I think
should be interpreted not as “We’re unable / incompetent to pick an investment”, but rather as “We have assets already much in excess to our wants and needs. Getting more assets by whatever means would be useless at this stage of our life. Why bother?”
On the nose. We were in the market for many years, but just decided enough was enough.
My late aged MIL ended up in a similar spot.
She was always only working class, but as a careful saver and eventual long term investor she did pretty well from a low base. Even with her low-ish social security by the time she died at 96 she had enough money that we could have put it in all in zero-interest passbook savings and it’d have taken her another century to use it up at her current consumption rate. Old folks just don’t spend much money beyond the rent at the Home.
Now her heirs may have had an opinion about her optimal investment portfolio, but that’s a different discussion.
This scenario really isn’t all that rare. Anyone who retires with a reasonable nest-egg will either have crappy investment luck and go broke before they die or will have great investment luck and end up stupid-rich by their standards before they die.
It’s darn hard to plan to spend it smoothly to zero given the vagaries of health, longevity, and investment returns. People talk about elder medical expenses, but if you can stay out of a skilled nursing facility or memory care center, insurance covers almost all of the bills so you don’t have to.
It may be worth offering up the old (100 - your age) philosophy of investing:
The 100-age rule of asset allocation is a guideline that investors use to determine how much of their investment should be allocated to each asset class based on their age. The rule states that an investor’s portfolio should contain 100 minus their age in stocks and the remaining amount in bonds. For example, if an investor is 40 years old, they should have 60% of their portfolio in stocks and 40% in bonds.
It’s subject to tweaks and individualization, but it’s rather time-tested.
There’s also a school of thought that says it may be prudent to increase that 100 number to, say, 110 or 120:
One thing that these two takes on an old rule of thumb tell us is that you can be a prudent investor, have very minimal risk-tolerance, and still be in the market.
IF you want to.
I am really trying to make it so my husband’s next car is paid in cash, but we got a huge medical curve ball with my son. The way the therapy place put it is, “You will hit your out of pocket max next year.” But we won’t hit it this year, which means December is on us.
We are people who could be wealthy some day if life didn’t keep happening.
Though I have to give myself props for finally signing up for my agency’s 401K. It has a trivially small match, but hey, money is money. (We have other retirement savings, I don’t want to give the impression that I’m starting at 40.) I’m just trying to ramp it up, and it’s especially important for me, psychologically, to have my own safety net apart from my husband.
It’s just hard to get ahead, even when you’re really responsible with money.
This is us, as well. Right now the 5+% on CDs looks damn good, which is why a lot of my money is parked there. I know it won’t last, but it’s nice right now.
As they say, many are one emergency away from poverty. I started in poverty, but as I was clawing my way out, it would’ve taken just one event to send me right back. I count my lucky stars that my wife and I got lucky and averted crisis for enough years to get over the hump where we should be able to handle most any crisis. I was 38 when I really started to gain traction (my wife is 6 years younger).
I hope you get many years of good fortune and can also get ahead.
I’m in the same situation, in no small part due to having a good investment adviser.
It is kind of fun some months to see our net worth increasing more than it would have in a month where I was working. With a lot less effort.
In 1997, I spent a month visiting Stanford U. While there I heard an interesting talk by a student who had an idea for a new search engine. It was interesting enough that I thought of saying to the speaker, “Sergey, if you ever start a company, let me make an investment in it.” But I didn’t actually say it, to my eternal regret.