Life before Death

In some respects I find blogging is a pressure valve. It allows me to be serious, rationale, manic, controversial; whatever I want, whenever I want. To that extent it does not really matter whether anybody reads the post.

Somebody wrote yesterday on another’s G+ post: ageing sucks. I could not have put it better myself. I worry about the process and all that goes with it. I am without doubt one of the world’s great worriers. I am the man, who will worry if he does not have something to worry about. As my former boss repeatedly said, I am the Risk Director and I’m paid to worry. The Grand Canyon sized difference is that I am not paid to worry. I do it because I have turned into my father. There can be no other explanation.

Much attention was garnered recently about Josh Brown’s article: How much time do you have? The thrust of it is that we all waste too much time worrying about what might happen and we forget to live. I felt an odd twinge of self-flagellation when I read it. Now Josh writes in an investment context but his message was that worrying about financial health is probably not the best use of our time. It is easy to argue that this is relevant as an idea only if you have money to worry about. Perhaps. However the great and the good of the financial and political world have decided in recent years that savers should be thrown to the dogs. Take risk or earn nothing. Quantitative Easing. Zero interest rate policies. ZIRP – sounds like a kitchen cleaning fluid. Flat yield curves. Let us suppose in a moment of madness you chose to lend money to Uncle Sam. He offers you an IOU repayable on a fixed maturity date that was originally 30 years from issue – the aptly named Long Bond. You will receive a gross yield of 3.63% at the time of writing. Why gross? Because it is not inflation protected. Only up for 10 years? Just over 2.5%. And if you only trust him for 2 years, he’ll offer you a yield of just 30 basis points. You could get 3.7% for 10-year money if you wanted to lend to that awfully nice Kevin Rudd and his chums in Australia. But if you do not have Aussie dollars to start with you may end up with less than you started. Exchange risk, don’t you know? So whilst I agree with the general message in Josh’s article it won’t stop me worrying about how I am going to pay the bills in 20 years time. If I am spared….. And that of course is his point. I may well not be.

The best piece of investing advice I read recently said my best course of action was to “do nothing”. Hmmm. That may be difficult for an inveterate worrier. It reminds me of the cover of The Hitchhiker’s Guide to the Galaxy, which supposedly had the words “Don’t Panic” emblazoned across it in large, friendly letters. I am not sure how letters can be friendly but the thought is certainly reassuring for a short while.

One of the classic traps is to be asset rich, cash poor. In other words, you have things but whether you can turn them into cash at a fair value when you need to is another matter. Part of the cacophony going on in my head is what sounds like 76 trombones all blasting out the word “simplification”. The sliders go in and out and the tone may vary but the message remains the same. I have too much stuff. I had a vaguely sensible discussion with Mrs. Ha the other day about how to dispose of my books after I have returned to ashes and dust. Now if I simplify I would resolve this problem by offloading the bulk of them now. But I can’t bring myself to do so. Many are collectable, first editions or obscure reference texts and I don’t want to part with them. We rent an air-conditioned godown area for well over US$2,000 per annum. In it we keep all our belongings that one day might come in useful and for which one day we may have space and use. But not today. Since we filled it I have never set foot in the place. We are now in year four. Do the maths. At the start of the year we agreed we would simply get rid of everything. But we haven’t. If we outlive the dog, which I sincerely hope we do, we expect that our next move will be to downsize. How on earth am I going to do that? I can’t even empty a small warehouse storage area. Does Josh have an answer to that? Should I agree to be sectioned for a month so the men in white coats have time to do all this for me and I can’t intervene?

I come next to the question of inheritance. I was fortunate. There was little to inherit. Problem solved. I am faced with the question of deciding how much to target leaving for the girls and how much to blow on Mrs. Ha and myself, whilst we await the call. This loops neatly back to the zero interest rate policy. If we could earn a decent interest rate on our capital we could live off that and the accumulated capital could remain untouched. We are not asking much. Five percent would do us fine. I would not have to think about selling properties in the future. We would have a comfortable lifestyle – not lavish but comfortable – and the future would be bright, even if it is likely to be communist red, not orange. This is complicated immensely by not knowing when the call will come – do read Josh Brown’s article. If the world reaches a state where it is no longer able to support a population that gorges itself on natural resources then the same politicians, who currently offer us high risk or no reward, may solve the problem for us. As kids we played a version of cricket called “six and out”. You could bat for as long as you like but if you lofted one over the boundary without the ball bouncing then your innings was up or indeed out. Perhaps the politicians will offer future generations sixty and out. We of course as existing taxpayers would be grandfathered and exempt.

The baby boomers are now spending their boom time loot and their sons and daughters may end up like me, with an inheritance that barely troubled the scorer. I encouraged my parents to spend the lot right up to the bitter end but they weren’t very good at spending. It went against their nature. I worked out a rather damning statistic recently. When I retired, I was earning 2.5x in a month what my father earned in a year when he finished working. I have already had as much retirement as he had before the call came. That was of course the primary driver for finishing early.

The conundrums remain. Worry or don’t worry. Spend or save. I suspect I shall have some sleepless nights mulling those over. I think the best approach may be to reread The Hitchhikers Guide to the Galaxy. And then empty the godown.