Thursday, April 7, 2016

Luck, opportunity and successful investing

I'm retired and doing quite nicely. But, and it is a big but, how much of my solid financial position is simply luck and how much is based on my decision making ability? I bought  a lot of my bank stock when it was in the $20s at the depths of the market crash six or seven years ago. It was a good decision made at an opportune time.

As I think about it, good luck teamed with a great opportunity may be interwoven into the fabric of my investment life. Overall the market has been good since I was born in the latter years of the 1940s. This wasn't always the case. The market has not always been good to investors. The folk who invested in 1928 got burned. I understand it may have taken some of those people some two decades to recover financially. Many would have died before the market fully recovered.

For that reason, I am loath to give out solid advice such as do this because it worked for me. As they say, "Past performance is not an indicator of future growth." Often the word used is results in place of growth but you get the idea.

Last night I stumbled upon a site, Financial Planning Association (FPA), that appears to contain a treasure trove of solid advice when it comes to managing one's finances in retirement. Today I got an e-mail linked to that site. The topic? Risks in retirement. (And yes, I signed up for the e-mail updates. It was not a spam mailing.)

The letter discussed the usual suspects when it comes to investment risk, unforeseen major expenses, etc., but it mentioned one risk that is often ignored. It is the elephant in the room, so to speak: declining cognitive ability in one's senior years.

My retirement approach, which has a complex, personally-developed , Excel spread sheet as a major tool, is in trouble if I'm out of commission for any reason. If I had a stroke and was unable to manage our retirement finances, my wife would have her financial hands full.

Maximizing my wife and my income in retirement may be taking up too large a part of my time. My goal of coming up with a stand alone, self-regulating, income strategy may be of far more importance to a successful retirement strategy than I have been willing to admit.

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