Here we are again — time for another retirement update where I share what’s going on in my life!
For the record here’s the last one. You may want to read it as some of the items mentioned in this post will assume you know what’s in the former post.
The past three months have been full of excitement, so let’s get to the details!
Life
- My son was supposed to spend January through March with a ministry organization and then go to (of all places) northern Italy for a two-month service project. As you might imagine, that was cancelled in mid-March due to the virus and he came home. It was a bit of an adjustment for us all, but he settled in. Since then he’s done a combination of studying for his return (I’m reading The 7 Habits of Highly Effective People
with him) plus he found a job with a company that subcontracts at Home Depot, so he’s been working 30-40 hours a week. - We have been loving our cat. He turns one year old next month so he officially graduates from being a kitten to a cat. Does anyone do birthday parties for their pets? 😉
- My parents are living the RV life, spending time in Mississippi and Alabama during the cold winter months. They headed to Kentucky in late March to see my daughter and then back to their hometown in Iowa after that. They’ll be coming out here in the summer/fall and we’re looking forward to that.
- Colorado went on lockdown (stay-at-home order) on March 26, so we spent from then through April 26 close to home (still going out for walks, which was allowed, and to the grocery store only). What a wild time! We are now in “Safer at Home” time which offers some flexibility, but not a lot.
with him) plus he found a job with a company that subcontracts at Home Depot, so he’s been working 30-40 hours a week.We went to Hawaii in mid-February. I’ve been documenting the trip with pictures on Instagram if you want see what we did, but here’s the verbal overview (just the highlights, not everything we did, of course):
- Thursday, February 13: We were up early and at the Denver airport by 9 am (it was snowy and freezing out!). My daughter and son-in-law arrived 30 minutes later (flew in from Nashville). We ate at McDonald’s then got on the very long flight to Honolulu. When we arrived we took a cab to the Embassy Suites Waikiki, got our rooms, dropped off our bags, and walked down to Waikiki Beach. That evening we ate at the Paia Fish Market, then split up. The kids went shopping and we walked the beach a bit more before turning in.
- Friday, February 14: Our hotel had a free breakfast, so we grabbed that and then went to the beach. The kids rented paddleboards while we sat in the shallow water and watched them. We had lunch at Okonomiyaki Chibo Restaurant which I swore never to return to after my SIL had octopus on his vegetables and it was still moving when they brought it out! That afternoon we napped and hit the pool, then cleaned up and grabbed dinner at Cheeseburger Beachwalk. We then walked to the Hilton where they have fireworks on the beach every Friday night. After that we went over to Lappert’s for some ice cream and walked back to our hotel.
- Saturday, February 15: We were up early and checked out of our hotel. They had reserved a “taxi” for us which was really a stretch limo, so we all enjoyed the ride to the cruise port. It took us a quick 30 minutes to get on the ship (NCL Pride of America) because we are gold members with Norwegian. We ate at the buffet, walked around the shipped, settled into our cabins (we had adjoining balcony cabins which were the smallest we’ve ever had — previously we had always traveled as a family and had booked a suite), played some cards by the pool, and then headed to dinner at the 50’s-style cafe. By that time it was getting late and we were all still a bit tired, so we went to bed early.
- Sunday, February 16: As we got up the ship was pulling into port at Maui. We ate breakfast, then got off the ship for our excursion. We got on to a catamaran that took us to the Molokini Crater. The snorkeling was fine, but not nearly as good as what we have had off Seven Mile Beach in Grand Cayman (the day was a bit overcast and colder too, which didn’t help). We stopped at a second location and discovered a few giant turtles, plus saw many whales on the ride out and back. We were back on the ship by 3 pm, took showers, and napped. We all met for an extended dinner later (we ate and then sat around chatting) before returning to our rooms and visiting some more before bed around 10 pm.
- Monday, February 17: We ate breakfast, then went down for our excursion at 9:30 am. We were bussed most of the way up Haleakalā, then got out and cruised on bikes down the volcano. It was fun, but I would have preferred going faster (they limited our speed). We stopped in a small town for shopping then were back at the ship by 3 pm. We ate and then napped, met for dinner, and then attended the nightly show (a tribute to movie musicals, it was the best show of the week). We were back in the room and in bed by 10 pm.
- Tuesday, February 18: We woke up today and were in Hilo (on the Big Island). We ate and then got off the ship and onto a bus for a tour. Over the course of the next seven hours we saw black volcanic beaches, the Liliuokalani Gardens, Akaka Falls, Rainbow Falls, the Pana’ewa Rainforest Zoo & Gardens, and the Mauna Loa Macadamia Nut visitor center. It was fun to see everything the city had to offer but there was a lot of wasted time (getting on the bus, getting off the bus, waiting for others, spending 45 minutes at a place when 15 would do, etc.) It was this experience that caused us to cancel our 9-hour tour for Kauai in two days (more on that later). Back on the ship we ate, went to the magic show (which was also good), and then headed off to bed.
- Wednesday, February 19: We woke up on the other side of the Big Island today, anchored off the coast of Kona. We tendered in (no port) and our son met us at the dock. We spent the day with him, seeing where he lived/studied, eating out, walking, talking, etc. It was great to see him after six weeks apart. We had dinner on the ship around 6 pm, then saw a comedy show followed by another magic act. We then went back to our rooms and visited before heading to bed around 11 pm.
- Thursday, February 20: We arrived in Kauai this morning and called to rent a car. After breakfast we got off the ship and walked 10 minutes to a nearby Marriott and picked up the car. We spent the day doing our own sight-seeing which was MUCH better than the bus tour we had a couple days earlier. We visited the following: Waimea Canyon State Park (stopping at several points on the way up to get out, hike a bit, and take pictures), ate at Paco’s Tacos, walked Poipu Beach (it was too windy and a bit rainy to get in the water but we loved the area), and Wailua Falls. On the way back we stopped at Costco to gas up the car and relished the shopping at a beloved place. Ha! That night on the ship we ate and played cards (we tried the show but it was terrible).
- Friday, February 21: After breakfast we walked 10 minutes to Kalapaki Beach where the kids did some paddle boarding again. But it was overcast and rainy, so we only stayed a couple hours. We walked back to the ship, doing some shopping along the way, ate lunch, and went to an afternoon “how to do magic” show. As we set sail that evening we had stunning views of the Napali Coast (our cabin was on the wrong side of the ship so we watched from on deck). After dinner we visited and went back to the room to pack.
- Saturday, February 22: We were up at 6 am, ate breakfast, and off the ship in Honolulu by 8 am (we walked off as we had carry on luggage). We took a cab back to the Embassy Suites and hit the pool. My son flew over from Kona and was at our hotel an hour later. We spent the afternoon at the pool, shopping (there is so much high-end shopping near Waikiki Beach — we mostly looked), and eating (back to the Paia Fish Market which we really enjoyed). We hit a flea market on the way back and then played Uno for a couple hours in our hotel room before bed.
- Sunday, February 23: This was the extra day we didn’t need. Everyone was tired and ready to go home. We were up at 7 am, had breakfast, and then hit Waikiki Beach for swimming and paddle boarding. We all showered back at the hotel and checked out at 1 pm, though they allowed us pool access. The kids shopped while my wife and I relaxed by the pool. Around 4 pm we ate at Subway, then I grabbed another quick shower in a room the hotel designates for guests leaving on evening flights (you get 30 minutes in it). We took a cab to the airport and all three of our flights left within 30 minutes of each other (son to Kona, daughter and SIL to Nashville via Houston, and us to Denver). We had paid extra for extended leg room on the flight back since we wanted to try and sleep. The flight left Honolulu at 9 pm, which was midnight Denver time.
- Monday, February 24: It was a very long flight. We got settled and tried to sleep but couldn’t which made the time that much longer. We eventually landed in Denver at 6:15 am, got our car, and drove home. We called our cat sitter on the way home to tell him we were on our way. Good thing we did as he thought we were coming back the next day and hadn’t left yet! Ha! He was gone by the time we got home. We spent the day unpacking, getting caught up with mail and the like, etc. and went to bed early as we were exhausted.
The trip was right before the virus was a big deal (it was mostly in China at this point) so we were probably on one of the last cruises not impacted by it. There was illness on the ship which I believe was the flu. You could tell this since most of the time the staff served us food — they didn’t allow us to serve ourselves which is a tell-tale sign of an illness going around.
Overall, it was a very good trip. We loved the warmth, the sites, seeing our family, the differences in the islands, and the cruise (which made it really easy to see many islands).
There were pros and cons to Hawaii versus Grand Cayman. Hawaii had more to do and see on most islands, a wider variety of landscapes, and was more “American” which made life easier (easier to rent and drive a car, shop, know how things operated, etc.) It was a faster-paced sort of vacation compared to the more laid-back ones we generally have.
The cons were the flight was very long, the weather wasn’t as nice (several days were rainy and colder — in the 70s), and the beaches/snorkeling were not as nice as Grand Cayman.
The costs seemed about the same overall. Grand Cayman is expensive and then you get hit with the conversion upcharge, but Hawaii is just plain expensive without any upcharge.
As for future trips, we’ll probably go back to Hawaii if our son returns. We’ll likely pick an island (probably Maui) and stay in an Airbnb, then fly him over on the weekend.
If he doesn’t return, we’d probably head back to Grand Cayman. It’s closer, more quiet, and has better weather and beaches.
Health
- I was working out six times per week (three cardio and three weights) at the gym right after we got back from the cruise. I was so close to my pre-cruise cardio times and then the gym closed because of the virus. Since then I’ve played some pickleball (my wife and I played during the lockdown which was allowed since we’re in the same household and now we can play in small groups so I rent a private court with three other friends) and done HIIT workouts in my basement seven days a week (here’s what I do).
- For strength training I started the 100 pushups a day plan (except I do them all at once — with breaks in between — not just 100 throughout the day). Day #1 was 100 pushups over the span of 14 minutes. I’ve now worked that into 100 pushups over 7 minutes. I have kept with this effort for over a month now. Knowing my personality I’m not sure I’ll ever stop. LOL!
- My entire routine is not as much challenge as the gym workouts, but I’m doing both cardio and strength seven days a week instead of three so hopefully I hold most of my fitness.
- We’re determining whether or not we’ll keep with the gym when it reopens. It’s a high-end, very nice gym close to our house but it’s also $130 a month and I think I can get what I need elsewhere. I’m still working on what that would look like, but the changes we’ve had to make over the past several weeks has got me thinking.
- We are still walking too — about 17k steps per day (I just passed 830 consecutive days where I’ve walked 7,000 steps or more). We are social distancing when we run into other walkers (which wasn’t that often initially but is becoming more common now that the weather is warming).
- My tooth decided to break just as the virus stuff started to get crazy, so I had a temporary crown done on March 16. By that time they had canceled all non-emergency procedures so it was just me, the doctor, and about seven assistants. It was kind of eerie. I’m scheduled to get the final crown on it on May 8.
- I grew out what I called my “virus beard” over the course of a few weeks until it got too much and I shaved it off. I’m not meant to be a bearded man!
Entertainment
- I have been reading several retirement books the past few months (as you can tell by the retirement book posts I’ve been doing). I’m also listening to books and podcasts, though most of my time dedicated to that (walking) has me either talking to my wife or, if I’m alone, chatting with my mom.
- The theaters closed in mid-March and we weren’t going to them before that anyway (kind of a combination of nothing we wanted to see and the virus). We’ve been enjoying YouTube TV and Disney+ instead and it’s nice not to have to get out to watch either of them. In particular my son and I are watching all the Marvel movies in order based on the timeline of the movie (not when each was released). It offers a new and interesting perspective into what happened when.
- One new thing I have enjoyed reading is the Morning Brew. It’s an old-school email newsletter sent out every morning with a summary of what’s going on in the world. I thought email newsletters were dead, but apparently not — and I’m glad this one is out there. Almost every day I get a good link or two out of it. It’s free too, which makes me like it even more. 😉 If you want to subscribe and check it out, you can do so here.
Finances
Wow! Where to begin? Some of the “highlights”:
- Our net worth reached its peak of $4.37 million in January (we actually got higher than that but I only count “official” net worth numbers that are recorded at the end of each month).
- By the third week in March I was down $1 million from one peak (inside a month) to a low point (inside a month). Using my official end-of-month numbers I was down “only” $670k. Hahaha! BTW, even the low was still a few hundred thousand dollars above what I had when I retired, so all is still good.
- But as the market rallied, so did my net worth. I’m now back over the $4 million mark (which fluctuates depending on whether the market is up 300 points or down 300 points — Ha!) and only $250k down from my month-end, all-time high.
- As you know, I bought dividend stocks during the market drop. In addition to the ones listed in that post, I bought Chevron (CVX) with its 5.9% dividend about a week after I purchased the others. So far they are up over $52k or 23.9% (S&P 500 has been up 17.6% in same period) not to mention the roughly 5.6% dividend I’ll be earning (based on cost). That said, rocky times are still likely ahead so I am not declaring victory any time soon. I’ll probably do a summary of how they perform versus the market after owning them a year so stay tuned if you’re interested in that.
- During the big market drops in March I pushed all my chips to the center. I invested an extra $60k in index funds during this time — we added to our SEP IRA as part of doing our taxes, I had about $20k cash in an IRA that I invested, and I moved my $30k HSA from cash to an index fund.
- I also converted $50k of IRA money to a Roth. I worked up a 2020 pro-forma tax return with my CPA and this was the amount we felt allowed us to “top off” the 12% tax bracket for this year. Of course that’s a bit of a moving target, but it’s our best guess. Assuming our finances stay roughly the same for the next several years, we’ll probably do this every year to move as much as we can to a Roth. Of course if tax rates change, then all bets are off.
As for other financial issues, here are some updates:
- ESI Money took a hit two ways — traffic went down (as people spent more time buying toilet paper and less time reading money blogs) and ad rates dropped like a rock (as companies pulled spending in an uncertain economy). I had been off to a very strong start in 2020 — on track to make $50k this year. But now I’m guessing it will be more like $25k to $40k. We’ll see — a lot depends on how things come back (or don’t come back).
- I moved to three posts per week from four. I like the extra free time and three is certainly enough to keep lots of fresh content out there.
- I’m reading so many retirement books because I want to get a broad view of what’s out there. Which leads me to this question: What’s your favorite retirement book? Let me know in the comments below and share why you like it. I might just pick it up and do a review. 😉
- I do need some more millionaire interviews as we push to 200. If anyone wants to do an interview, please drop me a note.
- We made some extra donations the past few months, supporting our church (which is giving food and supplies to high-virus-risk, low income families) and my son’s ministry organization (which has lost many of its donations during the crisis).
- I went paperless on all statements during the lockdown. When getting the virus through mail started to be discussed (not to mention the 6-foot social distancing dance we’d all do at the community mailboxes) I decided to move into the 21st century and get statements/notices emailed to me. This will also help when we’re out of town/traveling/living somewhere warm in the winter, we won’t have to worry about missing bills. Sometimes it takes a while for me to catch up with the world (I’m sure most of you have gone paperless a long time ago), but I usually make it in the end. Ha!
In an effort to 10X my travel spending (and thus our experience), I got two new credit cards recently:
- I upgraded my Hilton American Express to the Hilton Honors American Express Surpass Card. It gave me 150,000 Hilton Honors bonus points after spending $3,000 in purchases within the first three months, 12X Hilton Honors points, complimentary Gold status, and Priority Pass Lounge Access. I got the card right before we went to Hawaii and used it to spend the $3k plus get 12X points.
- I also got the United Explorer Card. It offered 60,000 bonus miles after you spend $3,000 on purchases in the first 3 months your account is open. It also gives a free checked bag per person, Global Entry or TSA Precheck fee credit, priority boarding, and two United Club passes. I got it mostly for the priority boarding (we carry on a lot and I get nervous when we’re in the latter groups that they’ll make us check our bags) and the checked bags (we have selected other airlines in the past because of the bag fees — when we had to check — but United has the best flight options from Denver so I prefer them). The club passes will be a nice touch on one trip as well.
My rental properties are doing well but I was concerned about my tenants since Michigan had a stay-at-home order, so I sent my management company the following message:
I was wondering what the situation in GR was with the virus and if most people are staying home and not working.
If so, it’s likely that at least some of my tenants are not being paid during this time.
Have other landlords thought of this and considered reducing or postponing rents for a month or two to help out their tenants?
I got a message back that they were working on a response and a few days later I received this as part of a larger email:
We have also heard from many owners requesting a long list of ways to help the residents that live at their properties. We’ve heard many ideas including “forgiving a month or two of rent” or “decreasing rent by 50%” and many more. The generosity of our clients is incredible and inspiring. However, we know from experience, that as much as we’d love for residents to get the assistance they need, those that receive assistance are not always in need of it. We are hoping that assistance currently being received, be it unemployment, or an eventual stimulus package, can help bridge the gap in the income they had lost. That being said, we completely understand the desire to help and we are actively setting up a plan for residents that are in need to receive it. We will set aside owner funds and create a list of requirements that we can fairly apply to each person in need and distribute it based on consistent criteria.
So I sent a note asking if any of my tenants needed/had requested assistance and my manager said she’d let me know if there were any.
I just received my April statement and it looks like one tenant hasn’t paid. I will need to follow up with my property manager to see how we can work something out.
Books
Here are some books sent to me recently. I probably won’t get a chance to read them for some time (if at all) but I wanted to give the authors some exposure. So I’ll share the book as well as a bit about it from Amazon:
- The Wealthy Gardener: Lessons on Prosperity Between Father and Son — The parable of the Wealthy Gardener is far more than an admonishment to earn more or spend less; it is about timeless principles. As his lessons reveal, financial freedom is a means to power and control over our lives. Without money, we are subject to the demands and whims of others. With money, we are sheltered from the storm, and we can extend that shelter to our loved ones.
- Retirement: The First 365 Days: Advice, Opinions, Observations — You will not only learn to better enjoy a fulfilling retirement but each daily essay offers some wisdom, witticisms and words of encouragement that retirees will appreciate. Retirement may be different for each of us but the purpose of retirement is to have a retirement with purpose.
- Chasing Wisdom: The Lifelong Pursuit of Living Well — (This one is from my pastor!) Some people have learned how to live. They can handle all that life brings. They are composed. They radiate strength. They are whole, with lives worth emulating, and when they speak people listen. They are, in a word, wise. How did these people get wisdom? And perhaps more importantly, how can we? Daniel Grothe shows us how to get wisdom for ourselves by examining what the Bible has to say about it and by providing practical steps for acquiring it.
- The Cash Machine: A Tale of Passion, Persistence, and Financial Independence — The Cash Machine is unlike any other personal finance book ever written. Not only will you get sucked into the rollercoaster relationship of Amber and Dylan, but you’ll learn hundreds of money lessons along the way, giving you the tools to drive your financial destiny.
- Your Sherpa: Your Parental Guide to Financial Literacy — Jeff Tyburski, Your Sherpa, draws on over 30 years of personal finance experience to provide a roadmap for becoming financially literate, and to educate and empower a new generation of students on their journey to good financial decisions and financial freedom.
- The Feminist Financial Handbook: A Modern Woman’s Guide to a Wealthy Life — The Feminist Financial Handbook provides actionable tips for women in business for overcoming obstacles as they try to master money management and their lives. Because women’s experiences don’t exist in a vacuum relegated to their gender, the handbook explores financial issues with anecdotes and perspectives of women of different races, sexual orientations and abilities.
— The parable of the Wealthy Gardener is far more than an admonishment to earn more or spend less; it is about timeless principles. As his lessons reveal, financial freedom is a means to power and control over our lives. Without money, we are subject to the demands and whims of others. With money, we are sheltered from the storm, and we can extend that shelter to our loved ones.
— You will not only learn to better enjoy a fulfilling retirement but each daily essay offers some wisdom, witticisms and words of encouragement that retirees will appreciate. Retirement may be different for each of us but the purpose of retirement is to have a retirement with purpose.
— (This one is from my pastor!) Some people have learned how to live. They can handle all that life brings. They are composed. They radiate strength. They are whole, with lives worth emulating, and when they speak people listen. They are, in a word, wise. How did these people get wisdom? And perhaps more importantly, how can we? Daniel Grothe shows us how to get wisdom for ourselves by examining what the Bible has to say about it and by providing practical steps for acquiring it.
— The Cash Machine is unlike any other personal finance book ever written. Not only will you get sucked into the rollercoaster relationship of Amber and Dylan, but you’ll learn hundreds of money lessons along the way, giving you the tools to drive your financial destiny.
— Jeff Tyburski, Your Sherpa, draws on over 30 years of personal finance experience to provide a roadmap for becoming financially literate, and to educate and empower a new generation of students on their journey to good financial decisions and financial freedom.
— The Feminist Financial Handbook provides actionable tips for women in business for overcoming obstacles as they try to master money management and their lives. Because women’s experiences don’t exist in a vacuum relegated to their gender, the handbook explores financial issues with anecdotes and perspectives of women of different races, sexual orientations and abilities.That’s it for this report. Any thoughts or questions?
ESI – Great to see the retirement update, I have my one year draft I’m trying to finish up.
I think I have a picture of your cruise ship, our time in Hawaii overlapped but we opted for the three weeks in a condo in Maui. Highly recommend going that route, Hawaii doesn’t have to be that expensive if your place has a grill and you shop at Costco. The comments on Molokini make my glad I passed that up, Seven Mile Beach was incredible. Honolulu is just an overwealming big city to me and not an enjoyable vacation.
I’m also debating what to do with that same American Express Card, the travel benefits are temporarily worthless.
Enjoyed the other retirement updates, reverse dog years are a great description
Where did you stay in Maui? Like it or recommend somewhere else?
Kihei – I love South Maui. Stayed at the Royal Mauian, but many similar condo complexes around. Paddle boarding a mile plus out with Blue Whales around was a top experience in my life. I think Brandon Turner has an AirBNB out there he rents
Great post ESI! Just curious…what is your asset allocation after making those portfolio moves in March?
Well, since my allocation was 99.9% stocks, it’s now 99.9999%. hahahaha!
I’d have to get into the numbers to give you exact percentages, but I can give rough numbers (these are only for investment dollars and don’t count real estate like my home, which is not an investment IMO):
74.2% stock index funds (mostly US, some international)
15.4% real estate
7.0% cash
3.3% private loans
I don’t like bonds and still have a 15 year investment horizon, so I’m letting it ride in stocks.
I may adjust at some point, but I do still need to be aggressive since I need something to battle inflation for me.
“…and don’t count real estate like my home, which is not an investment IMO):”
Very interesting post. May I ask WHY you don’t consider your primary home as an investment? I’ve heard all the arguments about how where you live doesn’t generate any income, or it “costs” you money, etc. But over the years, in dealing with very high net worth people (in a previous life) I always got the impression that their multi-million dollar homes were where they parked their money. They didn’t LIVE in a house. They lived in an investment property. And my perception was, from talking to these homeowners, that they held these properties like money in the bank. Always intending to sell down the road, if necessary. I’d appreciate your thoughts on this. Thanks!
I expect a return (and a good one) from my rental properties. As such, I look at criteria that will get me that return when I buy them.
I don’t expect a return from my residence (I may get one, but I don’t expect it). I buy it based on completely different criteria — ones that are important to my family and not centered on investment returns.
If I did view my home as an investment, I would use criteria similar to what I use in buying rental properties.
As far as others, there are many millionaires who bought homes long ago in states where there’s been rapid appreciation for many years (like California). They may be millionaires because they bought an $80k home 30 years ago that’s now worth $1.2 million and they may say their home is their greatest investment these days, but I’m almost certain they didn’t buy it 30 years ago based on investment criteria.
Perhaps there is some distinction to be pointed out here between counting your primary residence as an asset that contributes to your net worth vs counting it as an investment.
Contrary to Mr. Kiyosaki a home is definitely an asset. He just redefines words and then uses his own new definition like it is some kind of an epiphany. He defines assets as things that put money in your pocket. That’s not the definition of an asset. That’s a much closer definition to an investment. An asset is any item of ownership that is convertible into cash.
So houses are clearly assets. So are cars. Cars are depreciating assets that lose value over time. Houses tend to be appreciating assets that gain some value over time. But are they an investment? Namely, do they put money in your pocket? Well if they are an investment, they are really poor ones in most places. The 100 year average gain in house value tracks pretty closely with inflation. So your after inflation return tends to be zero. Houses also have carrying costs, including property taxes, insurance, and maintenance. When factoring those in the return is probably almost zero and after inflation it is almost certainly negative.
Houses are definitely assets, but I certainly don’t consider mine an investment.
Let me propose an investment opportunity for people:
1. You give me $250K today.
2. You pay me $5K in fees every year for the next 25 years.
3. Inflation during that time has made the cost of everything double on average.
4. I give you $500K at the end of those 25 years.
Interested? That’s a house.
Agree. I still count the house as an asset in my net worth since it has value.
But I don’t count it as an investment and thus don’t include it in my allocation numbers above.
I do the same. I count home equity in my net worth but I don’t include it as an investment asset.
It all depends on the end game when you purchase a house. Some people are rooted in their communities and never plan to leave the area. Some have overbearing spouses who don’t care how much it costs as long as they get that one feature they’ve GOT to have.
Some of us haven’t found our forever place to live yet – we go to where the next great job is. My last house I sold to Zillow for a profit after living there for 2 years. (Zillow buys houses in the Phoenix/Scottsdale area). We didn’t have to list it, show it, or anything, it was pretty cool.
If you purchase a home and intend to live there permanently, or at least for several years, I would agree it may not be an investment. But what if you purposely target an undervalued house and negotiate a killer price with the intent of living there 5ish years and selling it for a profit?
I’d call that an investment.
Much of this is semantics IMO and doesn’t materially matter to your net worth one bit.
If it goes up $25k, you are $25k better off no matter what you call it.
Personally, I don’t use anywhere near the same criteria for homes I’m going to live in versus ones I buy for investments.
In your five year scenario, you would be using your home as a planned flip with the only exception being you are the “renter” instead of renting to someone else. Under these conditions, I can see why you would consider it an investment.
I’ve been in my home for 16 years and I count the home equity in my NW but I do not consider my home as part of my invested assets portfolio.
Hi Apex: as usual good distinctions, definitions and examples.
Well that makes me feel better. I’m recently retired with 74% equities and people think I’m crazy. I think it makes perfect sense. I’ve never been a real estate guy so my other investments are split evenly between money market and short/Int term bond funds. Like you I consider my time horizon >15 years. I also hate bonds. Bought first bond fund in my life only 2 years ago to prep my retirement buckets.
I’ve struggled with the asset allocation and what to do. I retired at 57 and I’m 62 now. My wife still works and I have a startup that we began 5 years ago but I am only taking equity in the company and no salary so it is not generating any income for me. I’m pretty much out of the day to day operation and more of a mentor to the business now.
Up until February, I was 84% equities but just before the big drop, I moved 90% of our 401Ks into bond funds, cutting our overall equities portion in half. That was more luck than skill and I do plan to dollar cost average back into equities at some point but this market has too much uncertainty for me to want to leg back in right now. I probably will build back up to about 65-70% equities over time and maintain that balance for the long term.
Hi ESI,
Can you elaborate on this comment?
“I don’t like bonds and still have a 15 year investment horizon, so I’m letting it ride in stocks.”
What specifically do you not like about bonds?
Thanks,
I’m recently retired and am using a bond and CD ladder to fund the next 2-5 year retirement timeframe. I have never liked bond funds much, but buying actual bonds seems a good way to improve the return for fixed income assets. Do others agree?
I don’t like the fact that interest rates are at all-time lows, so it’s just a matter of time before they go up.
When rates go up, current bondholders take a bath in the value of their bonds.
Now if you hold the bonds to maturity, you don’t have to worry about that.
But I can get 5.5% income from dividend stocks PLUS a chance for growth, so why not?
If you want quieter HI check out Kauai. We went at the end of October a few years ago and loved it. Split our stay between south shore in a boutique hotel right on the water, and north shore in an AirBnB condo. South shore is better in winter, apparently – less rain. Vice versa in summer. Better snorkeling on north shore.
Koa Kea Hotel in Poipu. Excellent. Very grown-up crowd.
It was a bit too quiet for us, that’s why we think Maui would work better.
We did like the entire area of Poipu — very swanky.
Great update! The market has been a roller coaster. As an options trader, I’ve been shorting it on up days with some success, but overall still down quite a bit for the year (25%). I don’t have as much to lose as you, though. 😉
Grand Cayman sounds nice – or any beach for that matter. We canceled our sailing plans in April, hoping to reschedule in August. The ocean is calling.
Like a previous commenter, interested in why you don’t consider your primary home an investment. Do you plan to stay there indefinitely? If so, I can understand your point of view. For us, we plan to stay in our current house until we are ready to quit corporate life and live on a sailboat. It was a strategic purchase and we definitely see it as an investment.
See my response to them…
I just read the Cash Machine and really enjoyed it. I liked the format of a good atory that also taught personal finance principles. If you hear of other books like it, please share on this blog.
Great update post as usual:
1. The Embassy Suites at Waikiki is wonderful. Great breakfast and happy hour with local entertainment nearly every night, and a great location. Since I retired nearly 5 years ago, we have stayed twice in January for 3 weeks each time. We are booked to return next January after we take a 25 night Regent cruise from Miami to Honolulu and then stay for 10 nights.
2. I too did the Amex Hilton credit card upgrades this year. I first got a promo for 150000 points to upgrade to Aspire and then 2 months later got an invite to upgrade to Surpass card and got another 150000 points after spending the $3k for each promo period. The Surpass card also gave me $250 when I stayed a week at the Montego Bay Hilton Resort in early March, used the Priority Pass 3 times on the Jamaica trip (Clubs in Atlanta, Montego Bay and JFK airports), and also booked a free weekend night for us to visit my son in Portland, ME.
3. My net worth also declined down to $4.4M.
4. If “retired” how can one contribute to an IRA?
I have a “business” (ESI Money) that makes a profit and I pay taxes on.
As part of that I can fund a SEP IRA as detailed here:
https://en.wikipedia.org/wiki/SEP-IRA
I have been contributing the max SEP contribution for years and now have just over $300k in it.
Your drop wasn’t so bad. Mine was ~40% of my invested money. The book that I enjoyed the most and that helped me so much years ago was “The Millionaire Next Door”.
Wow, that’s a lot of updates! Glad everything worked out for you on the cruise. My wife and I took a trip to the Philippines around that same time, and before we even took that trip there was that cruise ship with all the sick people that couldn’t dock anywhere – would have freaked me out to get on a cruise after that! We took an amazing cruise to Alaska a few years ago and have been wanting to get on another one, but given the pandemic I think that is the last kind of vacation we’d want to take right now. Hawaii is on our bucket list for sure – some day…
Always interesting to read your updates.
What constitutes a long flight is a matter of perspective I think. Living in New Zealand apart from flying to Australia or some Pacific Islands all flight times are long. My wife and I were scheduled to fly to Chicago direct in June this year which is 15 hour flight but of course the virus has put paid to that. We were looking forward to visiting Colorado Springs amongst other places but think it will now be 2022 before we can get back to mainland USA
We went to Hawaii in 2019 and if international flights resume from NZ in 2021 we are hoping to return
True. For me, anything above four hours is a long flight…
MI101: sounds as if you live in New Zealand. We visited Australia and New Zealand for the month of February before the virus gained additional strength. NZ is a wonderful country and we were so glad to visit from Queenstown to Bay of Islands. Your country truly takes care of the land and monitors the ecosystem. Fascinating history with the Maori tribes, similar to the American Indian in the USA. Safe travels when you are able to come to USA.
CB. Yes i do. In a town less than an hour from Queenstown. Glad you enjoyed your trip. You would not recognise Queenstown now. Its a ghost town with zero tourists since our lockdown in late March. Our borders are now closed to everyone except the few Kiwis coming home. International flights are close to zero and mostly just for cargo. Some talk about reopening border with Australia later in the year but not expected to reopen to others until 2021
One of the best books I’ve ready recently is 20 Retirement Decisions You Need to Make Right Now. It has a lot of data-backed recommendations for portfolio allocation and withdrawal rates. You can review the charts and decide where you are comfortable regarding risk and reward.
p.s. We loved Kawaii, HI, but we look for less crowded, more tropical destinations. That said, I have heard that Maui is better for snorkeling/diving. Maybe next time.
Thanks! I’ll check that out!
We stayed at the Marriott Wailea a couple of summers ago. It was very nice and relaxing. It does have a slower pace and not as commercial as Maui but we enjoyed the resort and some of the private beaches that were just a short drive away. I think Maui was about a 45-minute drive so it wasn’t too far when we felt like venturing out for more night life.
ESI: thank you for the update. I appreciate your comparisons of Hawaii to Grand Cayman. We go to Hawaii every year, mostly the Big Island. Since you made the comment that snorkeling is better in Grand Cayman, I will begin to research that more. I enjoyed your previous articles on your vacations in GC. For our first trip there, I probably would want to do a hotel on the beach so I can learn details about the island, city, restaurants and then return for a longer trip in a condo option. Also Dallas is much closer for a flight to the east waters than Hawaii. We like the Big Island much more since it is less populated than Maui and Kaui but depends on what you crave for a holiday.
Where do you stay and what do you do on the Big Island?
I have stayed twice at Waikoloa Village – a Hilton property for a week each time. Check it out.
I have to strongly recommend again that property. Very crowded and run down compared to almost any other property. I have stayed at the Marriott Waikoloa Village twice in the last 2 years, both times the rooms were nice, and there are lots of restaurants and shops around.
We stay at a condo which we found when we traded a weekly timeshare many years ago. After a few trips there, we met owners with 1, 2, 3 months of ownership who rent their weeks out. We rent directly from the owners for 1 month. https://www.thekonabillfisher.com/ The condo has pros and cons which we understand since we continue to return. You can read on tripadvisor the good, bad and ugly.
Pros: close to Kailua Kona, we walk to restaurants, shopping, ice cream
close to the airport
close to several snorkeling areas
2 hours to the Volcano National Park
1 hour to Waikoloa part of the island with many cultural, hiking sites, beaches
Costco is close to Kona & airport
Kona has lots of grocery stores but a car is needed for island touring
price is reasonable for size of condo and location
Cons: condo is a bit outdated but super large, 2 bedroom or 1 bedrooms
pool is basic, no hot tub
Big Island doesn’t have many walking beaches from condos like Maui, that is lacking on most of the island–this is the newest island so lots of lava vs sand
Activities on the island:
snorkeling from the beach: not required to hire a tour guide or boat
kayaking
hiking at Volcano Park, hiking trails close to the condo, hiking black sand beach at the end of the island, hiking a green sand beach
swimming in ocean, some nice sandy beaches
cultural sites besides the Volcano (we have an US National Park Pass)
free weekly luau shows (no food, just music & dancing)
incredible sunsets
we did swim with a huge whale shark 2 years ago but that was on a Captain Zodiac raft tour (incredible experience and most likely can’t be repeated)
we also did a night swim with manta rays (incredible experience)
we have swam with dolphins while we were kayaking
underwater camera is a must for fish, turtles, eels, dolphins, whales, etc
We have stayed at the Waikoloa Village several times as well but we are more casual type of people and prefer tshirts, shorts, capris for dinners vs getting dressed up.
That’s close to where my son was staying — we probably walked nearby.
I’ll check it out — thanks!
Thanks for the DareBee exercise site! We have been running and walking more than before, since our gym closed. Miss playing basketball so much! We checked out the site and tried some of their exercise programs. Nice mix of exercise programs. Gotta stay in shape.
Good to see that you are busy as usual. Financial adjustments never stop. Looking forward to retiring in 3.5 years. Your updates during retirement help me see the light at the end of the tunnel.
We were in Hawaii that exact same weekend. We probably watched your cruise ship roll by from our condo in Princeville on Kauai. We aren’t cruise people, but understand why people like it, my wife and I got spoiled by learning to sail and now we charter our own sailboat on most vacations in tropical destinations. Hawaii though isn’t a good spot for sailboats, but spectacular for exploring. We’ve been 5 times in the last three years, so many awesome activities and areas to explore. I’d highly recommend mixing things up and doing an AirBnB in the future (if they still exist, I feel for those people who rely on that income) in between cruises. Rent a jeep for the week and find secluded beaches, hike to amazing waterfalls, see molten lava flowing, see the view from the top of Mt. Haleakala, see one of the only green sand beaches in the world, snorkel at the spot Captain Cook landed for the first time in Hawaii, hike the Napali Coast to a 400ft waterfall…the list goes on and on.
Now if you think the Hawaiian islands are spectacular, just wait until you go to French Polynesia. It makes Hawaii seem like the ugly stepchild by comparison. We spent 3 weeks sailing the islands last fall and it was hands down the most spectacular place on earth we’ve had the pleasure of visiting.
On the workout front, we are big fans of the Spartacus Workout, its a HIIT type workout you can look up online that you can easily do at home and it is a real butt kicker. You can modify or switch up the exercises as you see fit, you won’t make it through the first time, but that’s okay. We do 2 a week and then do weights/cross fit type workout 2 other days. It’s a necessity because my wife is such a good cook!
Very helpful comment in so many ways — thanks for leaving it!
We’ve traveled pretty extensively in HI (from the east coast) and in 2019 I was there twice, including a 48 hour photography trip and a week with my wife, daughter and her boyfriend.
We’ve primarily gone to Maui and the Big Island, and I prefer those much more than Oahu.
In Maui, Kaanapali is a terrific beach. There are many time shares up there that you can rent off VRBO, including some at the Westin. If you want to guarantee nice weather, the most consistently nice weather we’ve had has always been on the Kona side of Hawai’i. Always sunny, but a bit windy too (keps the clouds generally moving). 2 years ago when Kilauea was actively spewing from a fissure, the air was a bit poor (VOG), but it’s been much quieter since last July, and the air has improved substantially.
If you stay on Maui, Wilea (south of Kihae) is also an area with more condos (and hotels), and is a bit more expensive, and the beaches are not as nice (IMO) as those up in Kaanapali.
Further, the Molokini Crater is absolutely the worse snorkeling on or near Maui. right off the beach at Kaanapali is terrific, and you don’t need to go on a charter. Much less crowded as well. there are other easily accessible snorkeling spots right off the beach, including south of Lahaina.
The other luxury you have flying out of Denver is that United has nonstop service to OGG (Maui) and KOA (Hawai’i), so you can skip Oahu all together…
Thanks! Appreciate this!
I’ve heard people say the Molokini Crater snorkeling is the BEST. What’s up with that????
Snorkeling at Molokini is the “best” if you have never snorkeled before. Hawaii is a prime honeymoon vacation spot too, so first time visitors can find much to do on any of the Hawaii Islands and be quite happy. All is relative. Some times when we vacation at a new location, we are very happy to explore while other people who are repeat visitors can be nit picky. Frame of mind.
Hahaha! I get it…
I am probably the anomoly, but I didn’t find Hawaii that much fun. We went in October of 2007, did Pearl Harbor, Kauai, The Big Island. But for an 8 hour flight, I would rather just go to the Caribbean. I am just praying our Safari doesn’t get cancelled in August.
You did it wrong then…but safaris are fun too!
We did the helicopter thing in Kauai and went to Pearl Harbor, which was cool. Did the volcano and Kona coffee, but it’s just a long flight to sit on a beach. We did 3 islands in 10 days so maybe we were just on the go too much. It’s not a place I need to go back to. Maybe I am just spoiled with a two hour flight to Puerto Vallarta.
I retired about a year ahead of you. Our kids are all out of the house, a couple of them are doctors on the front lines of this health crisis in Virginia and New Jersey. The ER critical care doctor in NJ says this is unbelievably bad with nearly 100% mortality of their ER cases. We have kept playing tennis throughout this whole thing but not pickleball yet, and we miss it. Our lakes are open so we take the boat and fish once or twice a week, and the fish are easy to catch right now. We still run with our running group in the mornings. We had spent 20k on a Swiss hiking trip in June but it’s been canceled and we don’t know if we’ll ever get the money back. But if not it’s no big deal, although my wife is kind of mad they won’t refund our money. We are afraid they are stalling long enough to file bankruptcy.
Congrats on 3.75 years John! You guys are killing it!
My personal favorite Hawaiian island is The Big Island. Great island, lots to see and do, and many different landscapes to explore. Not to mention Volcano National Park!
I hope you and your family continue to stay healthy!