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In 1991 Billy and Akaisha Kaderli retired at the age of 38. Now, into their 4th decade of this financially independent lifestyle, they invite you to take advantage of their wisdom and experience.

Simple Approach, Long-Term Results

Billy and Akaisha Kaderli

Billy and Akaisha Kaderli in Puebla, Mexico

30 Years of Financial Independence

"No Fear, Dude" is a common slogan amongst surfers worldwide. Boarders know they cannot approach the powerful sea with trepidation in their hearts and still be fluid enough to ride the waves to shore. It's a combination of trust, skill, experience, and internal confidence that propels them on to success.

This theme carries forward to our investment philosophy. For over thirty years we have been long equities -- basically heavily invested throughout, except for a short time during the last bear market. Since 1991 when we retired, our portfolio mantra has been "embrace the future, stay invested, and keep it simple."

 

 

 

 

Easy to say, hard to do

Being vice president of investments, branch manager for Dean Witter Reynolds, Billy was constantly shown research reports supporting the fact that many people -- brokers called them Nervous Nellies -- would sell out of the market at its lows only to return after large gains had taken place. Even though Billy challenged much of the research he received, this fact remained intact.

When the market would fall and statements were mailed out the first of each month, Billy's phone would start ringing. "Get me out!" was often the response his clients had after reading their statements. If the calls were numerous, we used this as a contrary indicator and would suggest to clients that now is the time to be buying, not selling. And we took our own advice.

Because of this movement of funds in a typical reactionary emotional response, most people cannot beat the returns of the S&P for any reasonable length of time. You have to be extremely lucky to be correct twice: once by selling at the market top, and then again by buying at its bottom. Even professional money managers have a difficult time doing this, and they spend eight hours or more a day trying.

Our philosophy is not to beat the market, only to come close to matching it. And because we are selling off shares at a capital gains rate, our portfolio has tax advantages over one that is balanced with bonds, where the interest is taxed as ordinary income.

Answering the critics

We know that some people do not agree with this strategy, insisting that we need to hold bonds to balance our portfolio's ups and downs. Being 68, and now receiving Social Security, we do look at that income as our bond equivalent. This way we can hold more equities and still have a balanced portfolio.

Another critique of our investment plan is that we were "lucky" to have the bull run of the '90s with the wind at our back propelling us ahead in our financial independence. If so, then we were "unlucky" to have ridden out both the crash of 1987 and the second worst bear market in our nation's history, 2000-2003, as well as 2007-2008. As mentioned above, we did sell 30% and moved it to cash in 2000, only to buy back too early to benefit much from that move. Remember we stated you have to be lucky twice? We were lucky only once.

Over 30 Years of Financial Independence

What about international exposure? It is our opinion that the multinational corporations that make up the S&P 500 are plenty of international exposure for us. Plus, we do not have to concern ourselves with currency risks. It's great if a certain country's market moves up 10%, but if the currency goes against you 10% then it's all for naught, so we leave this up to the money managers of the multinationals and forget about it.

 

 

 

 

But what about diversification between small caps, growth, and value? This can be satisfied by owning a total market index like VTI, Vanguard Total Market. This way, you own them all. Money managers come and go like big-league all-stars. Therefore, we have no idea what an active managed fund will do in the future, but we do know with certainty that a market index will match the market. And there is a lot of historical data to support what those returns could be in the future.

When we started on this adventure 30 years ago, the S&P 500 Index closed at 312.49, and it was the investment of choice at that time. Why do we stay invested in this manner? Because it works.

About the Authors

Billy and Akaisha Kaderli are recognized retirement experts and internationally published authors on topics of finance, medical tourism and world travel. With the wealth of information they share on their award winning website RetireEarlyLifestyle.com, they have been helping people achieve their own retirement dreams since 1991. They wrote the popular books, The Adventurer’s Guide to Early Retirement and Your Retirement Dream IS Possible available on their website bookstore or on Amazon.com.

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