New Life So Far

 I’ve got a few weeks of retirement/vacation/unemployment under my belt now… and I’m still not sure what to call it! But I have already made a few discoveries about myself. Firstly, that I am lazy! I had very good intentions to blog every day and go to the gym every day and be very creative and productive and healthy, but I’m not doing a very good job of that just yet.

 In my first few days off, I bounced around the apartment doing a lot of little chores like washing windows, organizing my sock drawer, and repairing a lamp. But having knocked those off the list, I felt a bit at sea. I did go to the gym most days, but that only took up a couple of hours, leaving me a lot of time to spend A) wondering if I’ve done the right thing in quitting my job, and B) staring at my phone. I have an amazing capacity to just loll around and check Facebook, Instagram, Pinterest and Twitter all day!

Then I got sick, and even my gym routine went out the window. It took a few doctor visits and blood tests to figure out what was wrong with me, and luckily, just some antibiotics to fix it, but not before my brain went off into some anxious (and literally feverish) spins about how much COBRA payments were costing me and what would be happening with Obamacare, and pre-existing conditions, and deductibles and premiums and co-payments, oh my.

 The healthcare costs are my main spending these days— immediately upon starting my semi-retirement (I’m just going to call it that for now), I found myself with a hankering for peanut butter sandwiches. That plus some salad greens, cheese and crackers, and a baggie full of nuts and raisins, has been my primary diet on these lazy days, and I get really annoyed with myself if I forget to bring my own water bottle from home and have to buy one. Sweetie and I have occasionally gone out for lunch at pizza places, middle-Eastern restaurants, and Chipotle, but on the whole, I’ve been really good about cutting my spending on food. I also haven’t spent much on any other miscellaneous items or clothes, other than finding my favorite jeans on sale and snapping up a couple pairs since I’ll be wearing them a lot more!

 Our basic costs of living— housing, insurance, etc— are a big drain right now, but so far, my net worth has pretty much stayed steady, even increasing a little— stock market fluctuations will have a much bigger effect at this point than any day to day spending, at least in the short term. But it is painful to see all this negative cash flow.

 Right now, I’m just giving myself some time to settle into this new life and figure out a new rhythm— it’s more of a challenge than I thought it would be. Although I did not think of myself as wrapped up in my old career as a big part of my identity, I am uncertain about what my identity is now. What I mean is that I didn’t base my self-worth on making a lot of money and being at a certain professional level— I was proud of it, but my career was less about prestige than it was about an inner feeling of competence. I liked knowing what I was good at my job (most of it, anyway) and I felt satisfaction in getting things done. Now that source of satisfaction is missing and I need to replace it with something. I need to feel like I’m good at something, and productive. It’s scary to not have a clear idea what that will be, and to contemplate doing something new where I am clueless and might be frustrated at first because I don’t know what I’m doing and make mistakes. The part of my life that gave me confidence and security has been replaced by doubt and uncertainty.

 But this is temporary. I know things will settle down— we’ve got a house to buy, an apartment to sell, and a new life to build, none of which will happen overnight, so I need to be patient with myself. And we have money in the bank to get us through the next steps. I still feel incredibly lucky to have these choices and decisions to make.

Catching up on 2016

A few notes as I do my year-end accounting for 2016. 

The first thing I dug into was the trusts I manage for my mom. Their return was about 9% last year and I was about to pay Mom about $8,000 in dividends. I feel pretty good about this, especially after a shaky start in the first few months I was managing her money when the market was down and I was afraid she wouldn’t understand that it wasn’t my fault! I am also a bit less nervous about my mom’s finances since my grandparents both died in 2016 and she does not have to contribute to their nursing home costs anymore, which was a big expense.

My own personal investment accounts are a bit more aggressive and using the way E*Trade calculates returns, I actually beat the S&P 500 in 2016— 11.4% returns in one account, 10.73% in the other, vs. 9.53% for S&P 500.

I earned more money this year as a result of my new job, and decent investment returns. My total income including salary, bonus, investment income and other odds and ends such as employer contributions to 401k was over $214,000, vs about $188,000 for 2015. I also spent more on various things— food, wine, clothes and a few other small pleasures, but also taxes, as those increased when my income went up. But my total spending only went up by about $6,500, so my net savings for the year ended up being almost $85,000, vs about $65k last year.

I am thinking more and more about how to retire early, or at least downshift to a less stressful job. I like making more money, but it has come with a TON of stress and I’m not sure it’s worth it. Maybe I’ll eventually feel more comfortable in this position, but for these first few months, I’ve been struggling and really not feeling confident that it will ever get better. I’d love to quit, but I’m not ready to admit failure, and I keep telling myself that the longer I stick it out, the earlier I can retire! 

My net worth was about $1.17 million at the end of 2016. I’m on the right track for my retirement goals, but not so much so that I can totally relax. I’ve played around with a lot of scenarios in a retirement calculator— the good news is that it does seem like I’d be able to retire at least a few years early, even if I go back to making somewhat less. If I was willing to move to a different part of the US with a lower cost of living and make some big changes to my lifestyle, I could probably retire tomorrow if I felt like it. But I’m not willing to do that just yet, and who knows what the next few years will bring, in terms of my own career, my family, and the political and economic uncertainty in our country.

2016 was a pretty shitty year. It was bad enough that David Bowie, Prince, and Sharon Jones died, not to mention various other iconic celebrities. I lost some dear friends and beloved family members, which of course was more important to me, and I lost a lot of faith in American democracy in seeing Donald Trump elected President. In most other ways, I am happy, pretty healthy, and generally feel incredibly lucky that I have the life I do. When I started this blog, I still thought of myself as “young”— now I’m middle-aged! It’s weird to feel like I’m shifting into a new attitude towards the future, at exactly the point when the future looks bleak in some ways. But I still keep thinking “onward and upward!” Wishing you all, dear loyal readers, the very very best and a happy New Year!

Yowza, the Stock Market!

Normally I'm a very hands-off investor. I go for long periods without paying much attention while my various holdings drift up and down in value-- hopefully, mostly up! But in the last year or so, I've been putting more cash into the market, and paying a bit more attention. This is largely because I've had more cash to invest-- my own savings and the proceeds from selling my condo, and more recently, my mother's trusts.
I continue to mostly invest in a mix mutual funds, some just index funds and some with other mixes of assets-- nothing really sector-specialized, just some bond funds and others that are supposed to maximize dividend income. Then I have a few stocks that I've bought a few shares of here and there.

The last couple of days have been one of those times where I can't really sit by and ignore what's going on. I've been checking the S&P 500 multiple times throughout the day. As mentioned in the posts about my mom, I now have to worry that she'll think I'm mis-managing her money if the markets go down, and they've gone down a LOT in the past few days! I can handle seeing my own net worth plunge by $60,000 or more in the space of a few days, but that's nothing compared to dealing with my mother! :)
For my own investments, I'm trying to be strategic and cool-headed, so as Monday's big plunge was happening, I moved $25,000 into my E*Trade account so I'd be ready to act if it seemed like I could take advantage of buying low. At the end of the day, I thought things were down enough that it made sense to do some bargain-hunting, so I invested all the $25k. Tuesday morning, the markets opened higher and I was feeling like a genius! But as the day progressed on Tuesday, I began to wish that I'd waited another day as the markets ended up closing down even further. Oh well! Maybe not so genius after all...

I still try to keep an eye on the long term. I didn't sell off anything after the 2008 crash and my investments mostly recovered. I've had some things do very well in the last few years. But it's a bit depressing to see those gains wiped out again, and I do wonder what's in store for the next few years. A lot of people are saying stocks are generally over-valued, and I'm pretty exposed to that through a lot of my mutual funds. But interestingly, my individual stock picks don't seem particularly over-valued, at least not after Tuesday's close. I have shares in Ford, Bristol-Myers Squibb, Kroger, Xerox and KKR. The P/E ratios on these are mostly pretty reasonable-- all under 15 except Kroger at 18 and BMY at 54! BMY is up 113% from when I bought it in 2011, so I'm thinking I may sell it now. Kroger is up 197% from when I bought it so it's tempting to sell that one too. Whenever I've bought individual stocks, I've tried to find things that had a low P/E ratio and projected earnings that would suggest the price could rise-- that approach has worked well for me. Xerox was bought based on advice from a friend, the one time I've ever acted on that sort of stock tip-- that approach definitely did not work for me! Xerox has been down pretty much ever since.
I also like it when stocks pay dividends-- I figured out that I've reinvested almost $30,000 worth of dividends on my main E*Trade portfolio over the years. KKR is something I just purchased this week because the P/E ratio was very low and dividend quite high. I've never invested in a private equity company, or any sort of financial services company-- my other stock picking rule having been that I choose companies whose businesses seem more tangible and familiar to me. My most detailed knowledge of KKR has been from reading Barbarians at the Gate-- a fascinating book which I highly recommend, though it's not exactly flattering to KKR. So this pick goes a little against my grain but these private equity guys always seem to be raking it in like bandits, and I'm willing to try to ride along a bit!

Here's the current holdings in my main E*Trade portfolio if you want to follow along... this doesn't include a smaller Roth IRA portfolio or my 401K.

Symbol	Qty
BMY	30
BRLIX	3,082.075
BRSIX	605.537
BVEFX	277.961
F	300
ICENX	875.547
KKR	200
KR	200
NOSIX	383.203
PFODX	602.65
PGNDX	674.272
POMIX	427.673
PONDX	1,000.777
PRGTX	361.533
RYTRX	326.781
SFLNX	2,268.278
SFSNX	601.965
TINRX	604.23
TRVLX	137.817
VDIGX	437.085
VEIEX	396.939
VNYTX	787.866
VWELX	1,155.685
VWINX	1,129.674
XRX	75

More on Being a Trustee

Ok, so we left off with the big package of legal documents arriving for me to sign.
First, there was the irrevocable trust document. This spelled out that my mother was putting $350,000 in this trust and waiving all rights and title to the principal forever. It names me as trustee, and talks about various ways I’m allowed to make decisions about investing the money. It says I have to distribute net income quarterly to my mother, and provide a full accounting of the trust’s transactions annually. There’s also a lot of stuff about how a the trustee can be changed later if necessary, and what happens if I die, etc. It names my sister and me as the beneficiaries and that the principal will be paid to us equally after my mother’s death.
Then there’s the revocable trust. This money still belongs to my mother during her lifetime, but I am the trustee managing it. My sister and I are the beneficiaries after she dies. This trust is just to simplify things and avoid probate when my mother dies. But it’s also a very good thing to have a trustee in control so that my mother can’t just spend all the money without consulting someone else. This may become awkward in the future if my mother wants to spend money and I don’t think she should.
The final documents in the package were my mother’s last will and testament, and a durable power of attorney authorizing me to act as her agent. The will will cover any property of hers that is not held in the name of the revocable trust. If those assets are less than $25,000, then it goes through a “simple probate” process that is easier than for a larger estate. So we’re supposed to keep my mother’s assets under her own name at less than $25,000 but of course she had last minute cold feet about putting the full amount she’d intended into the revocable trust, so she actually has more like $40,000 in her own account— or at least she did when this all happened. Who knows how much of it she’s spent by now! I keep reminding her that the revocable trust funds can be paid out to her any time but she still doesn’t want to transfer her extra cash. I asked a couple of times then decided to let it go for a while as she seemed to be starting to think I was being morbid about it!
The final item in the package was two checks from my mother’s account, one for $350,000 made out to the irrevocable trust (“The [Madame X’s Mom] Irrevocable Trust of 2015”) and one for $100,000 made out to the revocable trust “The [Madame X’s Mom] Trust of 2015.”

The irrevocable trust has its own tax ID number, which the lawyer also sent to me a few days later. Once I had that, I went to the bank to set up checking accounts for each trust. It took about an hour and a half to do all the set-up paperwork at the bank— they had to fax the documents to their legal department to make sure everything was in order, in addition to all the usual account paperwork.  But once that irrevocable trust check was deposited, it started the clock ticking for Medicaid’s 5-year look-back period, in the event that my mother ever needs to apply for it.

After the checks cleared and I’d received new checkbooks in the name of each trust, I opened a Vanguard account for each trust. I picked a variety of mutual funds, including some that have the goal of maximizing dividend income. I did put some of the money in funds that seek growth and have higher levels of risk, but I steered away from the riskiest ones, and also put some money into lower-risk bond funds. I do want to make the principal grow, but I also want to make sure the investments generate some income for my mom. I am a little worried about how the first few months will go— it’s unfortunate that the stock market has taken some plunges exactly after I invested this money, so my returns are somewhat negative so far. I personally am a pretty calm investor— I always try to look at the long term and not panic during down times, but I’m worried about how this will appear to my mom and anyone else whom she might tell. If I say “ok, mom, I took $450,000 of your money and invested it, and all I have to show is a $5,000 loss after 6 months,” she may just think I don’t know what I’m doing, regardless of whether I point out that the entire market is down, and that any other financial advisor would have been likely to have similar results. I am kind of wishing I’d weighted the portfolio even more towards the bond funds vs. the others, given that the stock market was at historic highs when I was putting all this money in. Perhaps that is what a professional advisor would have counseled… but perhaps not, and I have to keep reminding myself, and my mom if necessary, that we’re still ahead by a percentage point or two just by not having to pay someone else’s fees to manage the money.

There will be more to talk about in the coming months, as I figure out whether and when to distribute income to my mother, how to deal with tax issues for the trust, and other questions. I’ll keep you posted!

How to Invest My Cash

For the last few months, I have had a very pleasant problem: approximately $150,000 in cash sitting in my savings account. Most of this is from the proceeds of selling my condo, plus a little growth from savings and interest. I have been holding off on any big investment decisions for a while, partly out of pure laziness and partly because there are some possibilities floating around for how to use the money. 

One thing I might do is buy all or part of some real estate Sweetie owns, as since Sweetie isn't working and I am, there could be some tax benefit to me being the one with the mortgage. 

Another possibility is going into business with some friends who want to invest in rental real estate upstate. There are some college towns where the investment return on properties is quite attractive. Though I didn't want to be an active, hands-on landlord, I don't mind doing some occasional work and otherwise being a passive investor, and trust the friends involved, one of whom has hands-on experience as a real estate agent and property manager.

And then there's just the stock market. I just bought $20,000 more in mutual funds to add to my E*Trade portfolio. I am tempted to put even more in, figuring I could sell some of my earlier investments if I need to free up cash later. 

There's no easy answers, but again, this is a good problem that I am glad to have!