Tag Archives: Emotion

The Stock Market Melted, Now What?

Well that was interesting.  I generally ignore the stock markets most of the time except for my monthly net worth posts where I login to my accounts and check the balances.  Yet even the current media coverage on the stock market decline managed to pierce my fog of ignorance a bit earlier in the month than I’m used to.  So yes, the TSX index is down like 10% or more from its recent peak.

First off, I don’t panic. In fact, I go back to my previous notes about my emergency plans and what the trigger is.  You know that plan you wrote down when things were going well and you were calm and rational…unlike now where your mind seems to be moving like a squirrel on a double espresso.  And there is black and write is my trigger point which is 10% decline in our portfolio, so while my TSX index is down over 10% I will need to check if my portfolio is down that far yet.  Given my bonds I doubt that the damage will be that bad but I will confirm that tomorrow.

Yet the timing of this does suck.  I was supposed to be re-balancing my portfolio next week and selling some investments to provide cash for next year.  So what do I do?  Well looking at my emergency plan the answer is simple: nothing.

Pardon?!? Yep, the answer is I’m doing nothing.  I’ll just sit back and wait until the US mid-term elections are done and the world just calms down a bit.  In the meanwhile I still have lots of cash in my savings account to live on in the short term and that gives me time to push off pulling money out of my investments until later on in November.  Of course the delay is more psychological than real as I will be pulling money out the bond part of my RRSP.  What I’m really delaying is the re-balancing of my RRSP accounts as I don’t want to re-balance to a stock market blip that will put my off my planned percentage split of investments five minutes after I finish the transactions.

So I might be “missing a buying opportunity” or “trying to time the market” by delaying my re-balancing but the fact is I wrote out a plan back when I was much more calm which said this: when your portfolio goes down 10% or more than you trigger the emergency plan.  Don’t sell investments.  Sit down, take a deep breath. Cut back on optional expenses (if you feel the need to do ‘something’).  Use your slush fund to pay expenses in the short term (if required).  Keep the long view and consider your options: perhaps pick up some part time work or a contract position and consider using debt as a medium term measure if the decline goes on a for an extended period of time.  Keep in mind, you are in this for the long run so don’t do anything stupid in the short term.  Sit on your hands if you have to but DO NOT touch that ‘sell’ button.

See “rational past me” knows “stupid panic current me” very well and wrote out just what I needed to hear: don’t do anything.  Sit tight and if you need to do something work on something to give you some income or perhaps look at your spending in the short term to give yourself a sense of control in a chaotic time.

That is the real value of writing out an investment plan.  It doesn’t have to be long or complex but it should be your ‘go to’ document when things hit the fan and you don’t know what to do.    So what does your investment plan say to do right now?  Or how are you reacting or not to this stock market decline?

Getting Things Done In Retirement

I do admit it.  Every once in a while when someone asks what I do in retirement I struggle to answer.  I think back to my week and realize that yes I exercised three times, volunteered for an afternoon at the school library, walked the dog daily, did some errands, helped my kid with a school project, finished writing 1250 words on my book, got some fall maintenance done around the house, read a book, worked on some crafts, bottle a batch of beer and baked some muffins.  But those things don’t sound all that interesting or particularly important compared to most people’s answers or stories from work about their 60 hour work week and having three major projects due next week.

Then I realized the other day perhaps my standards are all wrong.  Perhaps I should consider what I didn’t do in a week.  I didn’t spend over 20 hours in meetings where very little work actually got done.  I didn’t have to write up project status reports for anyone which most people won’t read.  I didn’t have to answer questions from co-workers or other interruptions at least ten times each day.  I didn’t have to book a meeting room to actually give myself some time to get some work done.  I’m not busy and I really should be proud of that fact.  The issue is we have confused busy work with real work.  Busy work isn’t real work, it takes you away from doing quality, well thought out and useful work.

Oddly enough, despite my relaxed weeks I honestly think I’m getting nearly as much done as I used to at work but in a faction of the time.  Do you any idea how much writing you can get done when you can focus completely on it for a hour?  I can usually get over 1000 words done on my book.   And that just isn’t crappy writing but rather a nicely thought out and organized draft  of 25% of a chapter.    Could I be doing more?  Potentially yes, but given I have tried to write more in the past in a short amount of time and I usually end up with a hot mess of text in desperate need of a good edit.  In short, I just make more work for myself to do. So I spend perhaps two hours a week focused on writing and then I don’t worry about it after I hit my weekly target.  It means it takes a bit longer to write a book but honestly I think I’m writing a better book because of it.

More time at work isn’t a good thing and I often thought during my career it was a failure when you did put in those extra hours.  Now that I’m retired from that job I completely agree.  Work could be so much better for people if the focus was on getting the ‘actual work’ done first and then ignoring much of the busy work that fills peoples’ days.  Why can’t we have a more sane work pace?  People aren’t machines and putting in more over time has been shown to actually get less done and often poorer quality work that often needs rework to fix it.

So yes, I wasn’t ‘busy’ this week and I won’t be busy next week either.  But you know what? I like this pace of life.  I can see doing this endlessly.  Can you say the same thing about your current pace at work?

Life After FIRE – One Year Review – Part III

I was considering stopping my one year review with the last post but then it occurred to me that I didn’t really get into something I feel is VERY important for retirees in general: self motivation.

The problem is summed up like this: your workplace typically provided you with lots of external motivation to do things.  If you don’t do your work: then you get called out on it and potentially put on a ‘plan’ to improve or face being fired from your job.  If you don’t complete something on time, you typically have to provide a reason why, a revised due date and again might lose your job if you keep doing it.  And due to this highly developed structure you typically don’t need to provide much self motivation to do your work.

But now imagine you don’t have that workplace any more and in fact there is no one checking in on your progress or lack there of on anything.  So if you don’t do anything on a project and just play video games all week and at the end of it you might feel guilty but there often is no initial consequence for not working on the project.  All your external motivation is gone in retirement for the most part and suddenly you have to use all internal motivation on everything which isn’t a muscle that you have developed all that much prior to leaving your workplace.

So this can be a very significant problem for any retiree and after a time it is easy to fall into a series of bad habits and then feel mildly depressed about the entire retirement lifestyle.  While I personally didn’t get that bad about things I did underestimate how significant this can be during my first year off.

You see I’ve always been one of those people that thought they had a decent amount of self motivation.  I didn’t typically need reminders at work about much of anything and I was proactive on keeping people informed on changes of status of projects I was working on.  But I did forget for a while the often quoted cautionary tale for engineers: what happens when you give an engineer an unlimited project budget and no deadline? They never finish the project because they keep improving it.

Thus I fell into a trap of endless research on my next book and kept delaying starting on writing it.  It was only over the summer when I finally told myself this was getting nuts did I start with writing out a table of contents and then start writing every weekday to actually get some progress done.  And so far that has helped, I can have weeks where I fall off the wagon a bit and not get as much done as I should but overall I’m much further ahead then I had been for the last four months or so.

So this is your cautionary tale for any retiree: do not underestimate how important self motivation is for getting anything done.  Feel free to use any and all tricks you need to keep it going: offer yourself rewards for getting things done, tell others about your deadlines so they can help remind you to keep working, sign up for specific training or appointments in the future to help drive you to get something done.  What ever you need, feel free to use it.

In the end, if you want to get anything big done you are going to need to figure out how to manage your own internal motivation.  And this is key because one of the major components of long term happiness is working towards a project you find meaningful.  You need to accomplish something that you care about and it doesn’t matter what that project is (running a race, being a better parent, helping out in your community) you need self motivation to get there.

This concludes this series of posts on my one year of FIRE.  Of course, please  continue ask any questions you have in the comments.