The first installment of my new blog at the Investor Education Fund’s Masters of Money initiative is now up. You can read segment one, Investing and Financial Independence, by clicking here.
Each blog entry is — by my standards anyway — a relatively short 400 words or so but I’ve structured the 6-month series (which appears weekly) as a kind of serial (Dickens style). So by the end, the whole series should amount to a short primer on Financial Independence: very similar to the themes being articulated at this web site.
In fact, those who read Peter Grandich’s blog may notice the IEF used the same rhetorical question: When is YOUR Findependence Day?
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What’s that 61 all about?
P.S. For those curious about the 61 used above to denote the end of a blog post, this is something I’ve been doing for years at the Wealthy Boomer blog within FinancialPost.com. In the pre-computer days of print journalism, it was customary to end a four- or five-page submission with a “30” to indicate to typesetters or editors that there was no more copy to come. So I’ve adapted that custom and used a number that essentially answers the above question: When is Your Findependence Day? Right now, I’m 58 years old, so 61 indicates that I’m aiming to declare my personal achievement of Findependence three years from now, or early in 2014 upon my 61st birthday.
This number sometimes goes up to 62 or 63, usually when the market has tanked and I’m feeling pessimistic. Conversely, it sometimes falls to 60 if the market is doing especially well or if I’m feeling more frustrated than usual at my day job. Financial planner Fred Kirby even jokes about what he has dubbed Findex: he considers the numeral I use as a sort of reverse indicator of the markets: if the number rises because of bad markets, he considers that bullish for markets. If I’m optimistic and the Findex falls, he gets nervous. By the way, Fred is one of the best fee-only financial planners out there. His firm is Dimensional Investment Planning Inc. and you can find his site by clicking here.
This web site experienced a flood of book orders today, including some from the United States. Turns out Peter Grandich of the Grandich Letter posed the question “When is Your Findependence Day?” on his blog. Here’s what he said about it.
Grandich is set to publish his own book shortly: Confessions of a Wall Street Whiz Kid. I contributed a testimonial, which notes his unusual journey from conquering Wall Street to his current focus on the spiritual life.
That’s where we’re all headed. I sometimes joke that my next book will be titled Sindependence Day [that is, seeking independence from Sin] but for now we still have a few more copies of Findependence Day to sell. To all who ordered, the book is already in the mail.
A note to any American readers: the book actually begins in Chicago and ends in New York City. The financial content is both American and Canadian, so we talk about both IRAs and RRSPs, Roth IRAs and Tax Free Savings Accounts.
In the end, the topic of achieving financial independence transcends borders.
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This weekend’s Financial Post contains two articles from me that may be of interest to readers of this site. One looks at two new books that are very bearish on the global economy and the stock market the next few years: Harry Dent Jr.’s The Great Crash Ahead and a new revised edition of Aftershock, originally published in 2009. You can read it here although the print edition has nice cover shots not only of the two new books but several more like it that have appeared over the years.
The other article, here, talks about how baby boomers in particular are starting to run out of investment time horizon. My point is that if you’re not prepared to go through another 2008, you either have to take some risk off the table now before things get worse, or use the kind of portfolio hedging strategies I’ve mentioned in this site. (See for example the talk I gave at the MoneyShow).
It is of course possible that the bottom is now in and that most of the portfolio damage the markets can inflict has already been inflicted on investors. Gloomy as the environment appears, the market has a way of doing what you least expect: who expected gold to plunge $100 this week?
How to have you equity cake and protect the downside
With interest rates so low, most of us still need equity exposure. When dividends pay more than bonds and carry with them the prospect of future dividend increases, that’s not an asset class you want to be out of, bear books or no. By hedging your long-equity exposure with inverse ETNs you can have your cake and eat it too — in theory anyway.
As for the two new bear books, read what Dan Hallett has to say in the “attic” above the version in the paper: he talks about “confirmation bias” and how bullish investors tend to avoid bear content and vice versa. We all tend to seek confirmation of our existing worldview but there’s value in considering the other side.
In the case of these two books, as I point out in the review, they don’t even agree with each other in their bearish prognosis. One thinks interest rates will rise, the other fall; one thinks the US dollar will rise (Dent); the other that the greenback will fall. Dent thinks gold will fall while Aftershock thinks it will rise. However, they both agree the China bubble will burst at some point and when it does, it will be bearish for stocks globally.
A comment on this site: while I do try and keep it updated with new content, such as what you’re reading now, you can always keep up with new FP articles and new Wealthy Boomer blog posts by reviewing the scrolling titles to the right. And of course, I’m on Twitter and Facebook (click on icons top right of this site) and also Linked-In.
A recommendation: Flipboard app for Apple iPads
If you have an iPad, I strongly recommend getting the free “Flipboard” app. It presents all these feeds in a sort of electronic magazine format. In particular, if you’re on Twitter, I suggest you “follow” my FindependenceDay list there. That list follows 500 good sources on financial independence and when you view it on Flipboard, it will be like a timely continually updated electronic magazine on Findependence Day.
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As noted in August in my Wealthy Boomer blog — here — I’ll be blogging weekly at the Investor Education Fund as part of its Masters of Money blogging platform. Several authors have already begun posting.
Look for my submission next week if not before by clicking here. (I can verify the first installment has indeed been written!). Generally, it will be laying out a lot of the principles of Financial Independence that this blog and the novel focuses on. As explained elsewhere on this site devoted to the novel, the “Model” is three-fold: fee-based (or better yet fee-only) financial planning coupled with discount brokerage and ETFs.
As noted in my column today in the FP, I think the days of the Easy Chair ETF portfolio are long gone: you can try and cut commission costs through a discount brokerage, and investment management costs through ETFs or holding securities directly, but I still think you need the help of a financial professional — ideally a fee-only planner like the one I use. (He’s one of five CFPs listed in the acknowledgements to the book. I’d recommend any of them, though: I introduced EES Financial’s Jason Heath in the blog on my MoneyShow talk and in November I’ll be giving another talk to clients and prospects of Burgeonvest’s John De Goey.)
Of course, recent market action appears to be threatening the financial independence of many older investors nearing retirement age. It’s a pity that the Fed’s Operation Twist was viewed negatively by the market: down almost 300 points. As I posted on Twitter, Wyatt Investment Research aptly compared the Fed’s shenanigans to shuffling deck chairs on the Titanic.
Speaking of which, see my recent blog entry at TWB on Harry Dent Jr’s new book, The Great Crash Ahead. More to come in the paper this weekend.
And for those looking for other good financial blogs, even though I’m not part of it, I think Sun Life Canada’s new BrighterLife.ca site deserves regular visits from anyone interested in financial independence. It was launched this Monday, as noted in TWB here.
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The Vancouver Public Library has stocked copies of Findependence Day since the spring and recently doubled its inventory, explaining that “patron demand for this title has increased and we need more copies to meet this demand.”