Often, analytical people get stuck on this step and want to gloss over it or miss it entirely, but then you have no idea of what your real compound growth rate should be, if you do … so, there’s a real right-brain side to all of this, too.

However, analytical people then have an advantage at the planning stage (once they finally do have their Life’s What/When sorted) …

Thanks again for the response. The problem is that I’m not sure about my Date, so when I attempt to perform your analysis (outlined above), I really can’t get started.

Instead of giving up, I’ve been working your analysis kind-of backwards…I found a Number I would need today, adjusted it for inflation for each Date (year) over the next 30 years, calculated (in some cases iteratively) the required rates of return for the various dates based on my current invested/investable assets (and optionally with various annual contributions and various growth rates for those annual contributions), and then looked at which investment options will get me to my number for each date. What I learned was that the longer you wait (and the more you contribute annually) the lower your required compound growth. Do you see a problem with this approach? Did any of your MITs have a similar problem with determining their Date, and, if so, how did they resolve the problem?

I guess what I’m really asking is do you have an analytical/mechanical way of determining your Date?

Thanks for the response. I’m leaning that way…but am always looking for a better way of investing. I thought, given your previous posts/comments related to Scott’s situation (keeping his medical practice v. starting up a ‘real’ business that he could sell for “many multiples of earnings”), that you would recommend pursuing business(es) in an effort to reach my goal earlier even if it meant that I would increase my chances of never reaching it.

You are right about me not “investing” in the lottery, just like I wouldn’t “invest” by throwing cash under my mattress

As for my compounded rate of return…I know my number if my date was today, but haven’t figured out an actual date yet. Thus, I have a spreadsheet with a required compounded rate of return for each of the next 30 years (with an inflation adjusted number). Actually it has two sets of compounded rates of return, one set if I passively invest and keep my career which allows my to periodically add money (difference between salary and comsumption) to my passive investment, and another set if I start/buy a business and mix my labor with my investable cash (as you suggest above and elsewhere in your blog). As you might have guessed, the former compounded rate is much lower than the latter due to the periodic additions of cash.

Right now, I know that I have a almost-certain chance of reaching my number (inflation adjusted, of course) in about 30 years if I continue along my present course. I guess my ultimate question is: do I give up a relative sure thing for a chance to get there more quickly (but risk not getting there at all)?

Very true…and for some people, buying lottery tickets might be one of their only available “investment” options that will allow them to reach their number

FYI, I didn’t provide this number-crunching…Rick Francis did.

“Rather than focusing on return per unit of risk, shouldn’t we look at risk per unit of required return?”

Looks like we were actually talk about the same thing here. At the end of the day, it looks like we both agree that a diversified and rebalanced portfolio of stocks/bonds should be considered as an investment option if it will get you to your number, i.e., provide you the lifestyle in retirement that you desire.