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
Billy and Akaisha Kaderli
30 Years of Financial
"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
This theme carries
forward to our investment philosophy. For
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
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
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
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
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
historical data to support what those returns
could be in the future.
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
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Early Lifestyle appeals to a different
kind of person – the person who prizes their
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time, and who doesn’t want to mindlessly
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About Billy & Akaisha