Fear is the mind-killer

[Tyler]

I did the full work-free FIRE thing for a few years and eventually settled back into working three days a week on my own terms. Permanent 4-day weekends are great, and the other perk is that I tend to get the low-stress projects as the high-maintenance ones require full-time attention that I no longer offer. The extra money is also allowing me to afford to live in a cool part of town to maximize the enjoyment of those days off. So while quitting is awesome (and I highly recommend a sabbatical for those able to do it), the more important concept is to embrace the idea of building your own happy, sustainable system. A little work is part of the recipe for me right now but that may change in the future. Financial independence is cool like that.

The best way to fight boredom is to do something productive. Granted, trying to suddenly self-motivate is pretty tough after years of atrophy brought on by a lifetime of depending on a parent or boss to give you direction. But with a bit of exercise and a few growing pains it gets a lot easier. I'm a much stronger and more independent person now than I was even a few years ago.

[dualstow]

Personally, my intention is to become a "SWAMI" rather than an early retiree.

Self Worth Amounts to MIllions?

[WiseOne]

The best way to fight boredom is to do something productive. Granted, trying to suddenly self-motivate is pretty tough after years of atrophy brought on by a lifetime of depending on a parent or boss to give you direction. But with a bit of exercise and a few growing pains it gets a lot easier. I'm a much stronger and more independent person now than I was even a few years ago.

Ah ha, I think you nailed it! Self-motivating is refreshing if you can do it, but it can also be hard to do. And, it can be depressing when you suddenly don't have immediate goals in front of you. My job requires me to set my own goals so I'm familiar with that let-down feeling when you get stuck in the goals department. Sounds like PS may have been stuck for a while, but glad he's worked his way out of that now.

Dualstow, there's a Mr. Money Mustache post about SWAMI's. I forget what it stands for, but it's a financially independent person who continues to work because they want to.

[dualstow]

I just googled it. Thought it might be Still Working and Making Income.
It’s Satisfied Working Advanced Mustachian Individual (Swami).

[Jack Jones]

This has been my favorite thread of the year. PS returns from silent retreat to proclaim the gospel of 100% equities.

For me, what little wealth I have is hard earned and I don’t know if I can do it again. I like having 25% of my wealth outside the system, where the have nots and do naughts can’t touch it.

For better or worse, I internalized the Your Money or Your Life lesson that my wealth represents the product of my life’s energy. Perhaps that will change on the other side of financial independence, but for now, I’m not prepared to witness 50% of that life’s energy evaporate in a drawdown.

P.S. it seems telling that your second paragraph expresses regret in not fully taking advantage of the recent bull market. Hopefully this was just a conversation starter, tapping into the Fear of Missing Out that us conservative investors experience from time to time.

[moda0306]

If investing in a deeply diversified portfolio is "fear-based," and losing everything doesn't matter, why not just spend most-if-not-all of your income in any year? By that logic, any hoarding is "fear-based," is it not?

I really don't think the PP is necessarily fear-based, nor is a more equity-heavy portfolio necessarily greed-based. But I definitely could make the latter argument easier than the former. If losing everything doesn't matter, neither does getting a 6% RoR instead of 10%... right? What DOES matter when it comes to wealth, returns, and financial security? I actually mean this as a real question... what are the most important one or few aspects of finances that are important? I'd say that things are most important insofar as they are in a place so-as-to not toxify other aspects of your life. So all the other non-financial aspects of life are best protected (financially) how exactly? Certainly investing in all equities isn't "important" in that model? It's just one way to move the deck chairs around for a hopefully higher return at the expense of higher volatility and potential for sub-par long-term returns, or perhaps a complete crash when you need the assets most.

Always glad to see PS back, but I feel like maybe he's weaving an inconsistent narrative... and you know how this group likes consistency.

All that said, I definitely think people put WAY too much stress onto things like market downturns, crappy traffic, social slights, workplace hiccups, etc. Stoicism is a good tool to avoid all that... but to PS's other point about marriage, it can leave you a bit insensitive and overly "sociopathic" in how you view things if you let it. I try to set my "stoicism filter" so to filter out all the bad stuff and amplify the good stuff. Cuz if I'm overly-carefuly-planny about risks, then I've done what I can do and should be able to fully take in the joys of life without carrying any other burdens on my back. I think it works well, but maybe PS has a better-tuned model.

[Pointedstick]

What I realized was that for myself, the desire to protect my financial gains arose from a worry that I would be unable to replace my income. For me, the PP was a fear-based portfolio. YMMV.

I went through the process of losing that income just like I feared. But then with little effort, regained it--and even created new income streams. This cured me of my fear of not being able to make ends meet, provide for my family, and be an income earner during my working years. I know that someday I'll want to retire, or semi-retire, or become financially independent again and pursue non-compensatory hobbies or charity or whatever. But I also know myself well enough to understand that I will always want to stay both busy and productive, and that in all likelihood I will be able to monetize those activities if I so choose.

The happiest retired people I know are very busy, and many of them are earning quite a bit of money from their post-retirement activities, such as selling art, teaching classes, giving panels at conferences, earning royalties from the sale of books and music, selling wax and honey from beekeeping--things like that. Not like $50k+ a year, but enough to provide a nice supplement and backup to their Social Security/pension/investment portfolio income. Like MT's carpet cleaning business. I just know that's what my model of retirement is going to eventually look like, rather than the "watch TV and play poker with my friends every night" model.

Current thoughts:

When I near the time when I feel like leaving the workforce, if I don't have a $3m portfolio (inflation adjusted, of course), I may consider moving $1-1.5m of it back into a fairly conservative PP-style portfolio (likely a 30/30/30/10 or therebouts), but if I do have more than $3m, I don't see the advantage right now. A $3m portfolio sustains $120k/yr, which is vastly, outrageously more than my family has ever spent per year, and similarly vastly more than my wife and I would ever spend when we're in our 60s when we don't have kid expenses anymore. If I ever have a $3m portfolio, it will be generating so much money than even in retirement, more than 60% of the yearly dividends and principal increases will be simply reinvested, causing the principal to increase rapidly.

Such a situation would allow me to lose more than half of it and still comfortably live off 4% of what remained, keeping the principal intact. So why bother putting it in something really conservative to try to preserve the principal when you have so much that the worst loss* is something that doesn't bother you? Yes, end-of-life expenses can be high, but if you stay active and your kids don't hate you, there's much less of a chance that you'll have to move into one of those miserable $70k/yr death houses. Even if you do, average stays there are not long before you finally, mercifully kick the bucket. My experience with people living in these places is that pretty quickly death seems like sweet release.



* Note: I'm not considering the possibility of losses like the stock market going to zero or the total implosion of the USA's economy, political system, and society, because if those kinds of events happen, we have left the realm of personal finance and entered a very different realm with different constraints, risks, and opportunities and our investment portfolios will have very little impact on our survival and condition once the situation stabilizes.

[Pointedstick]

Another thing: from an emotional perspective, I've realized that I'm personally more comfortable with the risk of exposure to stock market under-performance than I am the risk of missing out on stock market gains because of the desire to preserve and defend my gains. I'm old enough that I can start to notice life trends; one that has become apparent to me is that the more I plan and analyze and micro-optimize and try to protect my gains and avoid loss, the worse the outcome usually is. By contrast, the best choices I have ever made in my entire life were high-risk, spur-of-the-moment decisions, and I regret none of them.

It's like in war: you need to accept risk and venture forth and attack to have any chance of winning. Defense never wins, and by not winning, you lose. Now, sometimes the loss is subtle, like our losses from the past 17 years' Middle Eastern wars: We didn't lose territory, but our strategic losses include national wealth, social cohesion, regional stability in the Middle East and north Africa, and our military's readiness and ability to fight a peer war with a country that can actually fight back, like Russia or China.

I'm sure some of the risks I'll take won't pay off. That's the nature of risk. But I have faith that the ones that matter will, and that I'll be able to recover from anything really bad that happens.

[barrett]

Of course the other side of the coin, PS, is why bother taking risk when you have already won the game? (borrowing from Bill Bernstein here) It sounds like your annual expenses are so low and your human capital is so valuable that, essentially, money just isn't all that important to you at this point.

[Xan]

Right, barrett, it seems that PS could just as easily put everything into T-bills.

[Mountaineer]

Another thing: from an emotional perspective, I've realized that I'm personally more comfortable with the risk of exposure to stock market under-performance than I am the risk of missing out on stock market gains because of the desire to preserve and defend my gains. I'm old enough that I can start to notice life trends; one that has become apparent to me is that the more I plan and analyze and micro-optimize and try to protect my gains and avoid loss, the worse the outcome usually is. By contrast, the best choices I have ever made in my entire life were high-risk, spur-of-the-moment decisions, and I regret none of them.

It's like in war: you need to accept risk and venture forth and attack to have any chance of winning. Defense never wins, and by not winning, you lose. Now, sometimes the loss is subtle, like our losses from the past 17 years' Middle Eastern wars: We didn't lose territory, but our strategic losses include national wealth, social cohesion, regional stability in the Middle East and north Africa, and our military's readiness and ability to fight a peer war with a country that can actually fight back, like Russia or China.

I'm sure some of the risks I'll take won't pay off. That's the nature of risk. But I have faith that the ones that matter will, and that I'll be able to recover from anything really bad that happens.

PS, your post reminds me of a segment from a book I'm current reading. In my opinion, the context of the segment deals with human nature from a combination of psychological, philosophical, emotional, and religious perspectives, much like your post above.

The Genius of Luther’s Theology by Robert Kolb and Charles P. Arand, pages 119, 120:

People continually make a grave error when they, as creatures who lack faith seek to “usurp the power and authority of God the Creator” shaping the future. Lacking faith, human beings want to plan and control events and things in order to obtain the results that they want. They want to define success and how to obtain it. They need to find meaning in the world and make sense out of life. In his preface to Ecclesiastes, Luther recognized that the human need to manage, to be in control of our plans and actions, is so deeply ingrained within every person that it will also at times characterize the Christians. Luther pointed out that things often turn out differently from the way we thought they would which makes our planning and working seem futile and pointless. Retirement savings may be lost to corporate mismanagement (as in the Enron affair at the turn-of-the-century) or diminished through economic recession and other factors, such as illness, accidents, storms, and war. According to Luther, Ecclesiastes teaches that “human calculations and plans dealing with creatures all fall fail and are worthless when one is not satisfied with what is presently at hand but instead wants to master and rule the future. So things always go backwards as a person has nothing more than lost effort and worry”. When things do not turn out according to the best-laid plans of human creatures, they become impatient, disgusted, angry, disenchanted, and apathetic. Before long they want to give up and do nothing more convinced that creation is meaningless when the fault lies with them and their scheming.

As Christians carry out their responsibilities in the world, faith frees them from the bondage of caring for themselves and presiding over their own destinies. Christians no longer need to be masters of their fate. Their new relationship to God as the Creator and to the world as his creation no longer requires them to control everything that happens in their lives or in world history. It no longer requires them to predict the outcome of their planning and labors. Instead, faith lets God be God. It recognizes that he is the one who has a divine perspective and in his wisdom graciously guides creation according to his purposes. Faith then lets us be us, those who are fully human and accept our finitude and dependence on God.

[Cortopassi]

Mountaineer and PS,

I have to call a little BS here in these comments and clips.

"human beings want to plan and control events and things in order to obtain the results that they want....Yes

faith frees them from the bondage of caring for themselves and presiding over their own destinies....What is that trying to say?

It no longer requires them to predict the outcome of their planning and labors....Good luck with that"

You guys have families, you guys have jobs, you guys have bills, houses, cars, tuition, etc, etc. What am I supposed to read into this? Hey, I don't feel like going into work today, I may just blow it off. I don't want to take that Chem final today, so I won't. Seriously?

Of course you have to plan and control events to some extent to prevent from being destitute or homeless, or not graduating, etc, etc. That's why we are all on an investing forum! Am I supposed to read that God will take care of everything and I don't have to care about myself or my family's well-being? Of course things don't always go as expected...

That's how I read it but I am not religious and sorry if I am offending people. The faith I have is in myself, my family and my friends.

[Mountaineer]

Mountaineer and PS,

I have to call a little BS here in these comments and clips.

"human beings want to plan and control events and things in order to obtain the results that they want....Yes

faith frees them from the bondage of caring for themselves and presiding over their own destinies....What is that trying to say?

It no longer requires them to predict the outcome of their planning and labors....Good luck with that"

You guys have families, you guys have jobs, you guys have bills, houses, cars, tuition, etc, etc. What am I supposed to read into this? Hey, I don't feel like going into work today, I may just blow it off. I don't want to take that Chem final today, so I won't. Seriously?

Of course you have to plan and control events to some extent to prevent from being destitute or homeless, or not graduating, etc, etc. That's why we are all on an investing forum! Am I supposed to read that God will take care of everything and I don't have to care about myself or my family's well-being? Of course things don't always go as expected...

That's how I read it but I am not religious and sorry if I am offending people. The faith I have is in myself, my family and my friends.

Hey, no offense at all. I considered whether to post the material from the book as it can easily be taken out of the greater context of the whole book. For me, the the point of the quoted material is: use your God given gifts today to the best of your ability - reason, skills, social contacts, work contacts, etc. but always remember that it is God that is in charge of both this world and the eternal world to come. Thus, don't worry about tomorrow, tomorrow will take care of itself. Don't be anxious and uptight, it just eats away at ones self and is toxic to your family, friends, and neighbors. But, to really understand the quote, I'd suggest reading the book if you wish to understand thoroughly. Sometimes snippets fail to communicate, just like it is very difficult to communicate (vs. sharing data) on the internet. Can't see body language etc. Sorry for the confusion.

[Cortopassi]

use your God given gifts today to the best of your ability - reason, skills, social contacts, work contacts, etc. but always remember that it is God that is in charge of both this world and the eternal world to come. Thus, don't worry about tomorrow, tomorrow will take care of itself. Don't be anxious and uptight, it just eats away at ones self and is toxic to your family, friends, and neighbors.

That is much more succinct, thank you!

[Mountaineer]

use your God given gifts today to the best of your ability - reason, skills, social contacts, work contacts, etc. but always remember that it is God that is in charge of both this world and the eternal world to come. Thus, don't worry about tomorrow, tomorrow will take care of itself. Don't be anxious and uptight, it just eats away at ones self and is toxic to your family, friends, and neighbors.

That is much more succinct, thank you!

You are welcome. And, I really do suggest the book for anyone, Christian or not. It gives a good understanding of Luther's thought processes and how one of the major events in Western Civilization (the Lutheran Reformation which initiated the Protestant Reformation) came to be 500 years ago. One may or may not agree with the Luther's theology but it is a well written and interesting read. The impact of the Reformation is much broader than many realize: hospitals, capitalism, end of serfdom, universities, perhaps even was a big contributor to the settling of America, etc.

[Pointedstick]

Cortopassi, the way I would describe it is, "give it your all, but let go of your attachment to the outcome."

Obviously we all have goals and preferred outcomes, but it's a curious paradox that often the harder we try to force a situation into our mental model of how it should be, the less it works, or the worse the outcome turns out to be is even if it does work. Whereas, if we aim at a particular goal, come up with a sound plan, execute on it, and then completely detach from our expectations regarding how it turns out, not only are we more likely to be able to flexibly accept and react to whatever outcome happens, but strangely it seems to be more likely to turn out the way we want anyway!

I have no idea why this is, but I have experienced it in my own life and the world's religions refer to the same phenomenon in their own ways so it must be something very fundamental to the human condition.

[Cortopassi]

it's a curious paradox that often the harder we try to force a situation into our mental model of how it should be, the less it works, or the worse the outcome turns out to be is even if it does work.

My daughter is a perfect example. Did some online tutoring for the SAT, took it 3 times, did a little better every time, but still equivalent to about a 33 on the ACT.

Took the ACT for the heck of it, no pressure, got a 35.

BUT....you know what it usually takes to get 100% mentally to the: "give it your all, but let go of your attachment to the outcome" outlook?

Financial security.

[WiseOne]

The happiest retired people I know are very busy, and many of them are earning quite a bit of money from their post-retirement activities, such as selling art, teaching classes, giving panels at conferences, earning royalties from the sale of books and music, selling wax and honey from beekeeping--things like that. Not like $50k+ a year, but enough to provide a nice supplement and backup to their Social Security/pension/investment portfolio income. Like MT's carpet cleaning business. I just know that's what my model of retirement is going to eventually look like, rather than the "watch TV and play poker with my friends every night" model.

Amen to that. A question though. Did those retirees start doing these activities with the expectation and need to make money in order to survive? Or did they retire financially independent due to pensions, savings, SS etc, and then start doing these things for non-financial reasons?

I guess I'm still kinda confused about your message. The above is not only compatible with being financially secure, it's actually MADE POSSIBLE by being financially secure. If I didn't have any savings, I sure as heck wouldn't be retiring and taking up beekeeping.

[Cortopassi]

MADE POSSIBLE by being financially secure.

Exactly. I am not retired, but I AM a beekeeper...

Congregating around the entrance this past summer. Called bearding, when it's hot a lot stay outside the hive to keep the inside cooler.



Fruits of their labor



Wax on left is rendered from melted and filtered comb on right

[Mountaineer]

I think I'll leave the bee-keeping to others. I could not afford all the epi-pens.

[Pointedstick]

it's a curious paradox that often the harder we try to force a situation into our mental model of how it should be, the less it works, or the worse the outcome turns out to be is even if it does work.

My daughter is a perfect example. Did some online tutoring for the SAT, took it 3 times, did a little better every time, but still equivalent to about a 33 on the ACT.

Took the ACT for the heck of it, no pressure, got a 35.

Exactly, you got it! Now apply the same lesson to the rest of life too, not just standardized tests.

BUT....you know what it usually takes to get 100% mentally to the: "give it your all, but let go of your attachment to the outcome" outlook?

Financial security.

I guess I'm still kinda confused about your message. The above is not only compatible with being financially secure, it's actually MADE POSSIBLE by being financially secure. If I didn't have any savings, I sure as heck wouldn't be retiring and taking up beekeeping.

The FI community already sort of understands this with the concept of "fuck you money." It's an acknowledgment that financial hardship generates negative emotions, and that financial security alleviates them.

However, achieving financial security only alleviates the negative emotions attached to not having enough money. It doesn't do anything for the other stresses in your life, and in fact, having so much money or a large enough income stream that you don't worry about money anymore can actually produce new stresses: How can I save this money without the risk of it being lost or stolen? If I invest it, what's the best way? How long can my income stream last? What happens when people find out how wealthy I am? Is she only into me because I have a lot of money? Where am I going to store all this stuff I bought with my money? Ugh I think I need a bigger house... And so on.

So becoming financially independent or even secure is not actually the ultimate solution to our problems. The true path to psychological freedom is to stop attaching negative emotions to life's stresses and challenges. This is what I'm saying is the wisdom embedded in the world's religions. Basically all of them teach that a state of clarity and psychological freedom is available to everyone, today--not just people with 50,000 shekels and acres of productive land.

Of course, it's not that you stop caring about your obligations and they magically take care of themselves. That's silly. Rather, it's that when you discard your apprehension, fear, and expectations for preferred outcomes, your obligations not only become easy, but they can actually turn into a joy, a positive pleasure. As a result, you do a better job with them and somehow you actually attract wealth, attention, and followers to yourself. It's like the good things in the world become drawn to your radiance rather than repulsed by your negativity.

Have you ever had something annoying you needed to do that you put off and made worse? That's the inverse: when you hold onto something stressful so tightly in your mind that you actually mess it up because it's attached to negative emotions. That's the true problem. We need to focus on that, not the proximate causes (not enough money, are my kids going to get into a good school, why doesn't my boss respect me, etc).

[jacksonM]

Rather, it's that when you discard your apprehension, fear, and expectations for preferred outcomes, your obligations not only become easy, but they can actually turn into a joy, a positive pleasure.

Well said. I think you might just as well change the title of your thread to "Expectations are the mind-killers". If you go through life always expecting things to turn out a certain way you are only setting yourself up for disappointment and anger. Better to take life as it comes and enjoy the surprises it has in store for you along the way.

[Cortopassi]

It doesn't do anything for the other stresses in your life, and in fact, having so much money or a large enough income stream that you don't worry about money anymore can actually produce new stresses: How can I save this money without the risk of it being lost or stolen? If I invest it, what's the best way? How long can my income stream last?

Sounds like budd....

[dualstow]

MADE POSSIBLE by being financially secure.

Exactly. I am not retired, but I AM a beekeeper...
(images)

That's really cool! My ex gf does that too. Seems like a great hobby.

My daughter
...
Took the ACT for the heck of it, no pressure, got a 35.

For those who are curious, a 36 is a perfect score.

[dualstow]

I have no memory of the ACT at all. I remember getting a 1250 on the SAT, an ok score.
My brother got a nearly perfect score.