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Discussion Starter · #1 · (Edited)
In another thread, I mentioned that I respect James and his unique point of view.

The more I think about it, the more I suspect my view is more unique than that of James.

My view: 100% offence, 0% defence. Buy either good companies or a broad index, do not sell based on price or gain, hold regardless of macro factors including market crashes. Carry the minimum of fixed income to survive the worst case scenario on austerity. Cash on hand varies with market indicators.

James, would you mind sharing a high level of your general philosophy?
 
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Is this the match leading up to the main event Sags vs. m3s? :p

I know you are having a little fun with your thread title. I think that both james and yourself appreciate studying views that differ from your own so I look forward to the discussion of this thread on investment philosophy. Your thought provoking post on another thread regarding Peter Lynch gave me pause to reflect on investment philosophy. This includes names classics like Munger, Buffet and Lynch as well as more recent market impactors like Musk, Wood, and Reddit. As many know I profess there are many roads to wealth. It is those differences that make the market as well as investing interesting.
 

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James, would you mind sharing a high level of your general philosophy?
I'm not sure my view is that unique. It's pretty close to the couch potato / indexing methodology and my performance is almost identical to XBAL's trailing return.

I use a diversified, index-based portfolio. I'm using traditional asset allocation, using % weight targets and sticking to them over time. On top of the passive asset allocation, I apply three modifications:

(1) much of my Canadian stock exposure is in my 5-pack which is stock picking, but very passive and similar to XIU
(2) I also hold some individual Canadian high growth picks, though these are a negligible weight. More for fun.
(3) I hold some individual bonds and GICs as part of my "bond" allocation

So I'm largely an index investor, but I do have these things above which add a bit of an active component. I'm happy to say that my 5-pack has outperformed the index this year so far and seems to be doing well in the turmoil. Additionally my bonds and GICs are dramatically outperforming the bond index, mainly thanks to GICs not having volatility.

My growth picks (2) have underperformed a bit, as can be expected in this environment, but the boosts from (1) and (3) have still put me a little bit ahead of indexing this year.
 

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In another thread, I mentioned that I respect James and his unique point of view.

The more I think about it, the more I suspect my view is more unique than that of James.

My view: 100% offence, 0% defence. Buy either good companies or a broad index, do not sell based on price or gain, hold regardless of macro factors including market crashes. Carry the minimum of fixed income to survive the worst case scenario on austerity. Cash on hand varies with market indicators.

James, would you mind sharing a high level of your general philosophy?
I'll sell on price to maintain appropriate diversification.
I have mostly individual stocks, but they're spread across industries.

I don't really consider BRK, BAM, BIP, BEP "stocks" as much as actively managed funds.

Asset allocation reflects general recommendations, but I consider my emergency fund "fixed income"


I don't think anyone here with a clue would suggest selling because of a market crash. Look at the blip in March 2020, selling then was ridiculous (I think several said so at the time).
 

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Discussion Starter · #6 ·
I'm not sure my view is that unique. It's pretty close to the couch potato / indexing methodology and my performance is almost identical to XBAL's trailing return.
Fair enough.

I appreciate you taking the time to share your approach with me. Thank you.

As londoncalling mentioned, I can learn more from someone with a different point of view than I can from people who share my gut instincts. One of the most profound things I've learned in the last 50 years is that my gut is a moron so my approach specifically ignores my own gut reactions.
 

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Discussion Starter · #7 ·
James, if you could fully support yourself with an investing process, would you stop working in IT?
 

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James, if you could fully support yourself with an investing process, would you stop working in IT?
Well I'm not exactly in IT, but I think I'm too young to stop working. What I would do (already am doing this) is scale back my hours and work a minimal amount, with more freedom, supplemented by my investments.

That's what I'm currently trying out. For example I refused some work this year because it sounded irritating.

Hypothetically if I had a larger portfolio that was enough to sustain me, at my age I think I would continue to work... just not very much.
 

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@TomB16 , here's more about my current motivations in case this is interesting to you.

I think I've saved up enough money to start to take it easier in my career. I don't have enough to retire, but I certainly don't have to work full time either. So I'm thinking... I'm going to start taking it easy.

But like many people I still have "workaholic" tendencies after all those years in a career. I tried to stop working in 2019, but before I knew it, I had bounced back to working and earning pretty good income in 2020 and 2021.

At the moment, I'm taking another shot at this "taking it easy" experiment and so far haven't worked much this year. I want to do a trial run of retirement and living off my portfolio. My reasoning is that if I can get used to doing this at a young age, I won't be intimidated by the process when I'm much older and I can have more confidence about living off capital.

I really just want to experience the lifestyle of living off my portfolio. If I can master this art, then even though I will continue working, I will never fear job loss or income loss ever again. So yes I currently am in a retirement experiment.

At the moment, my finances are very much like a senior in retirement (except I don't get CPP or OAS). I want to get the hang of this, but it's kind of a psychological barrier to overcome.
 

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Discussion Starter · #10 ·
Thanks for the additional insight.

I don't get CPP or OAS, either. Despite being in my 50s and having worked 3 day weeks for the last few years, it has been a difficult adjustment. Other people find it easier; my wife, for example.

I still have a lot to do. We will be selling off property for the next two years but it's not the same as working in an office. There is something about working with other people that is a wonderful part of life.
 

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I still have a lot to do. We will be selling off property for the next two years but it's not the same as working in an office. There is something about working with other people that is a wonderful part of life.
Yeah, and I think I'm going to miss working with people. So I can see myself taking occasional jobs or gigs, mostly for social connections.

Others have pointed out to me that social connections can also be made through volunteer work, clubs and hobbies.
 

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At the moment, I'm taking another shot at this "taking it easy" experiment and so far haven't worked much this year. I want to do a trial run of retirement and living off my portfolio. My reasoning is that if I can get used to doing this at a young age, I won't be intimidated by the process when I'm much older and I can have more confidence about living off capital.
I'm doing something similar this summer. Taking a 3-months leave without pay, primarily to take a step back from work after a hectic couple years, but also because I wanted to experiment what it's like to live off my money without receiving a pay cheque. Ideally this experiment would be longer than 3 months, but a longer leave would have been more complicated to get approved.

In theory I could "leanFIRE" today and live modestly on my portfolio for the rest of my life. I had been planning to do so relatively soon, but the current downturn combined with high inflation have put a damper on my aspirations. The numbers still work, but the uncertainty sucks, so I will do this little 3-month experiment first and reassess after.
 

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I retired at age 55 and always missed my "GM family" of 600 mates. We all grew up together and it was good times.....both at work and at play.

As to retirement....we were at Level 7 of the FIRE index, which is basically having enough income to not worry about paying the bills, no fear of outliving the income, being able to live anywhere, and not having to work again. Nothing has changed much on that score since retirement day. We have more disposable income today than we ever had before, due to lower taxes and living expenses.

You will be surprised how fast the time goes by. Many retirees wonder how they had any time for work.
 

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In theory I could "leanFIRE" today and live modestly on my portfolio for the rest of my life.
I thought I might be close to that too, but this inflation is changing the picture.

If the cost of living keeps increasing like this, far beyond my portfolio CAGR, this is going to cause me problems. I'm certainly not alone on this. Inflation is very dangerous for retirees.
 

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“I will never fear job loss or income loss ever again. So yes I currently am in a retirement experiment.

At the moment, my finances are very much like a senior in retirement (except I don't get CPP or OAS). I want to get the hang of this, but it's kind of a psychological barrier to overcome.”

If I may James, I suggest that a partial/total antidote to fear (in this case a result of a sense of financial insecurity) can be not just trying out a retirement lifestyle now (external factor) but also working on fear itself (internal).

btw, i would make the same suggestion if one seeks to remove fear by working countless hours to amass $$ (still an external factor).

i do realize this is a financial forum but finances can still be placed within a more holistic container.

now i can come off the soapbox :)
 

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I really just want to experience the lifestyle of living off my portfolio. If I can master this art, then even though I will continue working, I will never fear job loss or income loss ever again. So yes I currently am in a retirement experiment.

At the moment, my finances are very much like a senior in retirement (except I don't get CPP or OAS). I want to get the hang of this, but it's kind of a psychological barrier to overcome.
Not sure I understand, isn't it just a budgeting exercise? In other words, do you really need to experience it in order for you to see it'll work?
 

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Not sure I understand, isn't it just a budgeting exercise? In other words, do you really need to experience it in order for you to see it'll work?
From what I've heard (including from financial planners), a lot of people have trouble withdrawing from their portfolio. Concepts like constant rate / variable rate spending don't come naturally to people. I've had a few decades of building up savings, so now I want to try withdrawing and spending.

Look at this bogleheads thread. Many people say there was a big mental barrier to switching to withdrawals.


It's not essential that I experience it, but I want to try it out and get used to the concept.
 

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From what I've heard (including from financial planners), a lot of people have trouble withdrawing from their portfolio. Concepts like constant rate / variable rate spending don't come naturally to people.
That's the odd thing, financially responsible people are used to budgeting for their entire lives. VPW/SWR are just budgeting methods so it really shouldn't be much of a change.

I'm sure everyone goes through some period of adjustment both for lifestyle and financially. I would think with your variable yearly income it would be a no-brainer for you to manage. I too had a wildly changing yearly income when self-employed, had to budget carefully to span gaps in pay.
 

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I'm sure everyone goes through some period of adjustment both for lifestyle and financially. I would think with your variable yearly income it would be a no-brainer for you to manage. I too had a wildly changing yearly income when self-employed, had to budget carefully to span gaps in pay.
There are some big changes going into withdrawal mode. You're right that I've already adapted to unpredictable self employment income, but I've still always had enough new cash coming in.

Has that been difficult for anyone else here? I mean, going from a "saving" mindset to withdrawing and spending. Again, look at the bogleheads thread for what I mean.
 
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