Hey Tim, First glad you saw some value from the financial strategies I shared. I think being able to use some of the money that might be tied up in your house for other purposes, other than just sitting there, is a good choice. Money is a funny thing. I would make the strong statement that most people are not good money managers. Too many spend too much and too many spend too little. Most people do not want to take “money management” advice. They seem to think they have it figured out…when they don’t. Also, most people are unwilling to pay for financial advice. Then many people who are willing to listen and who might be willing to pay for financial advice can’t implement that advice. What a mess! I go back to the idea of, “Why do I take lessons from a golf pro?” The answer is simple. The golf pro can play golf better than me! I have always been 100% willing to listen to and then put others’ advice to work when those other folks can do what they are expert in better than I can. I also learned as a young sales manager that people don’t really change. They learned what they learned at a very early age. That’s why I would never want to earn my living as a financial manager or a golf pro. It would be too frustrating to teach people things and then watch them not use the advice! All the best, Randy

Hi Maury, Thanks for your post. Hopefully, it will be several years before I have to officially hand off the management of our portfolio. Nevertheless, I am always planning ahead. Our children are “in training” as you say right now. If something were to happen to me they could manage the portfolio. One of the advantages of this type of program is that with the exception of annual rebalancing it manages itself. All the best, Randy

Hey John, Nice to hear from you! Wow, that was 30 years ago? I’ll PM you to find out what you’ve been up too. Best, Randy

John

Hi Bob,

Thanks for your note. You bring up some interesting ideas. I think of “market timing” as doing something because you think the market will go up or down and your action is designed to take advantage of a market move up or down.

You are correct. I did move all of my retirement money into Vanguard at one time. However, I had ZERO idea if the market was going to go up or down after I did that. I wasn’t trying to time the market. Since I didn’t know what the market was going to do the next day, the next month or the next year I just wanted to get going.

I have examined the idea of “dollar cost averaging”. I’ve never really bought into that concept. I’ll tell you why. You mentioned that you put your money in over a period of 15 months. I’m going to suggest that you really didn’t know if the market was going to go up or down during the next 15 months.

With dollar cost averaging if the market were to go up over that span of 15 months you would actually lose compared to putting all of your funds in the market on day one. If you were buying into a growing market over the span of any amount of time each purchase would give you fewer shares than if the market was flat or declining. If the market generally went down during those 15 months you would be likely to gain compared to an all at once strategy.

Neither of us would know or could accurately predict what the market was going to do over the next 15-month period. It’s probably not exactly a 50/50 proposition. The market does go UP over time. That’s why we put our money IN the market. Since the market does go up over time it might be more likely than not to go up over the next 15 months. As noted dollar cost averaging actually costs people in terms of ROI when folks are dollar cost averaging into a up market.

Net, I don’t see very much difference at all in investing all at once or dollar cost averaging into the market over a period of time. It’s all pretty much random as to what the market will do in the relative short run.

Here’s my position on bonds. I am not investing in them to get much of a return. I’m in bonds so that when the market tanks like it did during the financial crisis the bonds will mitigate the loss. In 2008 the S&P 500 went down 35-40%. Because we had about one-third of our investments in bonds our overall decline was only about 25%.

In winning markets I wish I didn’t have ANY money in bonds. However, in losing markets I’m more than happy to have a chunk of my portfolio in bonds. I know that bonds won’t go up like stocks but they won’t go don’t like stocks either. Historically, we are in a very low interest rate environment. Considering the “theory of recency” I’m thinking low interest rates will begin to revert to the mean sooner or later.

Regarding Carol and food coupons…..no one ever got fired for feeding their wife too little. This plan must be working. Carol is in the best shape of just about anyone I know, man or woman.

In closing I agree with your opening statement. We’re pretty much on the same page regarding our investment strategies. Why is that? I think it’s because we are playing the percentages. We’ve been trained to assess risk and reward. There aren’t all that many choices in retirement than can manage risk reasonably well AND generate the proper reward.

All the best,

Randy

Enjoyed reading this. Quite similar to what I’ve done. One possible difference. It sounds like you might have put your assets into the Vanguard funds all at once. I viewed that as a version of “market timing” and set up a program to “ease into” the funds over a 15 month period. Just, in my mind, a way to avoid buying in at the high water mark. Also, I’m not sure I’m as confident as you seem to be that my bond funds are much protection these days, with interest basically 0%, I’m pretty nervous about anything other than short term bond funds.

Anyhow, I always enjoy your posts. I hope your wife knows about clipping restaurant coupons so she can stretch her meager food budget!

Bob Schappell

Hey Kevin. Hi to you and Julie. Yes, we out kicked our coverage with those steaks at your place! I didn’t have to feed Carol again for three days after our visit! Will keep you posted when we are passing through. Randy