2010-09-08T18:51:43ZMoshe MilevskyCopyright 2010, Moshe MilevskySPHPBLOGBuy, Hold and Forget: How Long Will it Take? Sally’s next door neighbor and good friend Robert Rischi is the typical stock junky. He, like Sally, is also 60 years old and has been investing $1,000 per month for retirement for the last 15 years, ever since his 45th birthday. However, in stark contrast to Sally, he surrendered to the siren call of the mutual fund and investment industry and has been allocating all of his savings to the equity market. Mind you, to maintain a diversified equity portfolio, he has allocated 75% to a broad collection of Canadian equity funds, with the remaining 25% going into broadly diversified U.S. equity funds. In the language of financial planning 101, he has been dollar-cost averaging into the stock market, buying more units when prices are low and less when prices where high. He has been careful to stay away from the high-cost mutual funds and concentrated bets on particular industries. After all, his RRSP isn’t meant for gambling.
Oh yes, Robert has endured some sleepless nights and restless days over the last few years, and especially the last 18 months; but he has been steadfast in his belief that over the long run the extra market volatility and financial stress will pay off with a handsome nest egg. In the language of financial economists, he is riding the equity premium. In fact, he periodically teases his neighbor Sally about her overly cautious retirement account, and has promised to invite her to his paradise retirement home in the Caribbean.
And, after 15 years of investing his portfolio is worth $221,150 at the end of March 2009.
Yes, you read that correctly, for all the risk Sally shunned, the equity premium she missed and the teasing she endured, she is actually ahead and has approximately $17,000 more money than Robert, after 15 years of investing. Oh, and if Robert had allocated 100% of his portfolio to Canadian stocks, he would have had $243,200 which is more than his cross border 25/75 portfolio. So much for international diversification.
Now, wait a minute, you might cry: “What exactly was Robert holding all these years? You are cherry picking!” Well, I assumed Robert was holding typical funds linked to Canadian and US Equity indices, on which he was paying (only) 100 basis points of expenses each year. If Robert was paying closer to 200 basis points in annual fees, his nest egg would be worth $202,000, which is $37,850 less than Sally. And, if you believe that the end of March/2009 isn’t a fair ending point, consider the end-of-December/2008 values: Sally has $234,500 while “Buy and Hold” Robert has $226,500.
So, what exactly went wrong?
It seems an entire generation of Canadians has been unlucky, or perhaps confused by the buy-and-hold mantra. Over the long run all this stress was supposed to pay-off with handsome rewards. Sally was supposed to look back with regret, at retirement, since Robert would be so far ahead. This has clearly not been the case and only time will tell – perhaps when Robert is 70 or 80 – if indeed his nest egg will ever surpass Sally’s by a wide enough margin to make it all worth his while.
Take Away
I am quite sure that most Canadian financial planners would never advise Robert to allocate 100% of his RRSP to equities, Canadian or international. Perhaps the portfolio would have been tempered with some asset allocation to bonds and other classes. The possibilities are endless and indeed, some alternative Roberts might be ahead of Sally. However, many others who have been buying and selling for the last 20 years have ended with much worse account values than all of the above-mentioned scenarios. They bet on performance that never materialized. And honestly now, beating Sally isn’t much of an achievement when you consider the little skill that requires.
Indeed, I believe that your equity allocation should depend much less on your so-called time horizon, hard-to-measure risk aversion or fickle confidence in the stock market, and much more on the composition and structure of your personal balance sheet. If your job is reasonably secure, your pension is protected and you income is predictable, then go ahead and take some stock market risk with the non-essential funds. Thus, I personally am still very heavily allocated to equities/stocks because I have a secure job with a Defined Benefit (DB) pension from the University. Economists call this general asset class human capital, which is likely more valuable than financial capital.
So, here is the bottom line. The long-run can be very long indeed. The financial planning theories we have used to quantify the “probability of regret” from equity investing must be revised after the new statistical evidence we have uncovered during the past year. The potential rewards must be tempered. To loosely paraphrase one of the greatest economists of our time, Professor Paul Samuelson, the long-run case for equities shouldn’t be oversold. ]]>http://www.ifid.ca/blog/index.php?entry=entry090502-2258292009-05-03T00:00:00Z2009-05-03T00:00:00ZSorry for the delay...http://www.ifid.ca/blog/index.php?entry=entry090412-1939532009-04-13T00:00:00Z2009-04-13T00:00:00ZGeneral Questions I Received Over the Last Few Weeks... [1.] Given the volatility and uncertainty in the stock market -- and the fact I am getting much closer to my actual retirement date when I need to spend money from the nest egg – should I be moving to a more conservative bond-based asset allocation?
Quick Reply: In general, there is a consensus amongst financial experts that an individual’s target asset allocation -- which is the mix of risky stocks versus safer bonds -- should become more conservative as they grow older. At some level, it should be quite obvious that a 95 year-old grandmother should have a safer portfolio compared to her 35 year-old granddaughter. However, there is quite a bit of disagreement between experts regarding the rate at which people should reduce their asset allocation as they age. Some have defended the use of a simple formula which dictates that you should have your age in bonds, while others (like me) have argued that the “age = bonds” is much too conservative. Personally, I think that “square root age = bonds” is a better approximation to the truth, especially when you consider human capital and pensions. Anyway, this debate has been ongoing for decades and started well before the current turmoil hit. If anything, though, the recent volatility is likely to tip the “thinking” scale towards a more conservative allocation for everyone.
[2.] Unlike teachers and government employees, for example, who have a defined benefit (DB) pension with guaranteed lifetime income, I must rely entirely in my RRSP for anything above the basic CPP entitlement. Is there any way to invest or purchase something like a pension in the retail marketplace?
Quick Reply: The short answer is yes. The easiest way to do this is by going to an insurance company/broker/agent, who can help you purchase a personal pension, which is sometime called a single premium immediate annuity (SPIA). This product comes in various types, shapes and forms so make sure to consult an expert (or become one) before you irreversibly annuitize a portion of your retirement nest egg. In fact, if you do not have access to a DB pension (other than the Canadian Pension Plan or U.S. Social Security) I would strongly urge you to consider allocation a fraction of your nest egg to these products. Make sure to get a COLA-adjustment, though.
[3.] I am terribly distressed by the amount of money my RRSP/portfolio has lost in the most recent bear market. My financial advisor claims that I should “do nothing” since it will eventually come back. Is that true? Can I trust him? Why didn’t the experts see this coming?
Quick Reply: First, I can’t really tell you whether your financial advisor is trustworthy. Most of them are honest professionals trying to make a decent living. Now, there is no way your advisor could have predicted or foreseen the severity of the current financial storm, no more than a basic physician can safeguard you from an unforeseen outbreak of SARS or West Nile Virus. Everyone in the financial services industry – from Alan Greenspan down to the shoe shine boys on Wall Street – has been shocked by the number of unprecedented events that have taken place in the last few months. However, I also think that it is a mistake to sit-back and do nothing, claiming it will all come back. We have learned some very important lessons regarding the fragility of the financial system and some sacred calves have been slain in the process. Make sure your advisor tells you how – exactly – he or she is absorbing what they have learned in the last few months, and what this means to you. Complacency is not a financial strategy.
[4.] How exactly to the new TFSA work? If I have only a little bit to invest, should I use the TFSA instead of an RRSP? What investment/assets should I place within a TFSA and what should I hold in the RRSP?
Quick Reply: There have been quite a number of good newspaper columns and articles written about this in the Globe and Mail as well as National Post during the last few months. Overall, I think that you should place highly taxed assets (like bonds) inside the TFSA, which is actually kind of obvious when you think about it. Overall, if you only have limited funds to contribute to one of these vehicles, it would really depend on your marginal tax bracket. At low levels I would favor the TFSA, at higher levels I would favor the RRSP. Think tax refund. That said, there are many moving parts to this equation, and it really, really, depends on circumstances. I hate to cop-out like this, but personally I would use BOTH of them and diversify tax uncertainty since good arguments can be made on both sides of the debate. Similar hedging thinking has been applied to the ROTH IRA in the U.S., which is based on the same idea.
[5.] My financial advisor has told me about a strategy called an RRSP meltdown in which I collapse my RRSP well before age 70 and then borrow money so that interest paid offsets the tax due. Does this strategy make sense to you?
Quick Reply: Ugh…Ok. In theory, this all depends on your (marginal) tax bracket now versus your expected tax bracket in retirement. If the gap between them is relatively large, i.e. you might face a higher tax rate when you withdraw larger sums from your RRSP/RRIF in retirement, then yes it might make sense. Overall, although there is some merit in these tax arbitrage strategies when interest rates are relatively low, please consult an expert before you do something like this, especially since it is irreversible.
[6.] A number of insurance companies, such as SunLife, Manulife and others have launched something called Guaranteed Minimum Withdrawal Benefits (GMWB) which supposedly guarantee that I will never lose money. But the fees on this are very high and cost a total of 3% to 4% in some cases. Do they make sense to you? They seem to be selling quite briskly.
Quick Reply: I have written quite a bit about these products in a variety of magazines and journal articles. See the articles section at www.ifid.ca for an in depth analysis of the pros and cons. In general, yes, I am an advocate of this family of new products that I call Guaranteed Living Income Benefits (GLiBs) – for people within the “retirement risk zone” who can’t afford the time needed to recover from market losses. And, although the fees are quite high, the actual insurance component (as opposed to money management component) is fair and reasonable. In other words, you are paying about 1.5% of assets for insurance, which is justified. In fact, I wouldn’t be surprised if these costs increase in the next year. The other 2% to 3% is for active money management. That is another matter, and don’t get me started about that…
[7.] I have been hearing and thinking about something called a “reverse mortgage” offered by CHIP. It sounds like I don’t have to pay anything until I move or sell the house. Is this a good way to supplement retirement income? Will my kids be burdened by this? I am concerned about having debts in retirement.
Quick Reply: First of all, I don’t think there is anything wrong with having debt in retirement. On a general level, if you have a house worth $500,000 and very little income, it makes no sense to me to starve yourself so that your children or grandchildren can inherit an expensive house (that they might sell anyway.) Don’t confuse dying broke with dying in debt. The former implies your asset are worth less than you liability (which is bad). The latter implies you have ample assets to pay-off debt (which is good). They key, in my mind, is to make sure you are paying a reasonable (i.e. as low as possible) interest rate on your debt, since you will likely be carrying this burden for the rest of your life. And, to make a long story short, I think the current generation of “reverse mortgage” products have a away to go before they earn a high grade in my course. I am actually a (bigger) fan of shared appreciation mortgages for the elderly – which have been available for some time in the U.K. – which hopefully will get imported to Canada, soon. ]]>http://www.ifid.ca/blog/index.php?entry=entry081102-2048532008-11-03T00:00:00Z2008-11-03T00:00:00ZWill Companies Be Able to Keep their FinSurance Guarantees? From my perspective, this unprecedented environment is emphasizing two previously-obscure concepts which lead to diametrically opposed effects. Let me explain.
First, any financial advisor that shunned GMWB-type products in the last few years simply because they were expensive or charged an extra 100 basis points in fees is looking pretty foolish after a 40% drop in equity prices. For their sake, I hope clients don’t remember the conversation in which that particular product was dismissed.
You see, here is some simple arithmetic to illustrate just how deep in-the-money (i.e. valuable) these “FinSurance” options have now become.
A single premium life annuity that pays $5,000 per year for life, issued to a 65 year-old buyer, would cost approximately $67,000, based on recent prices from any garden variety insurance company. Obviously, if you invested $100,000 in a GMWB product last year, that promised 5% for life, your put option was out-of-the-money by about $33,000. Indeed, many have scoffed at the meager guaranteed $5,000 for life, since you could secure this guaranteed income for much less in the pure SPIA market.
But, remember, the $100,000 bought you some upside potential in the market and some bonuses on the guaranteed base. Let’s assume you bought the GMWB and allocated your deposit to the aggressive 80/20 equity/bond fund, which was exactly the way to maximize the value of the guarantee, ex ante.
Now, say, your portfolio is down 40% and your account is only worth $60,000. This is quite painful and I sympathize deeply with these investors. But now it’s important to remember that your put option is in-the-money. This is precisely why you paid for protection; a mere 100 or so basis points in addition to management fees. Your quarterly statement might only say $60,0000, but the economic value of your contract is $67,000 since the value of the guaranteed life annuity is $67,000. And, if you were younger when you purchased the GMWB and/or were credited with a bonus for the last year or two, the in-the-money value is even greater. I repeat, your $60,000 account might now be worth as much as $80,000 in economic value.
Just make sure NOT to lapse or surrender the contract and then exercise the lifetime income option. Events have vindicated those who allocated wealth to GMWB products. You bought home insurance. You had a fire. Put in a claim.
But now I start to worry about the other side of this equation…
If – and this is a big if – insurance companies have properly hedged these put options by either buying their own offsetting equity puts, or reinsuring themselves, then theoretically those hedges should be showing a profit which offset the loss on their GMWB products. Even if they have experienced some hedging mismatch (i.e. basis risk) this is likely just a rounding error on a large and diversified insurance business.
However, and this is what worries me, if they didn’t hedge a substantial portion of this exposure, and instead relied on the traditional actuarial method of reserving against this risk, the situation is messier and potentially fatal. At the end of each quarter, and especially the most recent one, they will be forced to take some money from a so-called “capital bucket” and move the funds to a “reserve bucket”. Both of these metaphorical buckets sit deep in the bowels of the insurance company’s general account.
The amount of money they move from the capital bucket into the reserve bucket depends on the exact magnitude by which markets have declined in relation to the in-the-money value I discussed above. To those of your in the derivatives business, this is (well, sort of) the equivalent of delta hedging put options by shorting stock only when the option is in the money, and ignoring the liability when it’s far-out of the money. This kind of insurance thinking makes sense when you are exposing yourself to traditional law-of-large-number liabilities, such as life annuities and life insurance. It doesn’t quite work for FinSurance guarantees.
Now, to the outside observer this whole discussion of buckets and numbers might not mean very much, especially since insurance companies are constantly moving money back and forth from one internal pot to another. However – and this is the crux of my fear – at some point they may have to move so much money into the reserve bucket, they might get close to emptying the capital bucket. And, to make it worse, if both buckets are leaking because of the heavy mortgage-back securities that poked holes inside, they might be forced to tap new shareholders (or possible government) for an infusion of new capital. This can lead to bigger problems, to put it mildly.
Of course, mere mortals don’t get to see these buckets, ever – we are just told about them in very general, obscure and historical terms.
Ok, so, what’s going to happen from here?
First, this market has completely halted any innovation or enhancements within the GLWB business. Companies that were considering adding a step-up or increasing a guarantee have shelved those plans for now, and for good reason. The next step might be to-step back from actively promoting their GLWB, and perhaps even placing some (severe) asset allocation restrictions on the account going forward. They might also increase fees on existing business – which they are allowed to do – although I’m not sure it will reduce their risk profile. It might make things worse at this point since all their policyholders will become annuitized by default. Something will have to give, soon.
Bottom line. For GMWBs it has become the best of times and possibly the worst of times. ]]>http://www.ifid.ca/blog/index.php?entry=entry081024-1350192008-10-24T00:00:00Z2008-10-24T00:00:00ZWhy Not CPI Linked SPIA Products? For the last few decades, two of the most puzzling of these so-called puzzles in the general field of economics are related to retirement planning. The two are (i) the very low interest on the part of consumers in purchasing immediate annuities, and (ii.) the general public apathy towards inflation-linked savings bonds. Traditional (i.e. rational) models of consumer choice predict that the size or these two markets should be much larger. Thus, why retirees shun inflation-linked SPIA products is a puzzle to the power of two.
Indeed, up until a few years ago it was virtually impossible to purchase this combination in the open retail market. Recently though, The Vanguard Group has been selling a SPIA product whose periodic payments are linked to inflation via the urban Consumer Price Index (CPI-U). For example, if you purchase a joint-life annuity at retirement with $100,000 you would be promised payments of roughly $6,000 per year adjusted for inflation, as long as one member of the couple is still alive. The SPIA guarantee is backed by the well-known insurance company AIG (ok, maybe that solves the low demand puzzle).
Bottom line is that retirees don’t like these things no matter how much academic economists babble on about their welfare enhancing properties. Perhaps it has something to do with their illiquidity, credit risk, irreversibility, relatively low payouts, irrational discounting, myopic behavior, framing problems or the lack of compensation for the distribution channel. I have spilled much ink on this elsewhere.
Anyway, I’m not really in the puzzle-solving business, but I am interested in best practices and retirement decision-making. What prompted all of this is that I recently was interviewed by Money Magazine (October 2008) in which I was quoted as saying that “pensions and annuities…are a great solution to longevity risk, but they are not much help against inflation”. Of course, some pensions, like government pensions and Social Security are adjusted for inflation (although based on CPI-W, not CPI-U, mind you). In contrast, most corporate defined benefit (DB) pensions and most retail single-premium immediate annuity (SPIA) products are not adjusted.
So why not advocate or promote the importance and role of CPI-linked immediate annuities in the optimal retirement portfolio? (I was actually asked this by a number of people.)
This brings me to my main point for today’s post which is the topic of some research I recently conducted with a colleague of mine, Professor Huaxiong Huang at York University. I have attached a link to the draft whitepaper below. I have also tried to stress this in Chapter #5 of my recent book: “Are You a Stock or a Bond?”
Basically, as most people know, the consumer price index (CPI) is a weighted average. It weighs thousands of goods and services based an mythical “average” American with “average” income, and “average” preferences. It ain’t necessarily your inflation rate.
In fact, the Bureau of Labor Statistics (BLS) has been calculating a unique consumer price index for retirees, called the CPI-E. The index is composed of the same sub-categories of goods and services as the regular CPI, but the weightings are skewed away from the average and more towards items that retirees spend more. The gap between the CPI-E number and the regular inflation rate is not large, but is not trivial. Over long periods of time that gap is noticeable. A sum of $100 in 1982 would have decayed to $50 under the CPI-W but $44 under the CPI-E. The bottom line is as follows. Depending on how old you are, where you live, and what you like spending your money on, your inflation rate will differ. Don’t fool yourself into thinking that macro-economic inflation will be similar to your own inflation experience. They are correlated, but not perfectly.
Bottom line, for those retirees who are willing to go the SPIA route with a portion of their nest egg, I would recommend paying for a 3% to 4% COLA adjustment, as opposed to a product whose payments are linked to CPI (U, W or any other letter) increased. I suspect that the price you pay (especially with what TIPS are yielding today) to link to an index that is not a very good hedge for your own personal liabilities might not be worth the cost. Get a lifetime payout immediate annuity (LPIA) with some cost-of-living adjustment (COLA), but not necessarily inflation protection. The two are different. ]]>http://www.ifid.ca/blog/index.php?entry=entry080921-1337482008-09-21T00:00:00Z2008-09-21T00:00:00ZSequence of Investment Returns (SOIR) The basic idea is that if your portfolio gets hit with lousy market returns around the time of your retirement – a.k.a. the risk zone – the funds will not last as long compared to when the returns are earned in a more favorable order. It is rather easy to demonstrate that if you are practicing “safe retirement withdrawals” of say $5 per $100 nest egg adjusted for inflation each year, the funds will last much longer if you can earn a (positive) +10% average in the first decade and (negative) -10% average in the final decade of retirement, as opposed to the other way around.
There are many insightful ways in which to quantify this conditional-probability effect, and the preferred tool really depends on the audience in question. To mathematicians I talk about diffusions driven by Brownian Bridges. For the laymen I use simple binomial modes. Unfortunately – and this is partially my fault – the SOIR effect is often misinterpreted to imply that the order of market returns has no impact at all “during people’s actual saving and accumulation phase” and is only a problem in retirement. This is patently incorrect, so let me now be clear about it. The sequence of investment returns is irrelevant for a lump sum, is important when you DCA but has the greatest impact during retirement. (With hindsight, I didn’t emphasis this enough during a recent interview with Money Magazine.)
For example, think of my favorite investment triplet {27%, 7%, -13%}, with each number representing the investment return over one period. If you start with $100,000 and hold the investment for three periods, the money will grow to $118,224 regardless of which of the six possible triplet combinations are realized during the three periods. This is the irrelevance of SOIR for a lump-sum. However, if you add $100,000 to the account at the start of each year, there are now SIX possible ending values corresponding to the six possible return paths. For those who want to verify this, here they are:
As you can see, the worst $298,314 and $315,714 outcome is realized when the final period return is the lowest -13%. This intuition should be rather obvious. You don’t want to have the bear market around the time you retire, both immediately before and especially immediately afterwards.
Notice that the compound average (geometric mean) of the triplets is roughly 5.74%. Now, if you start retirement with a lump sum of $100,000 and earn 5.74% on investments for an assumed three periods of retirement, you can support spending of approximately $37,231 per period. The present value of this annuity at 5.74% is exactly $100,000. Work this out period by period. At the end of the first period you will have $68,509; at the end of the second period you will have $35,210 and at the end of the third period you will die exactly broke. Not a cent more and not a cent less.
So, what happens if I apply the above investment triplet instead of the constant 5.74%, and spend the same $37,231 per end-of-period?
In three of the six cases the individual is ruined before the end of the third (and final period) of retirement. This is the most powerful manifestation of the sequence of investment returns effect, which results in a 50% ruin probability (or, more precisely, frequency).
To me the most important point is as follows. When you are still working – and converting human capital into financial capital – you have the valuable option to delay retirement, work longer and thus mitigate the impact of sequence of investment returns. In retirement, the human capital is gone and all you have remaining is financial capital. An early negative sequence of returns is virtually impossible to recover from, unless you are willing to reduce your spending rate. Ergo, my often-quoted statement that a negative early SOIR is worse during retirement. ]]>http://www.ifid.ca/blog/index.php?entry=entry080915-1502482008-09-15T00:00:00Z2008-09-15T00:00:00ZYour 401(k) is a Number, Not a Pension A traditional pension, often called a Defined Benefit (DB) plan promised a guaranteed paycheck during your golden years. The size of your pension check depended on the number of years you worked for the company as well as your salary near retirement. A typical DB plan replaced 60% to 80% of your final salary, guaranteed. But, in recent years an increasing number of companies have frozen or eliminated their traditional pensions and replaced them with 401(k) plans. In other words, most companies are shifting the responsibility of retirement income directly to their employees. The risk and possible reward sits squarely on the shoulders of individuals. If markets don’t live up to their expectations -- and especially if stocks decline around the time people are supposed to retire -- the nest egg will be woefully inadequate.
So, what can you do about this turmoil? Unfortunately, in the short-run the answer is nothing. Selling all your investments now and moving to cash is futile. On any given market day, it’s virtually impossible to predict how markets will perform. Moreover, market timers have to get two things right: exiting prior to further declines, and entering again prior to the inevitable rebound. Some might get the first one right, but the odds of hitting both nails on the head are exponentially smaller.
Yet, for your long-run financial health and sanity I do have some economic aspirin. Now is the time to take a very close look at your job, profession and career and ask yourself an odd-sounding question: Are You a Stock or a Bond?
Let me explain. From an economic perspective your personal balance sheet – which is a concise statement of your total net worth – consists of two distinct categories of capital or assets. They are (i) financial capital and (ii) human capital. Your financial capital is relatively easy to visualize. You don’t need special glasses or measuring cups. It is the market the value of anything you can auction on eBay or sell for cash. That includes your investment portfolio, your retirement plan, your house, your car and perhaps even the family pet. The other type of capital on your economic balance sheet is your human capital. That is invisible to the naked eye, but is also an asset. It can be quantified as the present value of future wages, salary and income you will earn during your working life. Human capital is the oil in the well or gold in the mine called You Inc.
We now reach my main point. Make sure you manage your human capital and financial capital, jointly and together. The old maxim that counsels to keep your eggs in different baskets is just as relevant on the macro (jobs and portfolio) level as on the micro (stocks and bonds) level. Make sure your retirement plan’s financial capital and your job’s human capital are in completely different buckets. Indeed, the majority of hard working folks at Bear Stearns, Sprint, General Motors and Dell Computers, not to mention Enron, learned this lesson only after it was too late.
So, for example, if you work in the financial services industry, your retirement plan investments should be tilted towards consumer staples, healthcare or information technology. And, if you work in the airline industry, your portfolio should overweight energy and natural resources, etc. If you manage a hedge fund, I suggest your financial capital be entirely in treasury bills and bonds. If you are a teacher, fireman or policeman with a steady and reliable income that will convert to a lifetime DB pension when you retire, then your financial capital can be entirely invested in broadly diversified stocks.
The bottom line again is as follows. Make sure your human capital (i.e. your job) and your financial capital (i.e. your money) are in completely different sectors. This way, when one zigs the other zags and the true value of all the assets on your balance sheet won’t fluctuate as much.
At the very least, next time you check the value of your investment portfolio and feel the urge to jump from the highest window, remember that your human capital is still the most valuable asset class on your personal balance sheet for most of your working life. Jumping will exhaust that one too.]]>http://www.ifid.ca/blog/index.php?entry=entry080715-1525552008-07-15T00:00:00Z2008-07-15T00:00:00ZWelcome to My Blog The primary answer to all these questions – besides the obvious ego -- is that for whatever reasons, I am getting an increasing volume of questions about all-things-money, from media writers, business acquaintances and often complete strangers. I then find myself responding to numerous emails, often repeating the same thing, many times in reaction to similar questions. Other times I just ignore and delete the email, which (still) leaves a gnawing guilt as well.
The bottom line here is that I think blogging helps clarify my thinking on various matters, will save me time in the long run (and is a great way to pass time on an airplane).
Yes, I do write quite a bit already – and as academics we must publish or we perish – but the traditional methods for reaching my intended audiences have their own shortcomings.
Academic and scholarly research can take years to get published, and only after tortuous concessions have been made, primarily meant to appease anonymous reviewers and journal editors. Much of the results are bland, stale and outdated by the time they hit the proverbial newsstand. Popular columns and ongoing articles in magazines and newspapers must be focused in content, and are often heavily edited themselves. Finally, the numerous reporters I regularly talk to have their own space constraints, pre-set storylines and economic agendas and thus rarely-if-ever reproduce my remarks in their entirety. Hence, I have decided to give blogging a try. (I also relish being able to invent my own rules of grammar and not having to conform to any given presentation format or writing style.)
My plan is to both react to current events and be demand-driven based on questions and comments I receive from readers. I will focus my remarks on all things related to finance and investing, with a particular emphasis on holistic wealth management and retirement income planning, which is the topic of my most recent book: “Are You a Stock or a Bond? Create Your Own Pension Plan for a Secure Financial Future” published by Pearson/FT Press. (Ok, I couldn’t avoid a plug.)
I have been told by my local tech-guru who helped set-up the blog (thank you Brandon) that anyone can post comments to this page, but that we retain the ability to review the material before it gets posted. This sounds like a fair deal to me, if anyone else is interested in contributing.
Welcome to my blog.]]>http://www.ifid.ca/blog/index.php?entry=entry080709-1015272008-07-09T00:00:00Z2008-07-09T00:00:00Z