Did the retired you improve your investment returns?

[qwerty3656]

I lost my job to a restructuring a few years ago. I now have a different job which pays much less (pays 2% annually of my current nest egg). It's not a bad job, all things being equal I would rather be retired. The calculators say I can retire, but I probably don't have as much of a cushion as I would like. Part of me thinks I could make up that 2% in investment returns if I was retired and could devote more time analyzing my investments (and doing things like selling covered calls, etc.). Some part of me is concerned I would do worse (too much trading etc).

edit: also able to spend more time finding ways to cut costs

 

[mh]

I lost my job to a restructuring a few years ago. I now have a different job which pays much less (pays 2% annually of my current nest egg). It's not a bad job, all things being equal I would rather be retired. The calculators say I can retire, but I probably don't have as much of a cushion as I would like. Part of me thinks I could make up that 2% in investment returns if I was retired and could devote more time analyzing my investments (and doing things like selling covered calls, etc.). Some part of me is concerned I would do worse (too much trading etc).

Well the odds are certainly in favor of you doing worse. That “part of you” probably intuitively realizes that. If you wonder about a cushion, maybe you should assess if is possible for you cut expenses way back for 2 or three years if you are happen to get caught in an unlucky “ sequence of returns “ upon retirement. If that sounds unpalatable or not doable, Then maybe building a “cash cushion” isn’t a bad idea . Just a couple points to ponder.

 

[PussInBoots]

[FONT=&quot]Your money is like soap. The more you handle it the less you will have.[/FONT]

 

[twaddle]

It's hard to be objective about your investing skills, especially in a 12-year-old bull market.

But I did find it useful a long time ago to ask myself "can I find another way to replace my salary?" I started a modest business. My only goal was to make the same I had been but without being a wage-slave.

Worked for me, and it also paved the way for ER. Not suggesting it's the path for you, but there are many paths.

 

[Whisper66]

Did the retired you improve your investment returns?

The simple answer is ... I don't think so.. However, having more time to think about investments allowed me to better define my investment goals and move toward them a bit quicker. But what my investment returns would have been had I continued working ... don't know. My well defined goals guide me to avoid making changes very often. That was kind of my default when I worked since I didn't have the time to spend on them. So don't really know if retired returns are better than those if I had kept working.

 

[Born2Fish]

[FONT=&quot]Your money is like soap. The more you handle it the less you will have.[/FONT]

Nicely put.

 

[tdv2]

Unfortunately the odds are stacked against you beating the benchmarks over the long term. Some will beat it and some will under-perform but the value weighted average of all that activity will be the same as holding the market portfolio. That's before expenses....including expenses and taxes makes the picture is even worse for the active trader. Pick some low cost index funds with an asset allocation you are comfortable with, rebalance once a year and you will do better than most in the long run.

 

[bobandsherry]

I believe I have.... When I was working I had little extra time. Commitments to work, family, community, etc. Being retired I had more time to understand the finer points of investing and strategies. As an example I found the value of writing covered calls. It's now helping to boost my returns on a stock that I have held, by my own personal desire, for a very long term. Knowing what I know now would have increased my overall returns, and I am doing so today. So as it's been said, "An investment in knowledge pays the best dividends".

 

[street]

I can say I did better retiring financially, then staying and working. My reason is, I took a lump sum instead of the monthly pension plans they offered. In doing so, I put that lump/money to work and if I were still working that pension doesn't grow and the markets didn't effect what I would get when I retired, if I took the monthly pension payment.

I will say thou, I'm not a day trader an don't buy stocks personally.

So, retiring putting the money to work and I most defiantly have made more money, then If I stayed working by a long shot.

 

[Stormy Kromer]

I'm doing much better. When I was w*rking full time I had a Financial Planner where I sent a lot of money each month. I figured they knew more than I did and never looked at where the money was going. I just stuck to my work.


When I ER'd I took the time to look closely at the investments, the allocation, fees and performances against benchmarks. I never would have done this if I had continued w*orking.


Turns out I could save a ton in fees (about 2.5 - 3% between AUM and expensive internal fund fees) by moving them to Vanguard and investing in two funds. Total Stock and Total Int'l. They're also keeping up with their benchmarks, something my funds never did while under management.


I am not a trader, just a guy who took over his own mutual fund investments. Saving more than I could earn working part time at Home Depot.


I also have the time now to do all the management with my real estate investment property. Not much work and it saves me thousands.

 

[MRG]

Sure, my Roth did 30% last year and 17% over the last 3, beat the S&P handily for 10 years. The account was predominantly in Google. I did nothing but watch.

That said I'm playing with writing calls on stock I've owned for years. Way OTM, short duration. It won't boost my total return by much but I can easily make a couple thousand a month and never sell anything.

 

[jollystomper]

Probably not, since I invested more aggressively when working. With a good salary and relatively low expenses I could afford to take more risk. Now that I am retired, and have "enough", I have reduced some of the growth potential to lessen risk. My returns will be lower on a percentage level, but still plenty good for what I need.

 

[SecondCor521]

My investing approach is very simple and boring, and I'm pretty much doing the same thing in retirement that I did while I was working (LTBH low cost high quality well diversified US stock mutual funds).

The area where I've really found a lot of improvement is in taxes. Being retired and interested in the subject, I've had time to research, think creatively, learn, and also monitor all of the recent tax law changes. I also can be pretty flexible with my AGI from year to year. All of this has led to a number of additional tax strategies that I believe are serving me very well and will continue to do so over the years. Taxes are a very complicated area, though, and I still am learning new things every year.

 

[Lsbcal]

I lost my job to a restructuring a few years ago. I now have a different job which pays much less (pays 2% annually of my current nest egg). It's not a bad job, all things being equal I would rather be retired. The calculators say I can retire, but I probably don't have as much of a cushion as I would like. Part of me thinks I could make up that 2% in investment returns if I was retired and could devote more time analyzing my investments (and doing things like selling covered calls, etc.). Some part of me is concerned I would do worse (too much trading etc).

edit: also able to spend more time finding ways to cut costs

This question really cannot be answered in a general way. It depends on your choices, the returns available in the future, your spending patterns, your emotional state, etc.

Some people use the calculators but still want a bigger padding.

FWIW, I think my investing has done well enough over the 15 years of retirement. And I think I have even better plans now. But what will the future bring? No way to know in advance.

 

[scrabbler1]

When I ERed, I had to adjust my portfolio so it would generate more income to replace my paycheck. I was working only 2 days a week at the end of my career (enough to pay the bills), so I didn't have to really replace much. To help generate this replacement income, I would cash out the company stock and put it into a bond fund which would generate either all or nearly all of the income I'd need to pay the bills. That income has dropped a little as interest rates fell in the last 12 years although I have added lots of shares in the fund to offset the decline. The ACA has forced me to adjust my portfolio so I can get back on the premium subsidy train (by lowering my income, ironically) and lower that quickly rising expense.

 

[NW-Bound]

Yes, being retired will allow one more time to be an active investor.

Does that help? Yes, if you do the "right" things. No, it will hurt more if you do the "wrong" things.

The OP asked about picking up a 2% additional return by being active. It's a modest goal, and in my view attainable. I have been selling covered calls on the stocks that I hold, and cash-covered puts on my cash, and made more than 2% last year with this activity (but I will not tell the exact number ).

With the market going nuts recently, the option premium I collected YTD is approaching 2% already after 2 months. Crazy market!

Is it all luck? Maybe. I just enjoy this while it lasts.

 

[Aerides]

"Retiring to spend more time analyzing my money with the hopes that I improve performance" would not be a strategy many would endorse.

 

[twaddle]

Being retired gives you more time to learn the science of investing. You can learn about risk factors from Nobel laureates. Learn about optimizing for the highest expected returns with the lowest risk via the efficient frontier.

And then be out-performed for years by kids yelling bitcoin and gamestonk!

 

[Bamaman]

I paid much closer attention from age 25 to 60 to my meager savings. In retirement, I prefer to live my life on cruise control.

I still am invested in FIDO's better performing funds, and few adjustments have been recently required.

I'm just thankful for stability in any markets. Who knows the future?