Blogs are different, and they’re valuable. I still get much of my news and most of my analysis from bloggers. I appreciate the individual, idiosyncratic viewpoints — not the sanitized or one-sided slop we often get from government, corporate, or special interests. So, here are some of my favorite blogs of 2016, with links to the posts if you want to read further. We’d all be much poorer without these independent voices….
Allan Roth, a seasoned and savvy financial advisor and regular writer on financial topics, takes a conservative approach to asset allocation. In Why You Shouldn’t Substitute Stocks for Bonds he makes some traditional and non-traditional arguments for continuing to own bonds. He concludes “I’m sticking with my 45 percent stock portfolio in 2016. I’ve seen too many ‘new paradigms’ end poorly for investors.” Allan and I think alike. That’s just about exactly the stock allocation that got me to my own early retirement, and that I maintain today.
But, some disagree. A grouchy reader recently took me to task for merely mentioning bonds (and gold) in today’s investment climate. Apparently, given the current political tides, everybody should “know” that such conservative investments will be out of favor. But, as a guy who’s invested successfully in all kinds of markets over parts of three decades and retired early, let me offer this wisdom: diversification is never out of style, and trying to pick asset classes based on what you think the future will bring is foolhardy.
Running a blog requires dealing with both constructive criticism (welcome), and occasional incivility or abuse. Since this is a part-time, retirement gig offered partly as a public service, I have no patience for such drama. That’s why I don’t take public comments on posts, rarely do interviews, and ignore impolite emails. My buddy and a favorite blogger, James Collins, analyzes the phenomena in more detail in What the naysayers are missing, deconstructing the haters’ dubious arguments. If you should find yourself doubting the path to financial independence, read Jim for a quick morale boost.
Jim always puts his unique spin on passive index investing. He’s been a major proponent of Vanguard’s investment products — its funds and ETFs. But recently Vanguard has expanded its investment advice offerings. How does the new advising service measure up? Read Stocks: jlcollinsnh vs. Vanguard for a surprising critique. It turns out that even the best pedigreed advisors may just add complexity and expense to your financial life, compared to a do-it-yourself investing solution. Why? Because, even in the best circumstances, their objectives will not be exactly the same as yours….
If you own asset classes other than stocks, then you will need to contemplate rebalancing occasionally. Rebalancing is often the primary rationale for hiring a financial advisor. But I think it’s oversold. Understand first that rebalancing is a risk mitigation strategy. It doesn’t usually add much, if anything, to performance. And you can often rebalance as a simple procedure in the context of other routine financial transactions. That said, the savvy U.K. blog Monevator offers this succinct and practical guide to the different styles of rebalancing. In essence you can go by the calendar, or by a threshold, or a hybrid of the two. So, if you still feel the need for a “system” to rebalance, start with Monevator’s excellent overview.
The ultimate goal for most investors is financial independence. But, how much do you need to retire? I deal with that question at length in my second book. The starting point should be your expenses. An accurate answer must build on that number. But one of the more inane answers still bandied about in the personal finance industry is that your expenses in retirement will be some standard percent of your pre-retirement income. I could go on and on about how blind and self-serving this answer is, but groundbreaking early retiree J.D. Roth, founder of the Get Rich Slowly blog, ruthlessly debunks the entire argument in Traditional Advice is WRONG: Here’s How Much You Actually Need to Save for Retirement. The short answer from J.D.? You need 100% of your pre-retirement expenses, not some one-size-fits-all standard percent of income!
Megan McArdle, libertarian-leaning columnist at Bloomberg, has earned my respect for her unflinching analysis of the complex issues facing our times. She refuses to dumb down the facts or put a stock “conservative” or “liberal” slant on them. Like me, she doesn’t see the world in terms of a single tribe of thought. In Start Worrying About Long-Term Care Megan expertly sums up the state of the long-term care insurance market (not good). She also does an admirable job of explaining the mechanisms underlying insurance, and why long-term care policies are so hard to sell and make profitable in the first place. She ends with one of her trademark analyses from both sides of the political chasm. If our politicians could be a fraction as clear and forthright when discussing important issues, we’d be far better off.
Speaking of politics, one of my all-time-favorite and most respected blogging voices, CPA Mike Piper, recently detoured from his usual technical investing and tax topics to explain exactly why Politics and Investing Don’t Mix. Mike and I are alike in trying to keep political views out of our blogs. But, whatever your political stripes, you can’t avoid hucksters trying to sell investment products based on your fears about the world. And while you can argue forever over politics and the future, one thing that’s for certain is that if you make investing decisions based on fear, greed, or other short-term emotions, you will almost surely lose money in the long run. Take that from Mike, from me, and from most other successful long-term investors.
For an example of Mike’s other excellent writing on one of his topics of special expertise, check out his Social Security Planning Questionnaire/Checklist. It lists all the data you will need to know to plan your Social Security claiming strategy. It covers both routine scenarios, and many special situations as well. His post could be instrumental in helping you maximize your Social Security.
If one of your New Year’s resolutions involves reducing information overload, then you’ll appreciate Five Things You Notice When You Quit the News. In this Raptitude post, David reminds us that turning off the news has a variety of benefits, including both feeling better, and being more productive. I first got serious about limiting my news and entertainment intake from reading Tim Ferriss’ The 4-Hour Workweek, while still working in my career. Cutting down on the inflow of useless information and focusing on the limited set of areas where I could impact my life or the world, got me to early retirement quicker.
Everybody must find their own path to a happy life. But giving time and resources is a proven way to enrich your retirement. If you’re outdoors-oriented, Kristen over at Bearfoot Theory offers an excellent list of ways to contribute. Whether you love the national parks, land preservation, wild or marine life, rivers and water, or just outdoor recreation, she has a like-minded group for you in her detailed list.
Kristen is a blogger after my own heart. She has an enviable lifestyle punctuated by interesting and exciting travel adventure to places like New Zealand and the Everest Base Camp. She writes it all up in engaging style with great photos and detailed resources, tips, and how-to’s. She gets an income from her efforts, and contributes to a better world.
My thanks this season to Kristen, David, Mike, Megan, J.D., Monevator, Jim, Allan and all the other dedicated and inspiring bloggers who offer insight and understanding that improve our lives!
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