Two 60th birthdays: the S&P500 Index and me

As someone on the tail-end of the baby boom I have always watched, followed, benefited and learnt from the experiences of my slightly older cohort as we went through teenage rebellion, far out and groovy hippy years, degrees, marriages, families, mortgages and now into retirement. I've found Peter Thornhill’s approach to be a logical and proven long term investment strategy. Buy fully-franked, sustainable dividend producing shares and ride out, if not benefit from the slumps. Dividends do not have the volatility of share prices and dividend growth is currently better than inflation and wage growth. An initial 3%pa yield on purchase becomes over time with sustained dividend growth a 6-9-12%+pa yield. So for dependable long term retirement income one becomes an investor in income producing assets and not a speculator focussed on price fluctuations. Sure there have been some duds and disappointments (MYR I'm looking at you), but mostly successes (ANZ, EVT, FLT, MQG, SHL).

Heartiest congrats on achieving 60 years – the new 40 years. Here’s to a continuing very readable and informative Cufflinks.

Happy Birthday & Merry Christmas,

I followed State Bank of Victoria (SBV) advisors when the SBV folded & decided to do my own investing. Now at 76, I still believe in growing my SMSF & enjoying the ups & downs, which also keeps my brain active. My investment procedures have changed since I started at 50. Now I look for growth preferably with FF dividends, even if the yields are lower than the Banks.

I enjoy Cuffelinks articles. Keep up the good work. Live Long & Happily.

Graham

I agree on growth assets.
Being just over 60 with parents in their nineties I think I have 4 to 5, 7 year growth asset periods left in me and psychologically can cope with the downturns.

So I am all for growth assets

Hi Graham,
Happy Birthday and Merry Christmas to all.
I've also recently hit the ripe old age of 60, so I feel for you :)

I'm reminded of the great Jack Bogle, founder of Vanguard and a true giant of the investment industry. He famously said many years ago that you should "have your age in bonds" i.e. age 50 = 50% of your portfolio should be in bonds, 60 years of age = 60% etc.

I think this advice was relevant when people retired at 65 and popped off around 70-75.
As you say, we are now living much longer than previous generations and advances In medical technology and techniques will drive life expectancies ever higher in future.

Jack Bogle's advice is arguably now out of date and not helpful for people of say 50-70 today.

We need to have investment horizons of decades, not a few years and thus maintain a decent allocation to growth assets. This will provide a growing source of income in future to keep up with inflation; the real enemy of retired people.

My investment horizon is predicated on my wife living until 100 or more (she turns 60 next month, but has better genes than me), so I'm looking to invest for the next 35-40 years minimum. I think we need to learn to live with market volatility, but perhaps try to avoid large drawdowns with a well-crafted diversified asset allocation.

The old age in bonds formula is also perhaps looking rather risky these days, as rates appear to be on the rise from emergency GFC levels and long-term fixed-rate bonds will see falling capital values. Recent US research even argues for retirees increasing their allocation to growth assets, rather than the previous wisdom of increasing exposure to fixed interest securities.

The infographic is only a few data points but they show how low income earners in the US have missed out. While the S&P has risen over 50 times (and the wealthiest have most in the market), minimum wages have risen only 7 times (and how does anyone live on US$7 an hour?) and gasoline is up 10 times. So they voted for Trump and people wonder why they reacted against the system.

Happy birthday Graham. I am a 57 baby as well, but I have almost a year on you, so I am an old timer at being over 60!!

When I look at friends and family in their 70s or 80s, they had a complacency on reaching retirement that they had their house and some modest investments and the pension or part thereof. Nothing can go wrong from here! I really think that in past generations people have had their heads in the sand at retirement. The big medical bills are yet to come; there is the possibility of travel for another 20 years, downsizing may not necessarily put capital back in your pocket, and at some stage there could be the need for home care or worse, a nursing home. As you have suggested, the investment horizon is huge at 60 and so my advice to others is to layer the investments to provide some layer of investments for income and some to growth. Hopefully it will just go to providing intergenerational wealth or bequests, but if the money is needed in later years, it is nice to be able to do things like hospitals and nursing homes, comfortably.

I leave one financial tip. When people consider growth they often think of assets that are non or low dividend paying high risk shares. But, if you focus on stable blue chip shares that have a sound and sustainable dividend policy and you put say 30% of the dividends into a DRP, that is a great way to grow wealth and the DRPs can always be switched off if you need the income. (Of course LICs or the like that focus on these types of investments would possibly be even better.)

Happy B’Day Graham. You never know with increasing life expectancy you may only be at the half way point.

Happy Birthday, Graham,

Well done on another year of Cuffelinks and thank you for sharing the Infographic on 1957/2017.

Best wishes,

Martin

Graham - happy 60th ! Personally I like Peter Thornhill's (Motivated Money) approach to time horizons (and asset allocation) when investing. Don't see any reason to change that view simply because we hit an age number people consider 'old' or 'retirement' linked !

Happy birthday Graham. I had my 60th a few weeks ago.

Is one month's experience as an over 60 of value? The main thing I can say is to value your health and your health insurance. I got a clean bill of health last week after some significant issues in the second half of this year, but a month in hospital, 3 operations and associated medical services, on top of a more routine operation late in 2016, have added up to almost $40,000 paid out by my private fund and Medicare in 12 months.

Makes me hate those Youi ads even more! It's not about short term 'rewards', it's about the community sharing risks and you being covered for when you need it.

I once read Burton Malkiel, who I think was about 85yo, say his investment horizon is many decades because he is primarily focussed on bequeaths, so he thinks in terms of his money helping the next generations.