Are you Psychologically Fit?

It’s the day you’ve dreamt of. The day that has caused your imagination to run like a stallion. You’ve watched others experience it many times over only wishing it was you in their place. This day, the day you’ve been working for is here.

Retirement!


via GIPHY

So, you’re good financially? Great! But, what about psychologically? Asking the question, “Do I have enough?” is not the only question that you should be asking. Although it is important and can be liberating, having enough is just one of many steps along the path of a having a successful retirement.

Think back to the very first day you began your career. The excitement, the newness, the possibilities. Retirement is like that! Now think back to the day you began your seventh year. The normalcy, yet you're filled with questions and new roles. Retirement is also like that.

Change occurs early and often. Unfortunately, many retirees do not think practically past the first day of retirement or even the first year. The questions of worth, purpose and identity may creep in. What you must realize is that you are a creature of habit and when change occurs, you deal with it differently than someone else. Below are some questions/strategies to spur thought as you begin that transition into retirement and if you're already to that point - start where you are now.

  • Do I have enough?
  • Am I ready to retire or am I just retiring because that is the natural progression?
  • Will I miss the relevancy that my job provided? If so, what can I get involved in to fill the void I may experience?
  • What will I be leaving behind?
  • What is my purpose in life? In what ways can I go about accomplishing that?
  • Realistically, what will my lifestyle look like? Have I put off activities or interests that I want to pursue?
  • Who has transitioned into retirement that I know? Call them and talk about the transition they had.
  • What tasks will I implement to stay active, healthy and keep my mind sharp?
  • Just like your career goals, formulate retirement goals. Set short-term, intermediate and long-term goals.
  • After the bucket list items are checked off and the grandkids have been visited, what will my day-to-day look like?
  • If I am social, what organizations or clubs are available for me to join?
  • What type of legacy do I want to leave?


Final Thought: There is no one-size-fits-all solution to retirement. Everyone has different desires and different circumstances. What everyone can do is take those desires and circumstances into consideration before and during retirement and apply serious thought to them. Each decision creates complexities. Keep in mind that life happens, so remain adaptable just like you are in your career. Keep an open mind and surround yourself with people you trust and can have tough ongoing conversations with. This is where we want to end up:

 

via GIPHY

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Can you Invest Like a Billionaire?

Let’s role play the part of a billionaire investor and see how good you would be at it. Here is the scenario: You own 61.5 million shares of this stock trading at $93. That puts your stake at 5.7 billion dollars. It’s an oil stock and in just the last two months it drops from $93 to $79/share. Your paper loss would be somewhere around 860 million dollars.

The outlook calls for oil to continue to drop and global supplies are growing each day.  You’re a billionaire so you could buy more if you wanted to. The wait for a turnaround won’t be immediate. What do you do?

Option 1

Do not dwell in the past, sell, cut your losses and look for something better.

Option 2

Despite being down, buy more shares now and even more if it goes lower.

Option 3

Keep what you have but dont add anymore to a losing position.



 

Warren Buffett’s company, Berkshire Hathaway owns this stock. Do you want to compare your decision with Buffett? He bought 759,000 more shares on January 6th when the stock closed at $78. The next day the stock dropped to $76, adding another 124 million dollars to a paper loss that is now almost one billion dollars on the whole position. What would you do at this point? How would you handle losing a billion dollars in a couple of months?

Buffett bought twice as much on the 7th when it dropped again. It dropped to $75 on the 8th. He bought another 1.74 million shares. He didn’t let the immediate pain of losing a billion dollars in 2 months cloud his judgement about the long term opportunity. He was following his own well-rehearsed advice. He was being “greedy when others were fearful”. Here’s the chart of his continued purchases in January as oil stocks were getting hammered.



You may be tempted to reply that it’s easier for billionaires to invest like this since they have such deep pockets and are in charge. Realize that Buffetts company stock, Berkshire Hathaway was also down 15% last year and his personal stake of 350,000 shares in the company dropped over 12 billion dollars!

The lesson for mere mortals is a behavioral one. Buffett has mastered the fear that prompts rash decisions. He uses situations where other investors are capitulating to their fears as an opportunity to buy solid long term assets “on sale”. To mimic his approach you will have to divorce your investment decision making from the emotions of near term moves which is easier said than done.



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