{"id":502,"date":"2016-08-05T08:04:14","date_gmt":"2016-08-05T14:04:14","guid":{"rendered":"http:\/\/textor.ca\/?p=502"},"modified":"2020-12-03T11:37:34","modified_gmt":"2020-12-03T18:37:34","slug":"single-best-investment-doomed-retirement-feeling","status":"publish","type":"post","link":"https:\/\/www.textor.ca\/single-best-investment-doomed-retirement-feeling\/","title":{"rendered":"The Single Best Investment – Avoiding the Doomed Retirement Feeling"},"content":{"rendered":"

You know that feeling, \u201cI\u2019m not saving enough. If I could only win the lottery\u2026\u201d That pressure we put on ourselves is unnecessary and in fact, the system is rigged against us. The financial system itself is intent first on accumulating money, second (or even third) is to make a profit for you.<\/p>\n

How The Financial System Delays Retirement<\/h2>\n

Long-time investment advisor Adam O\u2019Dell spills the beans on his former employers in an article entitled \u201cWhy I quit My job as a Financial Advisor<\/a>\u201d with \u201c\u2026I was expected to toe the company line and only recommend strategies and investments that were \u201cpre-approved,\u201d\u2026 Most of the time, that advice centered on \u201ctraditional\u201d investment tenets: dollar-cost averaging (read: buying a little more each month), buy-and-hold (err, more like \u201cbuy-and-hope!\u201d), asset allocation (but just long stocks and bonds). The odd thing, to me, was that our recommendations in 2008 [, a year of financial crisis,] weren\u2019t all that different from all the years prior. The state of the market seemed to make no difference.<\/strong>\u201d<\/p>\n

We spend a lot of money on advisors and money managers. The trick is that they hide the cost in a low sounding management expense ratio (MER) of typically 1-2.5%. So how much is that really<\/em>? I sat down and figured it out. Because it\u2019s a percentage, we need to consider large sums of money, since the traditional retirement strategy everyone expects is big pot of gold and then taking a few coins out each month to live on. So I started with $100,000 but a more likely figure is several million. Drumroll please!! It costs us around $400-1400\/hr (or more!) to pay for these funds and the time it takes to manage the money for you. Most people think twice about paying a professional this much money. Here is a spreadsheet which you can play with yourself. Try changing the number from $100,000 to $1,000,000 or whatever suits your fancy. Click here<\/a>\u00a0to access the spreadsheet.\u00a0This then is why the universal recommendation is to only use a fee-only financial planner. One that doesn\u2019t make commissions or is motivated to put you in funds that charge an MER.<\/p>\n

Further digging into the spreadsheet mentioned, it tells us why that Mutual Fund or Exchange Traded Fund (ETF) basically treads water.\u00a0 Take that traditional retirement model; the big pot of gold. How many coins can we take out of it each year? Called \u201ca safe withdrawal rate\u201d my research indicates a reasonable amount is 2%. Remember, the fund is charging you the MER in retirement and also in situations where the fund loses <\/em>money. So add the MER and the safe withdrawal rate together and you have a significant negative trend against building wealth.<\/p>\n

The Single Best Investment (AKA “Dividend Achievers”)<\/h2>\n

There is a better way\u2026. Something I stumbled on to. It has a significant history of success dating right back to the start of the stock exchange in 1602. Mr. Lowell Miller introduced the concept to me in his book, now a free PDF online, called \u201cThe Single Best Investment: Creating Wealth with Dividend Growth<\/a>.\u201d \u00a0 (It is also on amazon if you want to pay for the e-book or buy an old paper copy.\u00a0 Also, there are copies at most public libraries.)<\/p>\n

Single Best Investment has also been called the \u201cdividend achievers\u201d strategy and is one of the few (only?) proven long term buy and hold strategies that work. What is it? Basically it is an investment in stocks that have raised their dividend every year<\/em>. Meaning the investment is not for the dividend itself but the dividend growth rate<\/em>. Click here<\/a> for more on “dividend achievers”.<\/p>\n

How the Single Best Investment Works<\/h2>\n

It works because it does two critical things:<\/p>\n