Are you working with “Your Hope We All Make It Guy” or Your Survival Guy? You know I’m here for you. And it might be easier to have me on your side than you imagined. Add up a couple of IRAs and brokerage accounts, and you and your spouse are probably good to go. Once you’re onboard, the welcome mat is out for other members of your family.
What a week. Markets are winning. Trump’s winning. It’s beautiful. Really nice. But let’s not forget about your margin of safety as an investor. When we get into our retirement lives, time is compressed. You can’t afford to make big mistakes. And not having a paycheck to fall back on can be terrifying. Remember the Arithmetic of Portfolio losses: everything you lose, you have to make back just to get back to where you were.
When I was at Babson, we would run Monte Carlo simulations to come up with probabilities based on our assumptions. You may have run a couple yourself using an online calculator that says: “You have a 50-90% chance of not outliving your money.” In my experience, it comes down to this: you either have enough money, or you don’t. Hope is not a strategy.
A strategy built around your margin of safety helps keep you in the game when others flee. Bad times are bad. Having an anchor to windward, a port in the storm, solid self-defense training comes down to this: you’re happy to have it when you need it.
Action Line: Rolling the dice, Monte Carlo simulations; not my cup of tea. I’m Your Survival Guy, not “Your Hope We All Make it Guy.” When you’re ready to talk about your plan, let’s talk. But only if you’re serious. Email me at ejsmith@yoursurvivalguy.com.
Originally posted on Your Survival Guy.
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