Retirement endgame

[Nuuka]

Intro see viewtopic.php?t=10901

Facts: 60+. Male. Married. Adult children. YMOYL believer 20+ years. Working part time.

I will write and edit this journal primarily to myself to clarify and record my own thinking. I will intentionally suppress quantitative aspects (i.e. don’t show numbers). Instead I focus on qualitative aspects (what, how, why, meaning, feeling, value).

[Nuuka]

Financial situation:

Debt free.

Mandatory national retirement savings
Voluntary retirement insurance savings

I am married and share 50-50 with my wife
Condo
Cabin
Caravan
Stocks
Cryptocurrencies
Vehicles
Cash and cash equivalents

[Nuuka]

Why am I still working? I don’t need to, but yet I am.

The answer is three-fold:

(1) Employer provides free healthcare if I work part-time over a certain number of hours weekly.
(2) Waiting till my official retirement age
(3) Waiting till my wife can leave her job

[Nuuka]

Stock portfolio: I am a stock picker. Currently sectors includes in my portfolio are Telecom, Gaming, Blockchain, Brand Fashion Clothing, Mining, Food&Beverages.

i don’t believe in index funds. I think they are too risky for my appetite.The risk I see is that they are kind of tracking stock with the money not actually being 100% invested to underlying shares but the middle-man actually pocketing part of the money. It must be so because they charge almost nothing. So they have to “eat from the payload”. Otherwise It doesn’t make sense to offer index funds to public. I see the risk that some of the index funds blow up if there is a counter-party failure in derivatives, such a megabank failure.

[jacob]

Index fees on large funds are typically on the order of 0.05-0.15%. Vanguard has $5.3 trillion (10^12) under management and it has 16600 employees. That's 330 million dollars per employee. If the average fee is 0.1%, then the average employee represents $300,000 of the house take. Given that salary is typically 1/3 of the total, employers making $100k/yr seems reasonable.

Since index funds don't have a research division, all their customers pay for is "banking" and "trading" and this is why fees are low. Yet, if you DIY, you do your own "banking" and you pay commission to trade. (Note, that in the US it's not uncommon for financial institutions to offer full-services. E.g. brokers will offer banking services like credit cards or check writing ... banks will offer broker services.)

What this suggests is that there's a break point (of laziness) where it makes sense to DIY your indexing for those who prefer to copy the market. For example, with $1M invested, even a low-low-fee of 0.05% is actually $500/year! This can certainly be done cheaper with not much effort from the living room. Hence, for the indexers, it certainly makes sense to start considering going to individual holdings once one's portfolio gets somewhat into the six-figs.

(This argument gets way stronger if one is holding esoteric sector index funds ("Large Cap Covfefe in upper Elbonia") that only has 15 holdings but charge 0.4% or somesuch. Now THAT is bordering on exploitation. Might as well buy all the holdings oneself.

TL;DR - There's really not much sneaky rent-seeking going on in large/mature funds. Those index funds essentially just provide a convenient service at economic prices.

[Nuuka]

Cryptocurrencies: 80% Bitcoin, 15% altcoin “X”, 5% “lottery tickets of” ICO coins launched since 2017.

Why cryptocurrencies: I believe investments in FIAT currencies will eventually (10-20 years) escape to cryptocurrencies. The problem is that nobody knows to which crypto. Bitcoin looks the best but can’t be sure.

Anyway, cryptocurrencies are very volatile. Its anti-boring to follow them daily. You can get a lot of emotions if you are onboard.

[Nuuka]

I could see the middle management in an index fund thinking: for those stocks that there exists derivatives, I don’t need to buy the underlying stock. Since I can get gearing with derivatives, I don’t need to put so much money to get the same effect. Rest of the money I can invest into some interesting play.

[unemployable]

Since index funds don't have a research division

Incorrect. I've even applied for them.

[jacob]

Research in the "financial analyst of individual companies"-sense ... not the "portfolio or risk management"- or "how can we create more ETF products or a better website"-sense.

[Dream of Freedom]

So what style of investor do you consider yourself? Growth, Value, income, trader?

[Nuuka]

So what style of investor do you consider yourself? Growth, Value, income, trader?

80% growth 20% trader (actually speculator)

[Dream of Freedom]

I'm more of an income guy myself, though I do some swing trading with a couple thousand when I see an opportunity.

The speculation must be the crypto.

[Nuuka]

My investment style has been influenced by this classic

https://en.wikipedia.org/wiki/Reminisce ... k_Operator

[Nuuka]

I'm more of an income guy myself, though I do some swing trading with a couple thousand when I see an opportunity.

The speculation must be the crypto.

Crypto allows trading but it is very challenging.

Propably I will move towards income, i.e. dividend stocks after I fully retire.

[Nuuka]

Cash: Holding cash doesn’t make much sense due to negative interest rates. Main reason for holding cash is to have liquidity to invest if some bargain opportunity emerges.

Cash equivalents: precious metals for SHTF insurance

[Nuuka]

Vehicles:

Where I live we have distinct seasons, and you need three kind of tires around the year. Summer tires, M+S winter tires with spikes, and M+S intermediate winter tires without spikes. Instead of needing to change tires based on weather conditions, I am keeping the appropriate tires in different cars and just select the car for the season.

Of course cars need storage and maintenance which introduce costs. I maintain and repair as a hobby cars myself (DIY). Thus I regard myself “Car Renessance Man” with wide range of technical skills.

Some of the cars are so old that they are EMP tolerant (contain no electronics).

[Nuuka]

Cabin: summer cottage, with electric heating and wood-burning cooking stove. Wood-heated sauna. Storage shed for cars and lawn mover.
Serves several purposes:
- Holiday & Weekend use
- SHTF protection, provides autonomy in case of urban law&order problems, electricity and fuel distribution; access to local farmers barter trade; fishing, hunting, gardening, wild berries and mushrooms

[Nuuka]

Caravan:
- Holiday and weekend use
- When fully retired snowbirding to Southern Europe for colder season Oct-April

[Nuuka]

Condo:
- primary residence
- close to services (shops, restaurants, post office, railway and bus stations, hospital)
- car parking underground
- commuting to job either by car or bus, also possible with bike May-Sept.

[Vaikeasti]

Very interestered to see your story further!
I can totally relate to the thinking of your cabin as a bug out destination. Cabin does sooth the mind on many levels.

How have you dealt with the tax issues regarding cryptocurrencies?