Should I Retire Early?
I have not addressed the subject of early retirement in this blog as I feel it is important for people to first and foremost understand and implement the basics of retirement planning. But over the course of writing this blog I have had more than a few people subtlety enquire as to how it is possible for my wife and I to retire early without an employer paid pension or health care benefits. As well I have gotten questions about what we do every day in retirement. Over the next few posts I will discuss what is involved in retiring early, how we were able to achieve it, and a few thoughts about retiring early from our experiences.
Reverting to the Mean
You have probably heard the phrase “Reverting to the Mean” before, but what does it really mean in the investment world? According to Investopedia, ‘Mean Reversion’ theory suggests that prices and returns eventually move back towards their mean or average. This mean or average can be the historical average of the price or return or another relevant average such as the growth in the economy or the average return of an industry.
The Low-Risk Anomaly
I ran across an interesting article this week that was published in early 2011 in the Financial Analysts Journal (FAJ). The article is an academic study on the long term returns of investing in high-risk versus low-risk stocks. The study was conducted by three professors of finance/economics who are also asset managers. If you have been regularly reading this blog, the conclusions of the study will not surprise you as I have been preaching an approach to stock market investing that is consistent with the results of their study. With this study, you no longer have to take my word for it.
Recency Bias
Recency bias is not a term you often hear in the investment world, but I have read about it and seen other people experience this thought process when it comes to investing in the markets. I believe recency bias is one of the causes of why so many people sabotage their investments by “buying high and selling low.”
The Art of the Deal
This post may be a little off topic, but since I have written several posts on real estate investing, I thought it might be helpful to explain one of the most important skills I have developed over the years. This post will be about the basics of how I negotiate real estate transactions.
A Tool to Help Monitor Your Investments
If you are like me, after years of working and saving money, you have several retirement related accounts spread around different financial institutions. In this post I will introduce you to a free online software tool that can help make monitoring your investments much easier.
Why Did We sell Our home? (Part 2)
This post is a follow-up to my last post on why we sold our home. In that post I discussed the opportunity to sell our home at a premium price and, despite the fact we loved our home, we concluded that selling our home would better enable my wife and me to change our lifestyle to include more travel. In this post I will outline how selling our home changes our financial picture to support this goal of more travel. For people nearing retirement, whether you plan to sell your home or not, this post should provide some ideas to think about.
Why Did We Sell Our Home?
In my last post I mentioned that my wife and I recently sold our primary residence. This action would appear to be in direct conflict to the statement I made in my last post concerning real estate. I stated that real estate is at the best value it has been in over a decade and that anyone interested should consider investing in income producing residential real estate for the long term. This begs the question: if today is a good time to purchase real estate, why would we sell our home?
My First Real Estate Investment in 13 Years
In a recent post I described in detail a real estate investment of a single family home I have owned for 20 years. In my opinion it has been a pretty good investment for us. In this post I will describe my first real estate purchase in 13 years.
The impact of Stock Dividends on Total Return
In many posts I have stressed the importance of the income an investment provides as much as any capital appreciation you may hope to gain from the investment. In my last post I described a real estate investment I have held for the past 20 years and the income it provides. The importance of income in a real estate investment is rather obvious as real estate has a lot of ongoing expenses associated with it. But I think it is just as important to seek income in your stock investments as well. In this post I will again illustrate the importance of income in regards to stock investment.