A letter from this Gary Scott reader poses the vital question, “How much is enough”? See how spotting trends can bring the economic opportunity you need to retire now and see how and why a huge number of investors will suffer. Plus learn how to have greater economic opportunity from international stocks and bonds In this September 21, 2004 message.
Here is what the reader wrote:
“I've been thinking about what you said about how your money just kept piling up and not really mattering much. “You either understand it or you don't.” I am not sure…I sort of think I understand it. I think what you're really talking about here is FULFILLMENT. That is…you were feeling happy and fulfilled doing what you were doing. In this sense, the money doesn't matter once you've reached a certain level.
I have taken both your Int'l Business Course and Int'l Investing Course. I enjoyed both very much. I will turn 40 next month. On August 17th I completed my 17th year in my career and these days I sit in a cubicle…almost literally climbing the walls. The median HOUSEHOLD income here is $43,000. I make $83,000 in my cubicle. It's considered good pay for this area.
I'm at the $500,000 level as far as net worth. In 1994 I chose to believe Paul Terhorst who said that if your net worth is between $400,000 and $600,000 that's enough to retire. Today, I'm not so sure. Health insurance is a big deal. I don't feel like I have enough. One online planner indicated I needed $772,000 to have “enough.”
I look forward to reading your missives. Often I read them in my cubicle during lunch time. It helps me to build hopes.
My property has gone up a lot and is for sale. I'm intending to do a 1031 exchange to avoid capital gains taxes.”
Here is my reply.
“No one knows how much will be enough. History suggests that when Governments control money, inflation destroys its value. Plus we can imagine that some of today’s trends are disturbing. The global population grows. Natural resources decline. U.S. government debt is at all time highs and rapidly rising. Politicians are bolder in their lies. The Iraqi quagmire escalates. Increased security costs increase the price of everything. The Social Security numbers make no sense. A record number of baby boomers are about to retire.
Another historical economic fact is that it is always the retired on fixed incomes who get screwed when society and the economy collapses.
My suggestions for diversification are to hold real estate and shares (they fight inflation), Invest in distortions, spot new trends. These are ways to invest and this diversification is good, but the safest investment of all is your ability to serve. Develop a service or skill you enjoy and can always offer. Develop a service attitude. Be in demand.
Plus never trust any one currency, economy or government.”
Learn more about this by looking at how I have developed my portfolio in tomorrow’s (Weds. Sept 22) message.
Until then, good investing!