Forever Investment Plan

Categories Invest

Well that is a bit of a catchy title but it is ultimately what I want for my financial plan. And maybe even for my life. For instance, I really enjoy marrying a forever husband and I really love my forever children. I also love my forever home and I plan to not change our forever careers. I have even maintained the same hobbies since I was a child of running and reading books from the library. The library is still one of the few places I go to regularly. I note that “forever” is simply a plan, I am old enough to realize that things can go sideways pretty quickly. But that does not mean you can’t plan with forever in mind.

Therefore why not design a forever investment portfolio? In any case, I would be guided by my own plan. That is why I often write about making a plan based on what you really want, your values and your goals.

Forever Equities Plan

  • Plan to buy & hold forever (and at least 30 years)
  • Diversify money over assets and time by:
    • Buy low fee broad based ETF’s. I plan on buying a global ETF.
    • I will deploy capital into the market with DCA (dollar cost averaging).
  • Understand that although I can not time the market, with the CAPE10 currently above 30, I will expect lower long term returns on average.
  • Risk management for equities:
    • Avoid company, sector and market specific risk by buying a global ETF eg VGRO from Vanguard
    • Mitigate drawdown risk:
      • Buy and hold for > 30 years
      • Dividends can easily support our expenses so I do not need to sell the stocks.
  • Exit Strategy- keep forever, thus no exit planned except for estate planning.
  • Focus on things that matter and that I can control:
    • Fees matter so keep them low. Definitely less than 0.5% MER.
    • Taxes matter so trade less. I plan to add cash to balance a portfolio rather than sell which would trigger capital gains tax.
    • Stay the course. Whatever plan I decide upon, do not switch the strategy part way. Pick a line and stay in line.
  • I have zero interest in researching anything that I have no control over such as the public equities market. It is simply buy, hold & pray afterall.
  • For me, it is a place to keep pace with inflation. If it grows, that is a secondary benefit. Regardless, I will prefer the favorably taxed dividends.

Forever Real Estate Plan

I love buying urban multifamily homes that support our families now and into the future. I enjoy having my growing children start their young adulthood in our previous rental unit. I also enjoy buying the unit that my husband conducts his practice in. After years of paying rent, it has been wonderful to purchase our own unit for the practice. We bought the unit for ourselves and thus it has become a sanctuary even during working hours. We do not have to ask for consensus to do whatever we want with our unit. I simply love control at times and I am very happy to pay for it.

The only area that I have ever taken a mortgage was in purchasing real estate. But I am careful to never leverage more than I could easily cover with my liquid assets.

I am one of those people who keep a lot of cash around and am often told that this is foolish and that inflation will demolish my lifestyle. However, as I have gotten older, my living expenses continue to decrease rather than increase. I no longer wonder if there is something better out there anymore. I have tried all the luxury goods and services I need and I am always left thinking “is this all there is?”. I am content with my simple needs and I frankly love my lifestyle. At 49 years old, I have found no one else’s lifestyle that I wish to emulate. That is a wordy way of saying that I feel that I have enough and then some.

FIRE Anxiety

Lately, I have been coming across many calculators for the 4% SWR strategy. I sense the real anxieties. This probably exists because equity market volatility assists you while you are accumulating, but volatility will be risky when you are decumulating. Therein lies the issue. You can get the calculations right or you can veer far off base unknowingly.

Furthermore, many of the young FIRE community have never experienced the market crashes like the dot com bubble and the financial crisis of 2007-2009. Looking at the timelines of many of these portfolios, they were accumulated in the past 10 years during a bull market. Perhaps that is why I focus on tangible assets such as real estate. In fact, I do not even really focus on rental cash flow real estate but rather in acquiring homes for myself and my family with simple leverage. I recall when I purchased my current home as a rental initially. My husband was very concerned that the numbers might not work and all I could think was that even if this was a terrible investment, I would love to live here!

Therefore, you need to know yourself and what it is that you want. I love my home and if anyone told me that I should have kept the mortgage longer to invest more into the stock market, I still would not have. The whole point of wealth is to not have to worry about money. And I can confirm for myself that the more grateful I am, the less I need of it everyday. Additionally, the more simple my life and my needs become, the less money I also require. I suspected that when I was 15 years old but now as a 49 year old woman, I absolutely know that that is my truth.

I love the plan that Warren Buffett has for the trust for his wife. He plans to invest 90% into a Vanguard S & P index with low fees and keep 10% in short term bonds. Now that is a plan I can wrap my mind around. It is profound in its simplicity. It speaks volumes about one who can enact such a plan. Many of us would be wise to follow his advice.