Retirement; like your parents, but way cooler
In 1991 Billy and Akaisha Kaderli retired at the age
of 38. Now, into their 4th decade of this
financially independent lifestyle, they invite you
to take advantage of their wisdom and experience.
Investors, Not Traders
Billy and Akaisha Kaderli
When I was a
broker, my wealthiest clients had one thing in common: They owned their
stocks for years.
In some cases, they held for 50 years or more, with no
intention of selling their securities. This was a valuable lesson for
me: Don't become a nervous Nellie and bail out
during a correction.
That's the main reason why most investors constantly under-perform the
S&P 500 index.
My advice? Do your homework and
research investment strategies. Learn
what you can expect from each strategy using long-term results at a
minimum of 10 years or more.
Ask yourself whether you want a portfolio
that is a 50%-50% stock-bond mix, 60%-40%, or 100% stock. Stocks will
fluctuate, but bonds aren't risk-free, either. It's important to know
your position regarding risk, and only you can define your tolerance
There's one particular question I like to ask people: "If the stock
market fell by 50%, would it change your life?"
This has happened as
recently as the 2000-2002 bear market. Did you pull out for fear of
losing everything? Many latecomers changed strategies for a more
conservative approach just when the market bottomed. The fortunate or
skilled bought when the S&P was at 776.76 in October 2002. At its
current 3948.22, the S&P 500 Index is up more than 10 % per year with
dividends reinvested from that low just 20 years ago.
All through the '90s, dot-com mania sizzled. Did you buy those stocks in
the early '90s when few heard of them, or wait until the train left the
station? Commodities, oil, metals, and real estate all followed,
becoming the preferred areas of investment. My point? No one knows what
the next exciting area of the market will be.
Do not chase returns.
This common mistake appeals to many investors, and
it can knock you off track. Stick to your strategy. Remember, the market
rotates. First it'll be semiconductor issues moving up in value, then
transportation stocks, utilities, value stocks, or growth stocks. It's
smart to use index funds to diversify your portfolio like SPY (S&P 500 ETF) or
VTI, (Vanguard Total Stock Market ETF) since no one knows
how long each area will remain hot. You may not get that big home run
everybody talks about at the water cooler, but you can sleep at night
knowing you're not going to strike out, either. Everyone knows someone
who made a ton of money with dot-com stocks, then lost it.
the same mistake.
Once you've decided on your strategy, stick with it.
Every time someone
on the radio or TV mentions a hot new area of the market, consider what
they have to say, but file that information away in your knowledge bank.
If you just can't stand to be away from the action, take 10% of your
invested funds and try to beat the market. However, always keep your
original 90% core holdings invested in your planned strategy.
In January, we
will begin our 33rd year of financial independence. We
didn't get this far by trading incessantly, trying to beat the market.
We're investors, not traders. That said, you can do all the financial
planning you want, getting all of your retirement ducks in a row, but
no one knows what the future will bring. How many couples take decades to
plan and prepare for their retirement, only to have one of the spouses
get sick and blow a hole through their dreams?
That's one of the reasons we took
the early retirement leap back in
1991. Was it risky? Sure. But we both knew that working 60-80 hours a
week was keeping us from living the kind of life we wanted to pursue
Do we regret the decision?
Not for one minute.
So what are you waiting for?
Do your math, come up with a plan that
works for you, and get on with living life to the fullest, and following
the passions that make you excited to wake up in the morning.
About the Authors
Early Lifestyle appeals to a different
kind of person – the person who prizes their
independence, values their time, and who doesn’t
want to mindlessly follow the crowd.
Retire Early Lifestyle Blog
About Billy & Akaisha