Friday, August 29, 2014

Short Takes: Closet Indexing, Rent vs. Buy Calculators, and more

Here are my posts for this week:

Leverage Quiz

When Genius Failed

Here are some short takes and some weekend reading:

Jason Zweig give a clear explanation of why fund managers tend to make their portfolios match the index fairly closely even if their investors would prefer bolder moves.

Potato reviews several rent vs. buy calculators. He takes a much deeper look than writers of most such review posts and actually explains what’s wrong with some of them.

Tim Stobbs explains his approach to early retirement in an interesting interview. His approach sounds very sensible. The one thing that concerns me in declaring my own financial independence is the possibility that when my health eventually declines somewhat, my expenses will rise. I might need to pay someone to mow my lawn, shovel snow, or clean eavestroughs. I may have more direct expenses such as physiotherapy. For this reason, I think early retirement enthusiasts should add a buffer to their current spending to account for possibly needing to spend a little more in their 60s than they do in their 40s. There will obviously be increased spending due to inflation, but I’m talking about more spending in real terms (after accounting for inflation). The dream of early retirement can still be very real, but it might be sensible to delay it by a year or two to create a buffer.

My Own Advisor lists some Canadian dividend stocks to buy and mostly forget. While I don’t believe any investor with a concentrated portfolio can afford to just forget about a stock, it can be okay to not pay much attention if you’re sufficiently diversified.

Big Cajun Man complains that he thought public education was free. Back to school costs prove otherwise.

Million Dollar Journey has begun net worth updates for Sean Cooper. Sean’s frugality and drive for income should put most readers to shame.

7 comments:

  1. Public school system is taking a hint from the University system, where they kill you with 1000 extra charges and fees, good times. Have a great Labour Day weekend, join a UNION!

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    1. @Big Cajun Man: I'll pass on the union. I prefer it when coworkers who can't or won't work get fired :-)

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  2. Thanks for the mention Michael. No doubt Sean is on a mission...

    All the best,
    Mark

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    1. Looks like he is, but I'm not particularly envious of him, nor does he put me to shame in any way. I suspect that if I were in his shoes, I would feel that I had zero quality of life. He seems to have three jobs and lives in a basement apartment, and still doesn't break 100k in yearly income. The lack of light lalone living in a basement would lead me to depression, let alone the lack of spare time for hobbies, social life or family.

      I just hope he lives long enough to enjoy life a bit, and isn't hit by a bus tomorrow. All of his sacrifice would be for nought.

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    2. @Anonymous: There may be some truth to what you're saying, but it's hard to tell without a lot more information. I met Sean once and he seemed happy enough, but it's hard to tell much in a short time. It may be that his only hobby is frugality, but these efforts would hardly take up all his time. All the typical person has to do is stop watching television to free up 4 hours per day for meaningful hobbies and social interaction.

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  3. Not sure I agree with your Tim Stobbs comment. If you invest in your health as well as your wealth, there's no reason to assume you can't clean eavestroughs in your 60s or 70s. I'd rather avoid the extra years of work for a safety margin I probably won't need. But then, I would have no trouble downsizing to somewhere without eavestroughs if it became necessary! YMMV.

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    1. @Gerard: I *hope* to still be able to mow lawns and climb ladders when I'm 70, but I'd prefer to have some extra money in case I'm unlucky and can't. Another important consideration is that my current pay is 5-10 times what I could reasonably hope to make re-entering the work force in my 70s. So, one extra year of work now covers me either way.

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