January 12, 2017

Preparing for Extensive Time Off

As 2017 is only a couple days old, I already believe it will be a great year, or at least, it will be a great one for me. Forgive my selfishness but I especially look forward to this brand new year as I will be able to enjoy my second 6-month leave of absence from work. 

So my big project this year: to have time and to enjoy the freedom it can give me!

All this began to truly take shape back in 2015 as I Signed Up on a 2-Year Program that will end with a 6-Month Leave. Despite the fact we are a couple months away from the actual time off, it’s just around the corner, I’m starting to feel it and can’t wait to taste it for real.

This is the second occasion I took advantage of that type of leave. In my 2012 leave, among many ventures, Our Exciting 24-Day Trip to Italy is surely what marked me the most!

Meanwhile, with still a lot of on-going and new projects boiling in my mind, I am ironically lacking what I will have plenty of by the middle of the year: precious time!

Luckily, I can rely on the 12-Minute Approach to help pace myself, effectively materializing many of those ideas while maintaining a relatively healthy balance in my life.

Plan Not to Over-Plan

Back in December, we discussed How to Use Careful Planning to Maximize Your Time.

In the same matter, because of efficient financial planning, I can now afford to take some big chunks of time off. The great thing is that if all continues to go according to plan, those chunks will be getting bigger and bigger. This year’s leave will last 6 months, the 2019 one should extent over 8 months, and so on…

My next statement might encourage many of you to say that I’m beginning to sound like an old grumpy man. I know, I’m not really getting younger either but I faintly hope I’m getting a tad wiser. Here we go!

With experience, I’ve learned that it can be a very good idea and philosophy to appreciate time you already dispose of.

In that sense, I now try to savor each unique moment of my life. Our time is limited and precious. You have to appreciate all the little moments you have with others and especially cherish those with family and friends. My lonely nature sometimes makes it tough for me to always welcome the presence (and intrusion) of other people. That’s why I now lean more on my kind and gentle nature. I also try to use my very developed (maybe too much if you asked my lovely wife) sense of humour.

Alone time should also be relished and you already know that part is much more simple for me.

All that profound thinking led me to take a different resolution for my upcoming leave: I plan not to over-plan.

Hence, I’ll appreciate life and to some extent, try to take things as they come.

I still know that I’ll be able to accomplish much but my objectives will be less specific. 

So, wish me plenty of relaxing times, a ton of writing and some exhilarating trips (I still will plan a little ahead for these)! My time off will surely also involve a lot of reflecting and some problem solving.

Speaking of problem, I’ll now talk about probably my most interesting questioning for the upcoming months…

Challenging The 4% Rule

Because I should retire or at least pre-retire less than five years from now, one of my late mid-term concerns has been to develop a robust method to start taking money out of my investment accounts.

So far, my DIY approach has been successful in the accumulating/growing phase. Yet I’m a little worried about transitioning into the withdrawal phase.

And I’m kind of getting frustrated the more I read and research about it. Looks like I’m stuck and that everything always gets back to some version of the infamous 4% rule.

I used to view the 4% rule as a very conservative approach that provided a very safe minimum guideline. Maybe my instincts were wrong, but it would be ridiculous for me to achieve substantial long term returns (10%, 12% and even 14%) and in the end, to only settle for 4% withdrawals.

But when I tried to back test any method, the only one that would truly hold up is precisely the 4% rule. Even my own actual returns, despite being very impressive, could cause potential problems in some circumstances as timing sometimes became an issue. Large fluctuations seem to be the main concern. And in practice, one of the secrets of achieving better long-term returns is to learn to live with larger fluctuations. Thus reducing fluctuations is not a viable option as it would undoubtedly affect returns.

So, one of my biggest challenges in the next couple months/years will be to try to somehow get around the 4% rule.

As I have more time on my hands, I’ll continue to look for a definitive or at least, better answer to that puzzling problem and keep you posted…Ultimately, I hope I’ll be able to develop some kind of hybrid withdrawal method.      

Photo Credit

No comments:

Post a Comment