Comments on: So, who’s missed the point? http://7million7years.com/2010/02/03/so-whos-missed-the-point/ How to make 7 million in 7 years ... Thu, 24 May 2012 09:20:05 +0000 hourly 1 http://wordpress.org/?v=3.3.2 By: Adrian http://7million7years.com/2010/02/03/so-whos-missed-the-point/comment-page-1/#comment-4545 Adrian Wed, 03 Feb 2010 22:53:39 +0000 http://7million7years.com/?p=4012#comment-4545 @ Philip - Thanks for your Wise Bread articles, and thanks for stopping in to comment. This blog has a particular slant: my primary readership is interested in retiring Rich(er) Quick(er) than the general population DARES to admit. For most people, this means climbing higher up the 'yield curve totem pole' (e.g. into Value Stocks; Income Producing RE; Small Businesses) UNTIL they reach their Number (e.g. my Number was $5 mill. in 5 years; I ended up achieving $7m7y). But, once we reach our Number, then I agree: " extreme simplicity while also providing considerable security" is a virtue :) @ Philip – Thanks for your Wise Bread articles, and thanks for stopping in to comment.

This blog has a particular slant: my primary readership is interested in retiring Rich(er) Quick(er) than the general population DARES to admit.

For most people, this means climbing higher up the ‘yield curve totem pole’ (e.g. into Value Stocks; Income Producing RE; Small Businesses) UNTIL they reach their Number (e.g. my Number was $5 mill. in 5 years; I ended up achieving $7m7y).

But, once we reach our Number, then I agree: ” extreme simplicity while also providing considerable security” is a virtue :)

]]> By: ill liquidity http://7million7years.com/2010/02/03/so-whos-missed-the-point/comment-page-1/#comment-4540 ill liquidity Wed, 03 Feb 2010 18:40:45 +0000 http://7million7years.com/?p=4012#comment-4540 @Jake -- the last two posts, Jan 17/19, talk a little about the US and inflation hedging. http://www.philtown.typepad.com/ Also heard the following quote somewhere and found in worth remembering "there has never been a king or emperor in the history of mankind that has been able to keep his hand off the printing press, no paper currency has ever survived". @Jake — the last two posts, Jan 17/19, talk a little about the US and inflation hedging. http://www.philtown.typepad.com/ Also heard the following quote somewhere and found in worth remembering “there has never been a king or emperor in the history of mankind that has been able to keep his hand off the printing press, no paper currency has ever survived”.

]]> By: ill liquidity http://7million7years.com/2010/02/03/so-whos-missed-the-point/comment-page-1/#comment-4539 ill liquidity Wed, 03 Feb 2010 18:35:58 +0000 http://7million7years.com/?p=4012#comment-4539 @Jake - are there any indicators for changes in the bond yield curve that correlate changes in one part of the curve with another part, e.g. 30yrs go up by X and 5yrs go down by Y? What might be interesting is the stability of these indicators, the measure of their reliability (e.g. x/y = z +/- SD; SD being the item of interest that would be plotted). This might be a good alarm for looking at hedging long equities that are not quite so inflation proof. If the "bond yield curve change correlation indicator stability" (or whatever you want to call it) gets out of whack, that would be the moment to pull out...?? Not sure I know enough about bonds to make a case for this. If I weren't so lazy I'd either try to find this somewhere or get someone else to make it and then see if it leads gold. @Jake – are there any indicators for changes in the bond yield curve that correlate changes in one part of the curve with another part, e.g. 30yrs go up by X and 5yrs go down by Y? What might be interesting is the stability of these indicators, the measure of their reliability (e.g. x/y = z +/- SD; SD being the item of interest that would be plotted). This might be a good alarm for looking at hedging long equities that are not quite so inflation proof. If the “bond yield curve change correlation indicator stability” (or whatever you want to call it) gets out of whack, that would be the moment to pull out…?? Not sure I know enough about bonds to make a case for this. If I weren’t so lazy I’d either try to find this somewhere or get someone else to make it and then see if it leads gold.

]]> By: Philip Brewer http://7million7years.com/2010/02/03/so-whos-missed-the-point/comment-page-1/#comment-4537 Philip Brewer Wed, 03 Feb 2010 16:00:32 +0000 http://7million7years.com/?p=4012#comment-4537 Hey, thanks for the mention! The simple-minded investment program (which has been replaced in newer editions of the book) is part of a whole scheme for achieving financial independence. One step in the scheme is "visualizing" (i.e. graphing) your income, spending, and your investment income. The idea is that eventually your investment income exceeds your spending, at which point you've achieved financial independence. You can probably earn a better total return on your investment portfolio with a more sophisticated strategy, but their suggestion does have the virtue of extreme simplicity while also providing considerable security. Hey, thanks for the mention!

The simple-minded investment program (which has been replaced in newer editions of the book) is part of a whole scheme for achieving financial independence. One step in the scheme is “visualizing” (i.e. graphing) your income, spending, and your investment income. The idea is that eventually your investment income exceeds your spending, at which point you’ve achieved financial independence.

You can probably earn a better total return on your investment portfolio with a more sophisticated strategy, but their suggestion does have the virtue of extreme simplicity while also providing considerable security.

]]> By: Adrian http://7million7years.com/2010/02/03/so-whos-missed-the-point/comment-page-1/#comment-4536 Adrian Wed, 03 Feb 2010 15:20:31 +0000 http://7million7years.com/?p=4012#comment-4536 @ TraineeInvestor - The pat answer is 10 years, but (I think) it really depends on: a) whether you can reach your Number if you move into (presumably) more conservative MM301 strategies, THEN b) the expected market cycle (perhaps + 1 std deviation) of whatever it is that you are MM201'ing in. @ Jake - If you are interested in TIPS (particularly as a retirement / MM301 tool), google Zvie Bodie and pick up the UK or US version of his book "Worry Free Investing" (or therabouts) :) @ TraineeInvestor – The pat answer is 10 years, but (I think) it really depends on:

a) whether you can reach your Number if you move into (presumably) more conservative MM301 strategies, THEN

b) the expected market cycle (perhaps + 1 std deviation) of whatever it is that you are MM201′ing in.

@ Jake – If you are interested in TIPS (particularly as a retirement / MM301 tool), google Zvie Bodie and pick up the UK or US version of his book “Worry Free Investing” (or therabouts) :)

]]> By: Jake @ CareerAde http://7million7years.com/2010/02/03/so-whos-missed-the-point/comment-page-1/#comment-4535 Jake @ CareerAde Wed, 03 Feb 2010 14:45:03 +0000 http://7million7years.com/?p=4012#comment-4535 So speaking of TIPS - what is your take on them? There is a larger than zero - but hopefully reasonably small - chance that we will end up with serious inflation and potential hyperinflation over the next 24 months. TIPS are supposed to protect us from that, but what I don't know yet is if they will withstand the strain of some really serious inflation. I don't understand how the government hedges the inflation risk - is it merely a promise to print more money or is it tied to something of real value? So speaking of TIPS – what is your take on them?

There is a larger than zero – but hopefully reasonably small – chance that we will end up with serious inflation and potential hyperinflation over the next 24 months.

TIPS are supposed to protect us from that, but what I don’t know yet is if they will withstand the strain of some really serious inflation. I don’t understand how the government hedges the inflation risk – is it merely a promise to print more money or is it tied to something of real value?

]]> By: traineeinvestor http://7million7years.com/2010/02/03/so-whos-missed-the-point/comment-page-1/#comment-4534 traineeinvestor Wed, 03 Feb 2010 09:07:45 +0000 http://7million7years.com/?p=4012#comment-4534 Well, I might consider buying long dated treasuries either to make money in anticipation of interest rate cuts (which is pretty unlikely today but worth considering if interest rates are higher) and/or a appreciation of the US$ or buying shorter dated treasureis as a safe haven if I thought everything else was going to fall apart. Even then, there are probably better choices with which to make money. Your last point is one that I am dealing with at the moment - how close to retirement should I start making the transition from making money to securing a secure income stream? Well, I might consider buying long dated treasuries either to make money in anticipation of interest rate cuts (which is pretty unlikely today but worth considering if interest rates are higher) and/or a appreciation of the US$ or buying shorter dated treasureis as a safe haven if I thought everything else was going to fall apart. Even then, there are probably better choices with which to make money.

Your last point is one that I am dealing with at the moment – how close to retirement should I start making the transition from making money to securing a secure income stream?

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