I start with Die with Zero because it most directly deals with the topic of money as we age. In fact, as most retirees know, one of the biggest fears behind the whole retirement saving concept is running out of money before you run out of life.
But it appears that many of us have become so fixated with saving for retirement, we may end up wasting much of our precious life energy, and being the proverbial richest inhabitant of the cemetery. For you super savers out there, this book may be an eye opener, as is the other book, 4,000 Weeks.
As I note in the column, this genre of personal finance started with Die Broke, by Stephen Pollan and Mark Levine, which I read shortly after it was first published in 1998. That’s where I encountered the amusing quip that “The last check you write should be to your undertaker … and it should bounce.”
The premise is similar in both books: there are trade-offs between time, money and health. Indeed, as you can see from the cover shot above, its subtitle is Getting all you can from your money and your life. As with another influential book, Your Money or Your Life, we exchange our time and life energy for money, which can therefore be viewed as a form of stored life energy. So if you die with lots of money, you’ve in effect “wasted” some of your precious life energy. Similarly, if you encounter mobility issues or other afflictions in your 70s or 80s, you may not be able to travel and engage in many activities that you may have thought you had been “saving up” for.
A treatise on Life’s Brevity and appreciating the moment
Amazon.com
The companion book is Four Thousand Weeks : Time Management for Mortals, by Oliver Burkeman. If you haven’t already guessed, 4,000 weeks is roughly the number of weeks someone will live if they reach age 77 [77 years multiplied by 52 equals 4,004.] Even the oldest person on record, Jeanne Calment, lived only 6,400 weeks, having died at age 122.
I actually enjoyed this book more than Die with Zero. It’s more philosophical and amusing in spots. Some of the more intriguing chapters are “Becoming a better procrastinator” and “Cosmic Insignificance Therapy.” I underlined way too many passages to flag here but here’s a sample from the former chapter: “The core challenge of managing our limited time isn’t about how to get everything done – that’s never going to happen – but how to decide most wisely what not to do … we need to learn to get better at procrastinating.”
Added Note on July 4, 2024, America’s Independence Day
American stock markets are closed today for Independence Day. I wish all Americans a happy holiday.
This blog originally ran in February but in light of the momentous events of the past week, we’re republishing and updating it. In fact, emotions have been so raw the last week that some corners of the web fret that July 4, 2024 may turn out to be the last Independence Day.
I doubt that but the events since last Thursday certainly have grabbed the world’s attention, as well as Canada’s: as ever, when the elephant south of the border sneezes, we in the great white north catch a cold.
Those new developments are of course President Biden’s disastrous debate last Thursday, June 27th, and then this week’s equally dismaying Supreme Court ruling (on July 1) to grant the Former Guy immunity for any official acts while he was president.
If Democracy seemed on shaky footing back in February, it seems doubly so today, roughly four months from the November election. But that’s still enough time to read the four books highlighted in this blog, and perhaps act on them.
Back to the original text in the blog, which has also been revised and updated where appropriate:
While Findependence Hub’s focus is primarily on investing, personal finance and Retirement, Findependence has given me sufficient leisure time to absorb a lot of content on politics and the ongoing battle to preserve democracy and in particular American democracy. What’s the point of achieving Financial Independence for oneself and one’s family, if you find yourself suddenly living in a fascist autocracy?
To that end, I have recently read four excellent books that summarize where we are, where we have come from and where we likely may be going. (Note, this blog is an update of what I wrote in late November, but with two books added.)
In contrast to two of the books mentioned below, Heather Cox Richardson’s Democracy Awakening is disturbingly current and explicitly names names. There is an extensive recap of The Former Guy’s attempt to highjack the 2020 election and the subsequent event of January 6th and everything that has occurred since.
Yes, I’m sick of reading about him too, which is why I don’t even name him here (even on social media accounts I prefer to use 45). But after his deranged Thanksgiving rant and an equally insane Christmas greeting on the soon-to-be defunct Truth Social (aka Pravda Social), his behaviour has become nothing short of alarming.
On other words, what may have seemed alarmist warnings in these books six months ago now seem scarily more relevant and likely to pass. So what do these books actually say about past dictatorships of history and the possibility of another one coming to pass in the not-too-distant future?
Reclaiming America
Richardson is a history professor at Boston College. For Canadians in particular the book is a valuable primer on the founding of America, the Declaration of Independence, the civil war, the Constitution and its many amendments, the creation of the Democratic and Republican parties, and the politics of the last few centuries. I assume most well-read American readers are taught this in grade school (although maybe not, judging by the millions of deluded MAGA zealots.)
The book itself is divided into three main parts: Undermining Democracy, The Authoritarian Experiment, and Reclaiming America.
Richardson make frequent references to Adolf Hitler and the Nazis. As she writes in the foreword:
“Hitler’s rise to absolute power began with his consolidation of political influence to win 36.8 percent of the vote in 1932, which he parlayed into a deal to become German chancellor. The absolute dictatorship came afterward. Democracies die more often through the ballot box than at gunpoint.”
She goes on to write that a small group of people “have made war on American democracy,” leading the country “toward authoritarianism by creating a disaffected population and promising to re-create an imagined past where those people could feel important again.” In other words, MAGA.
I’ll skip to the ending but again urge readers to get a copy and read everything between these snippets:
“Once again, we are at a time of testing. How it comes out rests, as it always has, in our own hands.”
Amazon.ca
Hitler: Ascent 1889-1939
Even since I wrote the original version of this blog in November, the press has been full of alarming reports of 45’s Hitler-like rhetoric early in 2024: famously his references to vermin and to immigrants poisoning the blood of the American people, both from the original Hitler playbook. And who can forget his “dictator only on the first day,” an alarming recent example of many a truth said in jest?
A two-book series by Volker Ullrich looks first at Hitler’s political rise and then to his decline and defeat in the second World War that he created.The second book is titled Hitler: Downfall: 1939-1945.
While most of us may think we know this history going back to high-school history classes, not to mention numerous histories, novels and films about World War II, Hitler: Ascent is nevertheless a bracing refresher course.
Ullrich charts Hitler’s improbable rise from failed artist to political rabble rouser, to his failed beerhall putsch in the 1920s, his writing of Mein Kampf after a too-short prison sentence and ultimately his stunning January 1933 manoeuvre to become the Chancellor of Germany, which he soon consolidated as combined chancellor/president and ultimately the dictator he is now known to be.
The book also makes clear his goals for creating a Greater Germany at the expense of most of his European neighbours (famously Poland and France), and his plans for impossibly grandiose architectural structures to be implemented by Albert Speer, with Berlin (to be renamed Germania) the centre of what he hoped would be a global dictatorship.
The second Ullrich book — Hitler: Downfall, 1939-1945 — is also well worth reading. The final sentences are particularly relevant to today’s environment:
If Hitler’s “life and career teaches us anything, it is how quickly democracy can be prised from its hinges when political institutions fail and civilizing forces in society are too weak to combat the lure of authoritarianism; how thin the mantle separating civilization and barbarism actually is; and what human beings are capable of when the rule of law and ethical norms are suspended and some people are granted unlimited power over the lives of others.”
Of course, for most of us, reading yet another book (or two) about Adolf Hitler doesn’t usually create undue anxiety, since it all seems to be comfortably in the faraway past. Ancient history, as they say. Continue Reading…
A just-released study from Vanguard Canada on Home Country Bias shows that Canadians have about 50% of their portfolios allocated to Canadian equities: well beyond what is recommended for a country that makes up less than 3% of the global stock market.
As the chart below shows, Vanguard recommends just 30% in Canadian stocks but notes that the domestic overweight is slowly decreasing as investors move to global and U.S. equities.
Vanguard says home country bias is not unique to Canada: Americans behave similarly with respect to the U.S. stock market. But as you can see from the chart below, because the U.S. makes up more than half of the global stock market by market capitalization, the gap between its relative overweighting is far less dramatic than in Canada. Canada’s home country bias is almost as pronounced as in Australia (a similar market to Canada in terms of resources and financial stocks), and Japan is not far behind.
However,Vanguard adds, “overall, Canadians and investors in other developed countries are trending towards a greater appetite for diversification through global equities.”
Too much Canada can be volatile
So what’s wrong with having too much Canadian content (both stocks and bonds)? Vanguard says portfolios overweight Canadian equity can be volatile because the domestic market is too concentrated in just a few economic sectors. “Relative to the global market, Canada’s market is concentrated within a few large names. It is also significantly overweight in the energy, financials and materials sectors, and significantly underweight in others.” Continue Reading…
The 12 variables used to forecast Recessions are currently “signalling caution,” says Jeffrey Schulze, CFA.
Speaking Wednesday in Toronto at Franklin Templeton’s mid-year outlook, Schulze — Managing Director, Head of Economic and Market Strategy for Clearbridge Investments — told financial advisors and media that as of May 2024, the 12 variables he tracks have “historically foreshadowed a looming recession … the overall dashboard [shown below] is currently signalling caution.”
Three indicators — Job Sentiment, Money Supply and Yield Curve — have been flashing red since the end of 2023 and continue to be, as you can see in the above chart taken from a presentation made available to attendees. The only green light is Credit Spreads, while the other eight — which include Housing Permits, Jobless Claims and Profit Margins — are all a cautionary yellow.
However, stock valuations do not appear to be too stretched at present. The composition of major stock indexes, such as the S&P500, support higher P/E ratios, Schulze said. “Less-volatile defensive and growthier sectors are typically rewarded with higher multiples. These groups make up a near-record share of the S&P 500 today.” As you can see in the chart below and in the higher purple line of the graph, these Defensive stocks include Tech, Consumer Staples, Utilities, and Health Care.
However, Schulze did note a “troubling” record-high concentration of the largest S&P500 names by market weight. As you can see in the chart below, the five largest-cap components now account for more than a quarter (25.3%) of the index, which is “the highest levels in recent history … While this dynamic can persist, history suggests that a reversion to the mean will eventually occur with the average stock outperforming in the coming years.”
In fact, the combined weight of the so-called Magnificent 7 tech stocks now exceeds the combined market weight of the stock markets of Japan, the U.K., Canada, France, and China!
However, “after behaving fairly monolithically in 2023, the performance of the Mag 7 members have diverged substantially so far in 2024,” Schulze said. A slide of the “Divergent 7” showed Tesla down 28.3% and Apple flat, while the others were higher, led by the 121.4% surge in the price of Nvidia this year.
A key driver of the Mag 7 outperformance has been superior earnings growth, Schulze said, but “this advantage is expected to dissipate in the coming year, which could be the catalyst for a sustained leadership rotation.”
Companies that grow their dividends are overdue to start outperforming. “Over the past year, dividend growers have trailed the broader market to a degree rarely seen over the past three decades … Past instances of similar underperformance have been followed with a strong bounce-back for dividend growers.”
A positive for markets is the “copious” amount of cash sitting on the sidelines and being readied to deploy on buying stocks. After the October 2022 lows, investors flocked into money market funds with a net increase of US$1.5 trillion, or 32%, Schulze said: “Should the Fed embark upon its widely anticipated cutting cycle later this year, investors may reallocate. This represents a potential source of upside for equities.” Continue Reading…
Note that while the full 2500-word article at MoneySense is aimed at Seniors, it is not technically my monthly Retired Money column, which is typically shorter. And this short summary here at Findependence Hub is only a third as long: hopefully enough to entice readers to hop over to MoneySense for the full article.
So below, I offer only a small fraction of the full column and some of the major links. This is an important topic both for seniors and those who hope to be financially independent seniors one day, so do take the time to click on and read the full article at MoneySense.ca, linked above.
It was a bit of an eye opener researching and writing this piece but it appears to be the unfortunate reality of the technological world we all now inhabit. It’s overwhelming and the situation is unlikely to improve any time soon.
In the past MoneySense has covered such topics as getting scammed through e-transfers, phishing, crypto schemes, identity theft and more. There’s financial fraud in general that targets bank accounts, credit cards and potentially every other aspect of your financial life. My feature attempts an overview of most of them from a Canadian perspective, with a few new scams I hadn’t known about before researching this article. (Example: “smishing,” which is sort of phishing in the form of text messages on smartphones.)
A.I. is exacerbating the spread of Frauds on all platforms
As I note at the top of the full column, it’s a sad fact that the rise of Artificial Intelligence (A.I.) has exacerbated this problem. While anyone can be prey for technology-linked schemes to separate you from your money, seniors need to pay particular attention, seeing as they tend to have more money to lose and less time to recoup it.
According to Equifax, Fraud is the top crime perpetrated against older Canadians. Sadly, many seniors fail to report these crimes to the police because they feel shame or embarrassment about being duped by scamsters.
Identity Theft
Identity theft is particularly worrisome for seniors, if not the rest of us. As Equifax puts it, “a scammer may try to get information such as a bank card or personal identity number, credit card number, health card number, or a driver’s license or Social Insurance number. They can then apply for credit cards, take out loans or withdraw funds in the person’s name.”
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