What’s Your End Game? I’m Selling!

Checkmate!  Freddy plays chess on a huge board at Zaca Mesa Winery

Money is useless until you use it to buy something.  

I hope to own zero stocks near my end of life (that includes index funds).  The reason we didn’t spend all the precious cash we generated from employment was to grow those funds but with the real intention to grow them and sell them.

The motivation to write this one was reading the online arguments of the merits of dividend growth investing, pure index investing with the golden and unassailable VTSAX for the VanGuard worshipers, and dozens or safe withdrawal rate articles.  The thing I haven’t seen much is a strategy for cashing out those seven digits and buying something with those assets you likely traded some of your valuable time and maybe a hunk of your soul to amass.

I got to thinking about this after I hit “publish” and don’t want to sound to cynical or negative.  These are just some of the things on my mind in relation to the spend down to protect assets in old age.  Besides, take it all with a grain of salt as I often eat paste and don’t know much.  It’s a thought experiment.

Total Return Wins

I read these articles about passive income streams and growing dividend income year over year and it’s true those kinds of dividend growers do produce income from month to month but what happens if you’re buying shares of ZYX with a 3% yield but the share price goes down, maybe from an industry that’s a relic or some asinine management moves or just a down economy?  You’ve made your regular 3% and probably DRIP reinvested the proceeds over a number of years but maybe you bought those shares at an average of 50 bucks and time went by they ended up at 40 clams, even with the dividend increasing 2% a year.  Meanwhile, did you miss out on Amazon or Netflix for Facebook just because they had a zero yield?  You know what the dividend is for Berkshire Hathaway shares?  Zilch, nada, nihil, zero%.  Would you eschew Berkshire shares for that fact and miss out on those long term returns?  I’m not saying a person can’t do well with dividend investing but I would suggest to keep an open mind when looking forward and keep in mind the share price as part of total return.  Even if you never plan to sell and leave seven or eight figures to your ingrate kids or grandkids in a portfolio they can squander you would want maximize the value.  Instead of waiting for that quarterly or monthly dividend payment in retirement you could just sell some shares that have hopefully appreciated.  If you hate individual stocks and thing I’m a dildo for owning them you could even sell VTSAX shares and spend the proceeds.

Does anybody ever sell?

These are all personal decisions but I’ve said before I would love to kick the bucket with a zero balance, as the father of none.  It was our blood and sweat and having to put up with crappy managers working crappy hours that put all those glorious numbers on the computer screen.  It’s been fun watching them grow but that’s not the end game.  I am hoping with good enough health and a little luck to not just need to get my jollies from looking at the digits on a screen but to get real live jollies from selling the shares and spending the cash.  Those hang gliding lessons don’t come free, y’know, and I’ve had my eye on a custom Devo hat but have been waiting for the right time to pounce.  If you know of any article or series that includes the end game of cashing out please point the way.  Oh, I own plenty of indices lest you think I’m a hater.  The portfolio is here.  I just believe in keeping an open mind with this stuff.  Do you know anyone who is presently selling stock investments to fund their life?  I would love to hear about it.  If you’re not retired, what does your end game look like?

If I’m flat broke when Jimmy shoots me out of a cannon on an Ojai mountaintop then I win!

This is what I think about “The Rules” thrown around about safe withdrawal rates in retirement Help! I am Pooping My Pants Over Safe Withdrawal Rates!

16 Replies to “What’s Your End Game? I’m Selling!”

  1. I haven’t seen a lot of end game posts. Maybe that’s cause most of the people I’ve seen blogging about this stuff are still looking to grow the nest egg (me included). My current plans for retirement are to live abroad for a few years and then settle somewhere not too expensive in the US and read, write, code, spend time with family, and be outdoors. No schedule and no obligations. It’s easy to find new hobbies and interests when you have time.

    The image of your art piece on https://freddysmidlap.com/2018/05/22/painting-sales-and-portfolio-details/ isn’t working for me. Is it just me? Really like the portfolio details you share. I’m part of the index fund crowd, mainly because it’s so dang easy and relatively “low risk” if you’re playing the long game. But I have been looking at buying some individual stocks. Every time I do though I end up reading some post that convinces me it’ll be the worst mistake of my life… gotta get my cojones in place and maybe then buy some individual stocks.

    1. yeah, it’s not been the work part that’s bugged me about employee life but the schedule. we’re not at the end game yet but pretty close because we’re not young. i fixed that photo on the portfolio article, thanks for letting me know.
      i don’t think it matters too much what investing strategy you pursue so long as you start and keep investing. i just like to be honest with what has worked for my circumstance. good luck on the journey.

  2. One of my favorite blogs sexhealthmoneydeath.com is always talking about stuff like this, just the unknowability of what life will be like after retirement and the pain of selling investments when you’ve spent your entire life buying. You’re right, there’s a lack of guidance in this area.

    I like to think I will do the same as I’ve done with investing, but in reverse: Instead of spreading it out and buying say 65% stocks, 30% bonds, and 5% REITS, I’ll be selling at that same ratio. You probably shouldn’t pick and choose what to sell based on price, because you’re still vulnerable to price risk. The overpriced stock you sell might still have room to grow, while the stock you’re avoiding selling at a loss might still go further south.

    1. i’ve been toying with some idea like selling off for a little more cash than needed to fund our life and just growing a big ‘ol cash buffer every year. we’ll see how it goes when the time comes.

      1. That was kind of what I was thinking. So if the market returns 15% one year, sell to get me back to where I started from, use the 4% + inflation and put the rest in a high yield savings account to cover the next time the market returns -5% so I don’t have to sell anything. Granted that strategy has weird tax implications that I’ll have to think about at some point. We’re 7 years out so I have some time to read what you end up doing and steal those ideas. 😉

          1. Awww thanks Freddy!

            I agree with your index fund over dividend investing approach for your great reasons and add the tax and Obamacare implications to it. I can get significant growth in my index funds without much tax impact or income that goes into the subsidy calculation.

            If you want to end with $0, will you annuitize your portfolio at some point or is there another solution? I suspect I’ll end up leaving too much money to my niece and fake kids–you prepare for a long life but who knows. I suspect they’ll deserve it after looking after us in old age.

          2. fake kids. i like that. we could annuitize i suppose. if we get into our 70’s and still own a house i’ll likely want a cash our re-fi. i think the loose plan is to spend a little more to enjoy in our 60’s than some would advise. i know i want to turn those equities to cash for sure. i write these things more as questions i’m still asking myself but stay tuned!

  3. Wow, guess i haven’t really spent a lot of time thinking about this. I expect to still be in the stock market even late into my retirement. I do have a daughter so hopefully there will be grand kids in the picture by then.

    One thing i can say is for certain, i will be drawing down on assets and enjoying the fruits of my labor lol.

    1. thanks as always for the insight. i plan on being invested but that total return is going to matter when we start selling shares to cash in and buy something, even if it’s adult diapers.

  4. You ask a very good question here. We are “retired”, except that we own 2 rentals and we are DIY all the way. Just this week, our tenant of 7 years gave her 30 day notice. The keys will be returned right at the start of our plans to travel around in the trailer during end of August and most of September. We have not yet done the walk-through, but it will likely be a ton of work. If we sell it, we will have a large tax bite, have to pay back all of our Obamacare subsidy, which is upwards of 20K, yet we are thinking about it. Because are we really FI if this can change our plans?

    Also, years back I read the book “Die Broke”. A great goal. You are spot on, but it doesn’t make it easy.

    1. there might be a middle ground where you hire out a chunk of the work, eh? anything under 20k and you come out ahead as i read it. i’ll have to check out “die broke” and these are tough decisions. thanks for your input.

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