Index Fund Investing

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Successful investing always starts with a goal!

Source: Napkin Finance

Investing is for everyone and it can help you reach your financial goals. And, you don’t have to try to pick the winners in the stock market to achieve long-term investing success.

When investing, you don’t have to have tons of money, trade a lot, or employ sophisticated strategies. A proven strategy is just doing the “boring” thing of determining an appropriate asset mix (of stocks, bonds, cash and real estate), owning well-diversified, passively managed index funds, avoiding the herd following tendency to “buy high / sell low,” and sticking with that asset mix over time can help you reach your financial goals.

Even billionaire investor Warren Buffett, the chairman and CEO of Berkshire Hathaway, has repeatedly recommended index funds. Buffett said at a shareholders’ conference, “In my view, for most people, the best thing to do is to own the S&P 500 index fund,”

An index fund is a professionally managed collection of stocks, bonds, or other investments that tries to match the returns of a specific index. They tend to:

  • Pool money from a group of investors and then buy the individual stocks or other securities that make up a particular index. That model helps to reduce the associated costs that fund managers charge, compared to those funds where someone is actively strategizing which investments to include.
  • Track the performance of a particular market benchmark, like the S&P 500 or the Dow Jones Industrial Average. They’re a form of passive investing, because they allow investors to buy a lot of assets at once and hold them for the long term.
  • Offer instant diversification for a portfolio, which helps reduce risk. They also tend to be low-cost investment options, which is a big reason why they’re popular with investors.

While individual stock prices can fluctuate wildly, the broader index tends to go up over time — and with index funds, you don’t have to pick the winning stocks to benefit from the market’s overall gains.

Although all index funds track an index, according to Napkin Finance, what they invest in can vary widely:

  • U.S. stocks—some index funds track a well-known U.S. index, like the S&P or the Dow.
  • Global stocks—some try to essentially track the entire global stock market.
  • A specific industry—some index funds focus only on tech or healthcare stocks or those of another industry.
  • A particular region or country—there are index funds that track only investments in Japan, South America, or other regions.
  • Bonds—some index funds try to track the whole bond market, while others focus on a specific slice.
  • Alternatives—there are index funds that track oil, gold, real estate, and more.

Putting your money to work

There are some inherent risks that come with investing in the stock market, but investing also offers a higher rate of return than the interest rates you’ll earn on a savings account. The S&P 500, an index representing the 500 largest U.S. companies, has delivered average annual returns of almost 10% going back 90-plus years.

You don’t have to be an expert or professional investor to be successful. Index funds are a low cost and easy way to beef up the diversification of your portfolio. Additionally, they are relatively low cost and you don’t need a lot of index funds to achieve diversification.

References:

  1. https://napkinfinance.com/napkin/index-fund/
  2. https://grow.acorns.com/warren-buffett-index-funds/
  3. https://rajn.co/warren-buffett-quotes-investing-business-stocks-risk-debt/
  4. https://grow.acorns.com/why-index-funds-are-often-the-best-way-to-invest/

Stop Orders

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A stop order, also referred to as a stop-loss order, is an order to buy or sell a stock once the price of the stock reaches a specified price, known as the stop price.  Stop orders are orders that are triggered when a stock moves past a specific price point. Beyond that price point, stop orders are converted into market orders that are executed at the best available price.

When the stop price is reached, a stop order becomes a market order.  

A buy stop order is entered at a stop price above the current market price.  Investors generally use a buy stop order to limit a loss or to protect a profit on a stock that they have sold short.  

A sell stop order is entered at a stop price below the current market price. Investors generally use a sell stop order to limit a loss or to protect a profit on a stock that they own.

Stop orders are used to limit losses with a stop-loss or lock in profits using a bullish stop.

References:

  1. https://www.sec.gov/fast-answers/answersstopordhtm.html
  2. https://www.investopedia.com/terms/s/stoporder.asp

Five Money Goals to Financial Wellness | TIAA

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According to TIAA, there are five big financial goals anyone seeking financial well-being should include on their list:

  1. Max out your 401(k) / 403(b). One rule of thumb says that by the time you turn 30, you should have the equivalent of your annual salary saved (that’s all savings, not just retirement assets); double your salary saved by age 35; three times the amount by age 40. And, it’s essential to take full advantage of your employer match, if you have one: With a $50,000 salary from an employer matching up to 6% of your contributions, you’d be turning down $3,000 (free money) each year! Letting your employer match go to waste would be like you accepting a $3,000 pay cut without a fight. In the absence of an employer plan, contribute to an IRA instead, even though the target is much lower (the annual contribution rate for 2021 is $7,000.
  2. Build an emergency fund. Each year brings economic uncertainty to many and, even for the financially secure, life happens in the form of medical bills, domestic catastrophes and other unplanned expenses. As a general rule, it’s good to maintain an emergency fund that would cover three to six months of living expenses in case you find yourself unemployed. Once you’ve calculated how much you should save, set aside a certain amount from each paycheck to set you on your way.
  3. Get your financial affairs in order. Estate planning is something you can’t afford to ignore. Getting your financial affairs in order, and designating the right people to manage them in the event of your incapacity or death, takes a huge weight off your shoulders. Necessary documents include durable powers of attorney, which designate someone to manage your day-to-day affairs, and a living will or healthcare directive to instruct your doctor what to do if you’re unable to make medical decisions for yourself. Don’t forget to inform those assigned with the task of handling your estate, who need to know the location of your will and other estate planning documents.
  4. Give yourself a debt deadline. Bad debts. You know which ones they are: the loan you took out to pay for a wedding; the credit card with the sky-high interest rate whose balance keeps rolling like a New York subway car. Convincing yourself that minimum monthly payments are okay? How about setting a deadline for repayment and getting rid of this exponentially growing interest?
  5. Create a budget (and stick to it). If you find that your spending is a bit out of control, you may want to press the reset button on your out-of-control spending behavior with a budget.

Setting these five money goals is enough to start you well on your way toward financial well-being.

References:

  1. https://www.tiaa.org/public/learn/personal-finance-101/5-must-have-financial-goals

Value Time Over Money

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“It’s essential that you place a high value on your time.”

Happiness is more than simply a positive mood, according to Psychology Today. It is a state of well-being that encompasses living a good life, one with a sense of meaning, purpose and deep contentment. Happiness encompasses feelings of satisfaction and c. involves creating strong relationships and helping others. It requires also uncomfortable or painful experiences—to continue to learn, grow, and evolve.

Coincidentally, emotional well-being refers to the emotional quality of an individual’s everyday experience—the frequency and intensity of experiences of joy, stress, sadness, anger, and affection that make one’s life pleasant or unpleasant.

Time and time again, research has shown that not only do you need a finite amount of money to be happy, but that prioritizing things like time, relationships, hobbies and family may actually lead to long-term well-being. Research shows that the finite sweet spot for yearly income is between $60,000 and $95,000 a year, not a high six-figure salary. Earnings above $95,000 do not necessarily equate to increased well-being.

A study published by Science Advances in 2019 found that recent grads who valued time over money, in which they took jobs that were less demanding but also paid less money, were generally happier.

People who prioritize money are generally driven by extrinsic motivations like shopping, which bring little personal satisfaction, researchers concluded.

On the other hand, people who prioritize time are typically intrinsically motivated, focusing on hobbies, relationships and cultivating gratitude instead. Intrinsic motivations build autonomy and purpose, which lead to long-term happiness, the researchers concluded.

Although wealth offers the potential for people to spend their time in happier ways, such as by living in a more expensive apartment closer to the office, survey data suggest that wealthier individuals often spend more of their time engaging in activities that are less enjoyable, such as commuting. Research suggests that rising incomes are linked to an increased sense of time scarcity.

Takeaway

Happy people live with purpose and value time over money. They find joy in lasting relationships, working toward their goals, and living according to their values. They tend not to garner happiness from material goods or luxury vacations. They’re fine with the simple pleasures of life and cultivating gratitude.

People who cultivate gratitude tend to better appreciate and enjoy life, as gratitude creates satisfaction that is intrinsic. To practice gratitude, reflect on what you’re grateful for each morning to shape the rest of the day, keep a gratitude journal, and reframe negative experiences by finding something within them for which you’re grateful, and can learn and grow.

References:

  1. https://www.psychologytoday.com/us/basics/happiness
  2. https://www.pnas.org/content/107/38/16489.full
  3. https://www.synchronybank.com/blog/millie/money-and-happiness/
  4. https://advances.sciencemag.org/content/5/9/eaax2615.full
  5. https://www.inc.com/jessica-stillman/5-things-science-learned-about-happiness-last-year.html
  6. https://www.psychologytoday.com/us/basics/happiness/how-find-happiness

Money and Happiness

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“The great Western disease is, ‘I’ll be happy when… When I get the money. When I get a BMW. When I get this job. When I get the relationship,’ Well, the reality is, you never get to when. The only way to find happiness is to understand that happiness is not out there. It’s in here. And happiness is not next week. It’s now.” Marshall Goldsmith

Research shows that after you make enough money to pay your essential expenses and save for the future, making more does little for your happiness. A 2010 study by economist and psychologist Daniel Kahneman found that, where wealth is concerned, a person’s satisfaction with their life no longer increases after about $75,000 ($90,000 in today’s dollars) a year.

If anything, once people start making a lot of money, they begin to think they’re doing worse in life, because they become obsessed with comparing themselves to those who appear richer and appear to be living a relatively larger and more luxurious social media embellished lifestyle. But, it important to remember that, “Money has never made man happy, nor will it, there is nothing in its nature to produce happiness”, Benjamin Franklin quipped. “The more of it one has the more one wants.

Instead, research suggests that spending money on experiences rather than tangible goods, giving to others with no thought of reward, and expressing gratitude for what you have, results in the greatest feelings of happiness.

Pitfalls of chasing money

Focusing on chasing the accoutrements of wealth is a trap, because it leads only to an increased focus on chasing wealth. Even multimillionaires make the mistake of believing that money, and not time, experiences and gratitude, will enrich their lives.

“These days, in our materialistic culture, many people are led to believe that money is the ultimate source of happiness. Consequently, when they don’t have enough of it they feel let down. Therefore, it is important to let people know that they have the source of contentment and happiness within themselves, and that it is related to nurturing our natural inner values.” Dalai Lama

A few thousand of the world’s wealthiest people were surveyed and asked how much money they’d needed to be “perfectly happy”, according to Harvard Business Review. Seventy-five percent (many of whom had a net worth of $10 million or more) said they’d needed “a lot more” ($5 million to $10 million, “at the very least”) to be happy.

It doesn’t take a PhD in psychology to see how misguided the mindset of “needing a lot more money” is not related to achieving happiness.

Money may not buy happiness, but there are some things you can do to try to increase happiness such as writing down what you’re grateful for. Literally “counting your blessings” can help you feel more positive. Instead of thinking about what you don’t have, think about the things you do have.

Nothing less than your health and happiness depends on reversing the innate notion that money alone leads to happiness. It’s important to start seeing time, daily habits, being grateful, and lifestyle are the main drivers that determines your happiness:

  1. Convince yourself that your time, expressing your gratitude, and your health are more important than money and your bank account balance.
  2. Remind yourself that your values and that your closely aligned goals when faced with critical life and financial decisions.
  3. Make deliberate and strategic decisions that allow you to have more time across days, weeks months, and years.

Among millionaires, past studies reveal that wealth may be likely to pay off in greater personal happiness only at very high levels of wealth ($10 million or more), and when that wealth was earned rather than inherited.

Takeaways

Research concludes that money can buy life satisfaction and that money is unlikely to buy happiness, but it may help you achieve happiness to an extent through experiences, expressing gratitude, and giving to others. Look for experiences and opportunities that will help you feel fulfilled and that are aligned with your values. And, remember to count your blessings.

And beyond that, you can find happiness through other nonfinancial means, like spending time with people you enjoy or thinking about the good things in your life. Since, “Happiness comes from spiritual wealth, not material wealth…”, according to Sir John Templeton. “Happiness comes from giving, not getting. If we try hard to bring happiness to others, we cannot stop it from coming to us also. To get joy, we must give it, and to keep joy, we must scatter it.”

References:

  1. https://www.pnas.org/content/107/38/16489.full
  2. https://www.cnbc.com/amp/2020/10/19/even-millionaires-make-this-money-mindset-mistake-says-harvard-psychologistheres-the-real-cost-of-it.html
  3. https://www.healthline.com/health/can-money-buy-happiness

6 Habits to Build Wealth

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“If your goal is to become financially secure, you’ll likely attain it…. But if your motive is to make money to spend money on the good life,… you’re never gonna make it.” Thomas Stanley and William Danko

Your financial independence is far more important than showing off your wealth, according to authors of Millionaire Next Door, Thomas Stanley and William Danko. They assert that millionaires frequently remind themselves that those who spend all their income on high-priced luxury items often don’t have much accumulated wealth to their names and tend to live on the paycheck to paycheck treadmill.

Yet, many paths exist to building wealth which have little to do with wages and income. Wealthy people tend to practice daily habits that are designed to protect and grow their assets and help keep their body and mind in balance, according to financial experts who’ve studied subject.

They have found over and over again that you don’t have to be a high-income one-percenter to be wealthy. Many wealthy individuals never made more than $60,000 to $70,000 per year, but did a very good job of managing their expenses, cash flow and spending behavior. “Many people who live in expensive homes and drive luxury cars do not actually have much wealth”, according to Thomas and Danko. “Then, we discovered something even odder: Many people who have a great deal of wealth do not even live in upscale neighborhoods.”

Wealthy individuals generated several million dollars of net worth, simply because they started financial planning early in life, they saved as aggressively as they could afford to, and they invested that money in assets and stayed invested over the long. In short, “one of the reasons that millionaires are economically successful is that they think differently.”

Live Below Your Means and Practice Gratitude

“Wealth is more often the result of a lifestyle of hard work, perseverance, planning, and, most of all, self-discipline.” Thomas Stanley and William Danko

Related to not showing off your wealth, authors Stanley and Danko found that the vast majority of millionaires didn’t spend a lot of money and were grateful for things they did own and the lifestyle they lived. In fact, they spent well below their means given their fortunes. In addition, the majority of the wealthy reported that they created and followed a personal budget, and created and maintain a gratitude journal. In other words, they respected their wealth, kept their spending on a tight leash and practice gratitude daily.

There are a few key habits of building wealth:

  1. Remember to pay yourself first. Basically, paying yourself first is about having your financial and budgeting ducks in a row. One key to building wealth is creating a budget and sticking to it. Wealthy people know how to hold the line on discretionary spending items that can help them increase the “invest” portion of their monthly budget.
  2. Look ahead at your goals. Wealthy people typically set concrete goals, both personal and financial, and have a long-term focus that looks years, if not decades, down the road. The more specific the goals and the longer term the goals are, the better. The wealthy understand that it begins with setting personal goals—what you want to get out of life and how you might prioritize your list. And once you have an idea what you want to accomplish personally, you can plot a financial road map to help steer you there. In other words, the path to wealth involves starting early, and focusing on the long term.
  3. Do your homework; keep your cool. Markets go up, and markets go down—often suddenly and for no apparent reason. Define your comfort level with risk, keep your emotions in check, and recognize what you can and can’t control. According to Siuty, there’s no “secret sauce,” except that, to build wealth, it helps to “stay disciplined, be methodical, and not let emotions get the better of you.”
  4. Lead a non-lavish lifestyle. Despite the popular characterization of rich people throwing money wantonly around in movies and TV, in reality, wealthier folks actually tend to look for value in their purchases. They generally understand the difference between price and value. In other words, they’re not afraid to open the pocketbook, but they tend to expect value in return.
  5. Always expand your education. Education is one of the keys to success, and reading is one of the most efficient ways to learn. According to Thomas Corley, author of Rich Habits: 67% of the rich watch TV for one hour or less a day. Only 6% of the wealthy watch reality shows, he wrote, while 78% of the poor do. And, 86% of the wealthy “love to read,” with most of them reading for self-improvement.
  6. Get up early, eat healthy, exercise. The wisdom that “time is money” goes all the way back to Benjamin Franklin, so it’s no surprise that the wealthy tend to wake early and make the most of their time. The other aphorism the wealthy take to heart is “health is wealth.” According to Corley, 57% of wealthy people count calories every day, while 70% eat fewer than 300 calories of junk food per day. Some 76% do aerobic exercise at least four days per week.
  7. Practice Gratitude. Gratitude makes people more optimistic and positive. It improves relationships, which is strongly correlated with financial success, as well as health, happiness and longevity. And, grateful people are less likely to purchase things they don’t need and that can help them save more! The bottom line is this: It doesn’t matter how much you have if you don’t appreciate it! Without gratitude, you’ll never feel successful and wealthy, no matter your net worth. So regardless of your level of financial success, practicing gratitude is essential.

Seeking a life of balance in mind and body, creating measurable goals, and prioritizing saving and investing, can help put you on the right path, and help keep you from straying from that path. And the earlier you start, the better.

References ‘

  1. https://tickertape.tdameritrade.com/personal-finance/behavior-wealthy-habits-rich-16001
  2. https://brandongaille.com/the-millionaire-next-door-summary/
  3. https://www.fool.com/investing/best-warren-buffett-quotes.aspx
  4. https://partners4prosperity.com/thank-and-grow-rich-gratitude-and-wealth/

Successful Long Term Investing

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“All there is to investing is picking good stocks at good times and staying with them as long as they remain good companies.” Warren Buffett

You need courage, a long term focus, and the discipline to adhere to a long term plan to buy stocks when the markets are turbulent, stock prices are melting down, and the economy is in a deep slump, and the outlook for corporate earnings over the subsequent quarters is unfavorable. In Warren Buffett’s view, “Widespread fear is your friend as an investor because it serves up bargain purchases.” Thus, smart long-term investors love when the prices of their favorite stocks fall, as it produces some of the most favorable buying opportunities. According to Buffett, “Opportunities come infrequently. When it rains gold, put out the bucket, not the thimble.”

“The best thing that happens to us is when a great company gets into temporary trouble…We want to buy them when they’re on the operating table.” Warren Buffett

Warren Buffett

Additionally, investors must focus on the long term — a minimum of seven to ten years — and look for high-quality, blue-chip companies that have fortress like balance sheets and can generate extraordinary free cash flow. In the short term, equity markets tend to swing wildly from day to day on the smallest of news, trend and sentiment, and celebrate or vilify the most inane data points. It’s important not to get caught up in the madness but stick to your homework. Warren Buffett quipped that, “If you aren’t willing to own a stock for ten years, don’t even think about owning it for ten minutes.”

Invest in well-managed, financially strong businesses that sell goods and services for which demand is consistently strong (think food, consumer goods, and medicines), since it’s essential to keep capital preservation and margin of safety at the top of your priority list when deciding how to invest your money. As Buffett says, “Whether we’re talking about socks or stocks, I like buying quality merchandise when it is marked down.”

Businesses that are well managed and that have strong balance sheets typically display certain characteristics:

  • They carry little or no debt.
  • They generate enough free cash flow (earnings plus depreciation and other noncash charges, minus the capital outlays needed to maintain the business) that they don’t have to raise equity or sell debt.
  • They have a proven history of management excellence.
  • They have abundant opportunities for reinvesting capital (or clear policies for returning excess capital to shareholders), and their leaders boast an outstanding record of allocating capital.
  • They have a durable competitive advantage which could mean cost advantages, a strong brand name, or something else.
  • In addition, they are global in scope. After all, 95% of the world’s population lives outside the U.S., and economic growth is likely to be greater abroad than at home.

“We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.” Warren Buffett

To be a successful long term investor, it’s essential to filter out the short-term noise. Most of the chatter from Wall Street and in the financial entertainment media headlines is just that: chatter you can and should ignore. “We’ve long felt that the only value of stock forecasters is to make fortune tellers look good. According to Buffett, “Even now, Charlie and I continue to believe that short-term market forecasts are poison and should be kept locked up in a safe place, away from children and also from grown-ups who behave in the market like children.”

“The key to investing is not assessing how much an industry is going to affect society, or how much it will grow, but rather determining the competitive advantage of any given company and, above all, the durability of that advantage.” Warren Buffet

If You’re Not Investing You’re Doing it Wrong

“Today people who hold cash equivalents feel comfortable. They shouldn’t. They have opted for a terrible long-term asset, one that pays virtually nothing and is certain to depreciate in value.” Warren Buffett

Investing in equities delivers higher returns than bond or cash investments over the long term but is accompanied by a higher exposure to market risk. Investing in fixed income investments offers more modest return potential and risk exposure. Investors can invest in cash as a low- risk, low-return strategy, which is ideal for short-term savings goals or to balance out the risks of stock and bond investments. Ideally, investors’ asset allocations should reflect their goals, risk tolerance, time horizon, income and wealth, and other personal factors.

“The most important quality for an investor is temperament, not intellect. You need a temperament that neither derives great pleasure from being with the crowd or against the crowd.” Warren Buffett

References:

  1. https://www.kiplinger.com/article/investing/t038-c000-s002-7-blue-chips-to-hold-forever.html
  2. https://www.fool.com/investing/best-warren-buffett-quotes.aspx
  3. https://www.ruleoneinvesting.com/blog/how-to-invest/warren-buffett-quotes-on-investing-success/
  4. https://personal.vanguard.com/pdf/how-america-invests-2020.pdf

Mindfulness and Emotional Well-being

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“Cultivate the habit of being grateful for every good thing that comes to you, and to give thanks continuously.” Ralph Waldo Emerson

Mindfulness means maintaining a moment-by-moment awareness of your thoughts, feelings, bodily sensations, and surrounding environment, through a neutral, nonjudgmental filter.

Mindfulness also involves acceptance, meaning that you pay attention to your current thoughts and feelings without judging them—without believing, for instance, that there’s a “right” or “wrong” way to think or feel in a given moment.

When you practice mindfulness, your thoughts tune into what you’re sensing in the present moment rather than rehashing your past or imagining your future.

To be mindful is to be fully conscious or aware of your surroundings. It’s important to not think or worry about the future. Instead, the goal is to physically, emotionally, mentally, and cognitively stay within the present moment.


 
“Mindfulness…is the presence of heart.” Chinese Translation

To discover mindfulness is to discover what happens when you deliberately take time to detect the reality and your perception of the present moment no matter what it’s like—and gradually cultivate ‘an open heart’ to what we notice and sense, asserts teacher Adam Moskowitz. 

Mindfulness Chinese symbol

A Chinese translation for mindfulness is presence of heart. At its core mindfulness is a heart-centered practice. It is a realization of your fundamental wholeness, according to Moskowitz. It is a discovery of your innate care for yourself and one another. It is recognition of the truth of your interdependence—how we rely on one another and how the world relies on us.

Studies have shown that practicing mindfulness, even for just a few weeks, can bring a variety of physical, psychological, and social benefits. Essentially, mindfulness is good for your health, wealth and emotional well-being.

Mindfulness can be cultivated and practiced daily, Jon Kabat-Zinn emphasizes in his Greater Good video. “It’s about living your life as if it really mattered, moment by moment by moment by moment.”

It is essential for our wellbeing to take a few minutes each day to cultivate mindfulness and achieve a positive mind-body balance. Here are a few key components of practicing mindfulness that Kabat-Zinn and others identify:

  • Pay close attention to your breathing, especially when you’re feeling intense emotions.
  • Notice—really notice—what you’re sensing in a given moment, the sights, sounds, and smells that ordinarily slip by without reaching your conscious awareness.
  • Recognize that your thoughts and emotions are fleeting and do not define you, an insight that can free you from negative thought patterns.
  • Tune into your body’s physical sensations, from the water hitting your skin in the shower to the way your body rests in your office chair.

The cultivation of moment-by-moment awareness of our surrounding environment is a practice that helps us better cope with the difficult thoughts and feelings that cause us stress and anxiety in everyday life.

With regular practice of mindfulness exercises, you can harness the ability to root the mind in the present moment and deal with life’s challenges in a clear-minded, calm, assertive way. It’s about the challenges and the rewards of being less self-centered and more self aware.

References:

  1. https://greatergood.berkeley.edu/topic/mindfulness/definition
  2. https://www.withinmeditation.com/blog/2020/10/2/presence-of-heart-what-mindfulness-is-and-isnt
  3. https://greatergood.berkeley.edu/topic/mindfulness/definition#why-practice-mindfulness
  4. https://www.pocketmindfulness.com/6-mindfulness-exercises-you-can-try-today/

Retiree Emotional Well-being

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Retirement presents some unique emotional challenges.

There are significant emotional challenges of retirement. Knowing how to deal with retirement emotionally can be just as important as, or more important than, financial preparation.

Most people spend the majority of their lives working to cultivate a career and raise a family. It’s human nature to take solace in the daily routine that you developed, but when you reach retirement you may find that it takes some time to get used to your new life after leaving the workforce and/ or becoming an empty nester.

https://twitter.com/kathrynpeyton/status/1215464171912884224

If you’re having a hard time adjusting to retirement, you’re not alone. A survey of 1,000 people ages 60 to 73 shows that about two-thirds of Baby Boomer participants said they had difficulties in transitioning from their primary profession to retirement. The survey also identified the top reasons that participants had trouble adapting to life in retirement:

  • 37% said that they missed the daily social interactions they would have with work colleagues.
  • 32% had trouble adjusting to a new daily routine.
  • 22% found it difficult to find ways to create meaning and purpose in their life after work.

The good news is that eventually more than half of the participants found that they adjusted to these changes rather quickly, and 97% reported being “somewhat” or “rather” satisfied in their retirement.

The key to adjusting to these life changes and living a fulfilling life after work is emotionally preparing for the transition years and decades prior to reaching retirement age.

Deal with Retirement Emotionally

Though retirement is often seen as a time to slow down, this doesn’t mean that you can’t continue to remain active or find meaning outside of your professional life. And, there are ways to cope with the emotional challenges of retirement:

  1. Find activities you enjoy outside of work. – Retirement is the time for you to do the things that you enjoy most. Volunteer your time at your favorite local organization or take up a new hobby. Staying active is a great way to find meaning in life after work.
  2. Begin to expand your relationship base. – Chances are, many of your friendships were formed in the workplace. Though it’s great to keep in touch with former colleagues, try to develop new friendships. Friends are the key to staying connected and maintaining your well-being.
  3. Include your family in your pre-retirement plans. – Once you’re retired, you will have more time to spend with your spouse. Actively include him or her in your pre-retirement plans. Have a conversation about what you would like life after retirement to look like and discuss how you can help support one another.
  4. Have a solid financial plan. – Not having enough resources to support yourself after retirement can add stress to your life. One way to make sure that you are emotionally prepared for the transition is to make sure that you have a financial plan in place that provides a quality of life for yourself in retirement. 

Change in life status is exciting and can be positive if you’re prepared.

Mindset, attitudes, behaviors and habits.

Retirement can mean looking forward to a simpler, less stressful life, free of commuting, demanding boss, meetings and deadlines.

Good health care, combined with recreational and fitness opportunities, are critical attributes of retirement of a healthy retirement. Good health, combined with a moderate cost of living, are critical since 96% of retirees—and 99% of those age 75 and over—say that health is more important than wealth to live well in retirement, according to the survey.

Yet health and wealth are very intertwined. People with financial resources can invest more in their health, and those in poor health have a harder time enjoying what their money can buy.

Tackling tough financial issues, such as overspending, debt and “having more month left than money available”, are a great way to drive change. Better yet, it’s always a good idea to learn more about financial management matters, getting out of debt and becoming a discipline saver for the future and invest for the long term.

To retire with financial security and sense of confidence, most financial experts recommend a certain liquid asset level, a mostly paid-off mortgage, and multiple streams of income. Furthermore, they observe that:

  1. Retirees are feeling increasingly confident about their ability to maintain a comfortable lifestyle without running out of money. And, that is the primary goal for retirement.
  2. Retirees want a physically active, healthy and vibrant lifestyle.
  3. Retirees want to be emotionally engaged and socially fulfilling lifestyle.

Find happiness in retirement

Finding happiness and contentment in retirement requires retiring with core pursuits and sense of purpose. What’s paramount to an happy retirement and life is having multiple activities/ projects / endeavors that you’re passionate about participating.

These are activities (projects or endeavors) that excite and fulfill; hobbies on steroids and things you look forward to. Examples are learning an instrument, learning a language, and enjoying golf, biking, yoga, walking, hiking. Wes Moss, a managing partner at Capital Investment Advisors in Atlanta and author of three personal-finance books and host of the Money Matters weekly radio call-in show, commissioned Georgia Tech University in Atlanta do a statistical analysis retirees’ activities and found that “happy retirees have 3.6 core pursuits. Unhappy retirees have 1.9 core pursuits”.

When you have a long life expectancy, you can spend the first sixty years working for you and your family, then the next forty years working for the greater good and contributing to make the world a better place. Working for the greater food gives you a sense of greater purpose. One in five Americans downright hate their jobs. Compare this to the results that show that three in five could “take it or leave it”.

The Happiness Retirees on the Block (HROB) create their happiness by engaging in a long series of core pursuits — activities, projects and endeavors — that make a difference in their lives. Your core pursuits can lead you to a more fulfilling future while adding life to your years. Core pursuits can lead to a more fulfilling future while adding happy life to your years.

Get going, Get growing, Continue learning

Sparse diet, taking the stairs and take on activities that feed their soul and focus on you and the greater good. Curiosity may have killed the cat, but a lack of curiosity is what kills the happy retiree.

References;

  1. https://www.usatoday.com/story/money/2015/02/03/baby-boomers-retirement-emotional/22799155/
  2. https://www.newretirement.com/retirement/retirement-planning-the-emotional-toll-of-transitioning-to-retirement
  3. https://www.barrons.com/articles/you-can-probably-retire-earlier-than-you-think-says-personal-finance-guru-wes-moss-51599870173
  4. https://www.forbes.com/sites/andrewbiggs/2020/02/19/fact-check-are-41-of-retirees-economically-insecure/amp/

Bitcoin’s Bursting Bubble

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“I have to confess that I find it all exhilarating. I’m only concerned somewhat for the relatively new investors who get drawn into these things and then find out the hard way. I sympathize completely with these people out there enjoying this bubble, but they’ve always ended very badly, and I have no doubt this one will too.” Jeremy Grantham

The price of Bitcoin dropped below $40,000 for the first time in months and the cryptocurrency fell more than 40 percent off recent all time highs.

There are reasons for the recent crash in the price of Bitcoin, according to Barron’s Magazine. Recently, China banned the use of cryptocurrencies for financial institutions asserting that “virtual currencies shouldn’t be used in the market as they are not supported by real value”. Instead, China intends to create its own indigenous cryptocurrency that will allow the regime to monitor and track its citizens

Furthermore, other countries might be considering tighter regulation, particularly as cryptos become the currency of choice for ransomware hackers and money laundering. Additionally, Tesla stopped accepting Bitcoin as payment for vehicles and Elon Musk expressed climate-related concerns over Bitcoin’s mining process.

But sometimes things go down because they are going down, according to Barron’s. Investors who bought early are looking to lock in gains, while recent arrivals to the crypto game are panicking. Selling begets selling.

Image Source: Getty Images

Bubble Burst

“We’re a crazy marketplace full of irrational human beings who behave themselves 80% of the time and then 20% of the time totally freak out one way or the other.” Jeremy Grantham

Retail investors piling into Bitcoin have fueled a historic price bubble that has finally burst. When stock bubbles pop, the selling usually stops when shares drop well below intrinsic value and become attractive to a new class of value investors who didn’t partake in the market froth.

Cryptocurrencies are different. They have no intrinsic value, which means there’s no telling when the selling might stop.

Essentially, Bitcoin is a digital currency that is not tied to a bank or government and allows users to spend money anonymously. The coins are created by users who “mine” them by lending computing power to verify other users’ transactions. They receive Bitcoins in exchange. Overall, the mainstream acceptance of Bitcoin is still limited.

Bitcoins are basically lines of computer code that are digitally signed each time they travel from one owner to the next. Transactions can be made anonymously, making the currency popular with tech enthusiasts, speculators — and cybercriminals.

“The concerns among investors and traders is that perhaps we are about to see another crypto winter and it may take a long time for Bitcoin price to see any recovery as the bull cycle may be over,” said Naeem Aslam, chief market analyst at AvaTrade.

“The actual answer is that no one really knows about that and the only thing that we do know is that institutions are still buying Bitcoin on every dip,” said Aslam.

Maintain a long-term outlook

Stock market and assets, like cryptocurrencies, bubble bursts can be intimidating, but they’re no cause for panic. Historically, the market has always recovered from every one of its downturns — and it’s extremely likely it will bounce back again.

If you maintain a long-term outlook, it’s easier to avoid panic-selling when asset prices begin to free-fall. Remind yourself that the market will recover eventually, and you’ll be able to ride out the storm.

The key to investing for the long term is to ensure you’re investing in quality assets. And, investing during market downturns can actually be a cost-effective move.

Because asset prices are lower during market downturns, it can be a good opportunity to buy good assets, like stocks (and cryptocurrencies, if you’re so inclined), at bargain prices.

References:

  1. https://www.barrons.com/articles/china-issues-crypto-bitcoin-warning-51621416378
  2. https://www.dallasnews.com/business/technology/2021/05/19/bitcoin-falls-below-38000-whats-going-on/
  3. https://barrons.cmail20.com/t/ViewEmail/j/62CDF96507F967432540EF23F30FEDED/9E2B0856731CA0B32018F019E6F15D33
  4. https://markets.businessinsider.com/currencies/news/jeremy-grantham-gmo-stock-market-bubble-burst-before-may-2021-2-1030118339
  5. https://www.fool.com/investing/2021/04/03/3-ways-im-preparing-for-the-stock-market-bubble-to/