 years ago in 1994 at age 38. My portfolio has grown more than 10-fold despite the 30+ years of annual withdrawals for living expenses. Like the good doctor in the post above in this tread, my current withdrawal rate is a fraction of 1%.
Eventually you run out of things to spend on and are just happy “to be”.
My lifestyle hasn’t changed in the last 20 years or so. Always lived a very simple life. So, marginal dollar doesn’t make any difference to me. But it does allow me to support/ help family, few causes I like.
If anything last year made me to “chase and not be content”.
Much of my money is already in fairly low-effort investments. The part that induces stress and effort beyond what will likely be lifelong maintenance is the publicly traded options strategy. Even then, ever since I paired that strategy with my bond ladder, the stress comes more from my broker’s seemingly random changes to its margin requirements on my existing positions than from the market’s movement.
Year to date, for instance, that account’s total value is up, its cash value is up, and I’ve only rolled rather than added net-new options positions. Yet my available margin purchasing power has dropped to “riding the knife’s edge.” The culprit is that the broker has (again) changed the margin requirements on a handful of the underlying companies.
This is not a new phenomenon… I deal with it because over time, that options strategy has delivered great returns. (No guarantees for the future, of course.) With that “magical $1 million”, I could get the bond ladder both long enough and broad enough to get me to the point where I could scuttle the options strategy and make it to age 59 1/2 and “normal access” to my retirement accounts without having to rely on exceptions or pay penalties.
In addition, scuttling or scaling back the options investing with that “magical $1 million” would free up headroom for more tax- and ACA-efficient Roth IRA conversions.
Net — I hear you, and agree with you that there comes a point where the juice isn’t necessarily worth the squeeze. I also think that based on what you’ve shared about your personal situation that you’re probably currently in a better position to completely make that shift than I am.
Of course, if a magical $1 million were to find its way into my account with no strings or taxes attached, I might be singing a different tune…
That’s a great metaphor. Very visual and very appropriate.
Yeah, compared to you, I’m an “oldster”, even older than the “boomers”. My financial situation is different, just as it is for every person. We typically had a DB pension from employment, plus access to a 401k, plus markets whose valuations were much more rational.
OTOH, we also had to deal with abusive stock and bond commissions, a dearth of historical data that was often very expensive, a dial-up connection, no ETFs, much less inverse ETFs, and certainly not fractional-share trading.
That’s what strikes me most about today’s markets. They are so democratic. Even those with tiny money can begin to participate and begin to gain they experience they need, to have the judgment they will need, when they come to managing bigger money.
Can you truly separate both views? Is one influencing the other?
Markets go through 10%, even 20% correction in a year and still end the year on positive note. Correction is different from Bear market. So, saying there is a correction is likely is saying like markets overtime goes up. Both are true
