I was having lunch the other day with a retired colleague and friend. We catch up periodically, filling each other in on our children’s activities and our lives. This time, he really wanted to spend some talking about the retirement experience.
He’s not your ordinary retiree. In his last several years with Vanguard, he studied for and passed all the Certified Financial Planner™ exams, because he thought it would be helpful personally and as an alternate career option.
My brother-in-law will be graduating from college in a few days, and that has me thinking back to when I started my career a few years ago.
As I set out on my own, I had many questions about finances: How much should I spend on rent? Should I have a roommate? What car should I buy, and how I will afford to keep gas in the tank? (And, of course, how many pairs of shoes can I afford?)
Commentators almost seem to have been competing to coin the catchiest—or most negative—label for the ten years from the end of 1999 to the end of 2009. It’s not surprising that some have called it the “Decade from Hell,” given the 9/11 attacks, wars in Iraq and Afghanistan, Hurricane Katrina, a deadly tsunami, the nastiness of domestic political discourse, soaring unemployment and federal budget deficits, etc.
This comment on Steve Utkus’ recent post about retirement struck a major chord with me:
“Our children’s incomes are not increasing, and they have their own children to support, let alone saving for their own retirement. No one is to blame or is being stingy; we simply must plan for and take charge of our own later years.”
The vast majority of what you read and hear about investing focuses on returns. As in, what mutual fund, or stock, or asset class investors ought to buy now to garner the best return for some indeterminate period. Or which stock or mutual fund had the best or worst returns for a given quarter or year or decade.
Risk—the flip side of reward—tends to get much less attention, except in the wake of severe market slides such as we’ve seen recently. And that’s not sensible, because risks are always present in investing (well, in life, too, of course), even if those risks are not apparent.
