I'm having a hard time adjusting

[My Dream]

For those that remember me, I retired last year and my DW decided to take on a part time job. Investments were just over 1 M. with 60% of it in Investors Group the rest with Toronto Dominion Waterhouse. One of the first things I wanted to do is read as much as possible to educate myself in this new world of investment and then take out our investments with IG and reinvest on our own with TD Waterhouse.

Well the plan didn’t quite pan out like I thought it would. First off, I had a difficult time comprehending some of the jargen, concepts, what ever the case may be, I just didn’t really get it. When I finally decided I didn’t want to deal with the headaches, I decided to go full force on my to-do list that I was putting off for around 10 years. While doing this I started feeling guilty since I knew that my priority should have been to deal with IG, secure our finances and have a plan. Well, being overwhelmed with it all I just didn’t want to deal with it and hiring someone was in my eye’s not an option since we had several bad experiences with financial advisers.

Lately, I find myself pinching pennies and I’m constantly looking at the market. I don’t want to spend any money on materials to do any repairs unless I absolutely have to. Our family doesn’t go on vacations, or even small picnics, only the odd dinner out.

I’m starting to get depressed and my DW is feeling the effects of my unhappiness. Lately there has been two major changes in our finances that has me wondering if I made the right choice. We had to pay the Government CPP contributions for the last several years, since my DW (bookkeeper) and our accountant were told by the CPP rep that since I was self employed we didn’t need to contribute. After writing letters they denied our appeal to wave the penalty and interest since there was only phone conversation and nothing in writing. Amount owed ($30,000.00). 2nd…..in the last couple of weeks the TSX has dropped over 10% which has directly affected our portfolio and seeing the numbers drop like flies, well…..although I believe it will rebound, it still doesn’t set me at ease.

I need to change my mindset, I know my DW loves me but I can see she’s worried and my unhappiness is directly affecting her.

I took on the occasional part time job (very good money) in the same field and that only reinforced why I wanted to retire.

My advice to myself would be,

Pay the penalty, get the money out of IG, and reinvest with TDW.
Don’t worry about the market, it will rebound.
Cash in some of your mutual funds and make the repairs needed around the house.
Take some quality time with your family, it doesn’t cost much and the rewards are priceless.
Sit down and tell your wife how you feel and somehow let her know that everything will be ok.



I just with I could follow through.


Thanks for listening


MD

[DangerMouse]

My Dream, sounds like there is a lot of adjusting going on in your life.

I am assuming IG is some type of Canadian mutual fund. I am concerned that you are considering moving your funds to TDW and reinvesting on your own when you haven't really got "it" yet. I think it is a bit of a risky move. Before you do anything are there any classes on investing at the community college you could take? Also what about joining an investment club to bring yourself up to speed. Secondly are you sure you want to go the individual stock route as it could be time consumng and if you do not have the right personality you could find it very stressful.

As to the tax penalty, if you have it in writing that it is due seems there is no way around it. You may actually find it a weight of your shoulders if you pay it and just move on. Is there any further avenue for appeal?

[My Dream]

IG is Investors Group, one of the largest financial companies in Canada and have been with them for approximately 10 years. You're correct, I don't really get it yet, the TDW mutual funds have been purchased several years ago with the advice of a ER neighbor which is slowly teaching me, but with confusing results. I don't want to go the route of stock purchases, I feel more comfortable with mutual funds.

The CPP contributions and penalties have been paid and that's when I started really pinching pennies since our reserve fund in totally gone now.

Thanks for the reply DangerMouse.

[GoodSense]

Maybe you could consider hiring a financial advisor BY THE HOUR (not commission based) to guide you and answer questions? I've never personally used an FA, but just a thought.

[My Dream]

We have dealt with over 5 different advisors and several institutions, none have come close to obtaining ours as well as what they felt were reasonable goals when we first sat down and made a plan although we exceeded there goal in savings. I don't want this to become a FA bashing, all I know is that of the over 10 people that I know that have a FA, none would recommend them to me.

If I were to hire one a FA by the hour, I would still be at there mercy since I really don't get it yet. I think I'm at the point of 5 times bitten 4 times shy.

I know it's all up to me; I just need to change my mindset real soon.

[kumquat]

As a Canadian, you may get some financial ideas and newbie advice from reading some of the posts at Financial Webring Forum :: Index

The "Starting Out on the Right Track..." is good. There is some info on "fee-only" planners in this thread.

While IG funds are mediocre and fees are high, wait until you have a good plan in place before moving anything.

[My Dream]

I glanced over at Financial Webring Forum and I think it's worth reading, I also recognized a few members.

I'm still not comfortable with a FA even if it's fee only. The last meeting we had with our FA made us so upset, that we swore we would never put ourselves in that position again. If some can remember the thread, our FA advisor in closing thanked us for being a client and that he made a lot of money off of us. Also when he told us that he didn't manage our money IG did, he managed us. Our reply was simply, we didn't need to be managed, since we exceeded his savings goal by 50%, in other words we gave them 50% more every year then he expected. He wanted to teach us how to live below our means but we were already good at it.

We haven't moved our funds from IG yet for that specific reason. We need a financial plan first.

Thanks kumquat

[HokieHill]

If you are interested in investing in only mutual funds, try doing some reading at FundAdvice.com - Home. It is an approach I think is reasonable and I think they do a great job of explaining it. Take a look and let me know what you think.

[maxer]

I think before you do anything, talk to your wife - she being a bookkeeper may have some options she has in mind. Or any children?

Secondly, find some relative and/or aquaintance who you and your wife can trust and ask for some handholding but keep the decision making to between you and your wife.

Whatever you do, dont jump into or get pressured into doing anything you are not comfortable with. It seems like yours is not really a financial problem but more of a self confidence problem - and I think comparatively easier to address. I may be wrong, of course.

Lastly, I dont know if there are index funds or fund families like the Vanguard Group. These fund families may have a free prtfolio anaysis and perhaps some suggestions too.

Seeing that you already have a TDW a/c, try them out too for their free portfolio X-ray and suggestions.

Again, DO NOT get pressured into doing anything you are not comfortable doing.

I do wish you get your self-confidence back. Good luck to you.

[Ed_The_Gypsy]

My Dream,

Ouch.

But, I think you are doing fine so far, taxman notwithstanding. The market will come back. We just don't know when. Stop looking at the tape. Myself, I would cut back on spending for comfort. Unless the roof is leaking, maybe it can wait. This is where a a year or two in certificates of deposit as a buffer can help the butterflies in the stomach.

I, too, suggest Financial Webring. Post there. One of our old hands (SWR I believe) is a regular there. That is what I would do.

It is hard for us Yankees to help with the investment issues because Canada is different. You can't buy Vanguard, for example, and Canadian mutual funds have a high (comparatively) annual fee.

I just read Alex Doulis's new book on dealing with Canada Revenue. I am more inclined to listen to my tax man now who says, stay off their radar. They sound even less friendly than the IRS.

Best of luck, mon ami.

Gypsy

[chinaco]

MD - Hang in there dude. As far as the market is concerned, you need to get comfortable with the idea that it will move down (correct) and have bears. It catches my attention and I am still working. I am sure that would be magnified if I were not working now.

LBYM is one of the mechanisms in your ER tool kit. But there are many other tools in terms of managing your money/portfolio. I am not talking about get rich quick schemes or how to beat the market, but how to leverage the natural ebb and flow of the market so you don't get swamped and utilize its power to your advantage. Continue your study, do not give up. Think of investing like learning math. You need to build a good foundation and work your way up. The terminology alone can be intimidating. Do not start with differential equations... begin with some basic algebra. Matter of fact, you probably will not even need to go past algebra if you catch my drift.

The tax bite... fugidaboudid (ala Sapranos). Try to understand what it is about. If it looks like you owe it (then there is little you can do)... you might as well pay it and get it over with.

I have a feeling that everyone that ERs (at one time or another) wonders if their dream just turned into a nightmare. Taking the part-time job may be more of a psychological blanket for now.


My best advice to you is setup a financial plan/projection, monitor progress along the way and try to stick to it.


Keep us posted.

By the way, what books were you reading about finance and what level would you consider your knowledge? Maybe we can recommend some books that would be good.

[My Dream]

Quote:

Originally Posted by [COLOR=blue HokieHill[/color];547107]If you are interested in investing in only mutual funds, try doing some reading at FundAdvice.com - Home. It is an approach I think is reasonable and I think they do a great job of explaining it. Take a look and let me know what you think.

Thanks HokieHill, I've placed a few links in my favorites to view later. First off I think I need to understand just how the market works, I understand the difference between mutual funds, bonds & stock. I don't mind a bit of risk but at the mutual fund level.

maxer

I know more about investing then my wife and all of my friends, the only person that knows more is this one neighbour who is trying to teach me a little at a time, but I can tell he's getting frustrated since he finds he needs to repeat himself.
I think with the recent CPP contribution and TSX still going down, it's just adding to my concerns. We still have just over 1 M invested, but it's quickly diminishing.
I've heard a lot about Vanguard but I don't think Canadians can invest with them.
We've talked to 2 different people at TDW and they gave us different suggestions, this made us even more confused. When asked to explain they both could have convinced us to do what they recommended, this is probably why we listened to FA's and were disapointed on every occasion.


Ed_The_Gypsy

I also believe the market will rebound although I don't remember the market loosing well over 10% in less then a couple of weeks.
I'll take that luck Gypsy.


chinaco

25 years ago I read "The Wealthy Barber" well that kick started my LBYM. The next book I read which was given to me by my FA was Rich is a state of mind: Robert Gignac, Michael Townshend but I think that was more tailored to working with a FA, it didn't educate me in the art of investing. Then The Lazy Investor, Stop Working, it taught me what I was already doing, but still an interesting book. My last book was The 4 Pillars Of Investing, excellent book and exactly what I was hoping for, it was so interesting that I even got new prescription reading glasses since I though it would help with my headaches, well the headaches continued since I wasn't comprehending what the author was trying to teach me. I was both interested and confused and finally gave up.

I know that I should get back to the 4 Pillars but I just can't seem to rap my head around it.


In conclusion, my DW has no problem with me retiring and even took on a PT joke to show her support. What I think she was hoping for is for us to cut all ties with our FA and some how get the returns that our neighbor across the street has been living on in his ER.

[Orchidflower]

FundAdvice.com: Thanks for the site. I'm sure loving it. Got any more good ones?

[W2R]

Quote:

Originally Posted by My Dream My last book was The 4 Pillars Of Investing, excellent book and exactly what I was hoping for, it was so interesting that I even got new prescription reading glasses since I though it would help with my headaches, well the headaches continued since I wasn't comprehending what the author was trying to teach me. I was both interested and confused and finally gave up. I know that I should get back to the 4 Pillars but I just can't seem to rap my head around it.

The 4 Pillars is very good but you are not the only one to have that reaction to it!!! It is incredibly boring in some parts, and other people on this board told me they felt the same way. I have it by my bedside as an insomnia cure, though I feel guilty about that because I know I am learning good things from it (before falling asleep) and it makes sense.

One that's a little clearer, more practical, and less painful is the Only Guide to a Winning Investment Strategy You'll Ever Need by Larry Swedroe: Amazon.com: The Only Guide to a Winning Investment Strategy You'll Ever Need: The Way Smart Money Preserves Wealth Today: Books: Larry E. Swedroe

At least, I found it to be clearer and I actually can read it without falling asleep!! Hope this helps.

[teachme]

Being one who is far away from ER but have known a few that have done it and watched them struggle I can only offer what one of them did that appears to have suffered some of the stresses you did.

1. He saw the market adjustments and didn't like it so he moved out of it. Moved most of his assets over to something he did know (land) and short term cash equivalents and has never been happier.
2. Relaxed, now that he was out of the thing(s) that were stressing him he noticed his life was getting to a place that allowed him to sit back and decide what approach he wanted to take with the markets, decided he's going to stay out...forever. Some here might argue that point but when he's put his experience to the test he almost always beats the markets.

He stopped there and since he bought his land strategically he has seen more growth than the market ever would have given him. In your case once you've put your money in all low risk investments (cash or cash equivalents maybe) you could maybe start playing with your money slowly and not be so stressed. Personally I think the markets might have some more upswings but I don't see that as being 'real' but artificially supported so I see you're BP going up by 20 pts since you're not comfortable with it. If you die early due to the stress of watching this happen is it really worth the 'potential' 10%, 20%+, whatever/year? Don't underestimate the life sapping power of worry.

Since I'm new here I'll obviously concede to the pros but whenever I see someone not taking joy in an experience that is supposed to be joyful it seems like an appropriate time to jump in...best wishes to you in your journey.

[My Dream]

Quote:

Originally Posted by Want2retire One that's a little clearer, more practical, and less painful is the Only Guide to a Winning Investment Strategy You'll Ever Need by Larry Swedroe: Amazon.com: The Only Guide to a Winning Investment Strategy You'll Ever Need: The Way Smart Money Preserves Wealth Today: Books: Larry E. Swedroe At least, I found it to be clearer and I actually can read it without falling asleep!! Hope this helps.

I'm going to make another attempt at the 4 Pillars Want2retire, and if I end up getting headaches again I just may try the book you've suggested. Thanks.


teachme


1. I believe that if I stay with Mutual Funds as my neighbor has been doing I will be able to get fairly good returns. It's all about educating myself

2. I will become more relaxed once I have a handle on our finances and they're doing well.


I think I've always know what I have to do, seeing as it's a lot harder than I thought, it's going to take a lot more time than I had anticipated. In the mean time, I'll just have to accept any losses, and chaulk it up to inexperience. I know it's not the right attitude to take but I'm trying to see this as the glass being half full.

This wasn't the way I saw My Dream coming true but hopefully in time I can contribute more to this forum rather than seek advice all the time and one day My Dream will truly become reality.

Thanks Everyone

MD

[teachme]

Quote:

Originally Posted by My Dream This wasn't the way I saw My Dream coming true but hopefully in time I can contribute more to this forum rather than seek advice all the time and one day My Dream will truly become reality.

There is a lot of good information here and I'm enjoying this forum, will be interesting to see your progress and how your dream morphs the longer you have time to process what is going on and come up with new game plans.

Good day.

[haha]

Quote:

Originally Posted by My Dream I know that I should get back to the 4 Pillars but I just can't seem to rap my head around it.

This could be the problem. Be sure to pad the area around the book.

Ha

[HokieHill]

My dream,

It appears we are all recommending the same approach, an approach based on what is commonly called "Modern Portfolio Theory." The author of the 4 pillars book also has a website called Efficient Frontier. His approach falls under MPT, and his website was where I first learned of this approach. If his book is anything like his website, I can see how it could get tedious. The author of FundAdvice.com - Home uses the MPT approach, and I think does a good job of explaining the basic concepts without getting bogged down in too many details. I suggest you spend some time there before picking up the 4 pillars book. Go to the articles section and read "the ultimate buy and hold strategy" first. Also, I would spend some time in the psychology section, as I think this will help you determine why this may be approach you are comfortable with and willing to spend the time understanding it. I think the "when the experts disagree" in that section is helpful in understanding the MPT approach vs. other approaches.

[kevink]

Lots of good advice already. I empathize completely. Found myself ER'd right in the middle of the dot.com market bust, went through two FA-derived asset allocations, lost a bunch, decided I'd better get educated in a hurry.

50+ books later (and I don't want to think about the hours spent online) I now have the ability to make more interesting mistakes. 4 Pillars is great but a real tome. Swedroe is fantastic, but I also have to plug what I've found to be the single most useful book in terms of understanding asset allocation for an early retiree - happens to be written by a frequent poster on these boards (ESRBob). The book is "Work Less, Live More," by Bob Clyatt (Nolo Press). He's great at distilling a vast amount of modern portfolio research (including Bernstein's work) into an easily applicable building blocks approach to asset allocation. And just today I was rereading his advice on how to deal with market gyrations like the one we're in the midst of, and found it very helpful.

Good luck with everything!