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Six Years In Retirement
I cannot believe that it is already six years since I retired early. I retired exactly on this day in 2018. In these 6 years I have seen several interesting things, met a variety of people, changed our lifestyle and health in more ways than one. It was a good ride. Of course it might not have been any different even if I was working but things would not have felt so leisurely and I certainly wouldn’t have time to write about it. The finances are going as per plan. Physical health is fine. Coming to things I wanted to do after retirement, or as I like to call as hobby projects have been going amazingly well. Even better than I originally planned and I still have a lot more to look forward to. But best of all, I am thoroughly enjoying the time I get to spend with my daughter. I also have more time for family and friends too.
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A Farm By Any Other Name
I love the quote by Steve Jobs “You can’t connect the dots looking forward. You can only connect them looking backwards. You have to believe that the dots will connect and that will give you the confidence to follow your heart even when it leads you off the well worn path and that will make all the difference.”. We had absolutely no idea that somehow, our decision to unschool our kid, quitting the rat race, minimizing our lifestyle and retiring early will lead us to our dream of owning a farm. There are so many dots that eventually connected. But at the time when we were making those decisions which led us off the well worn path, we had no idea that they will connect. After all the many twists and turns, we eventually found a farm that we loved and knew that it has our name written on it.
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Should We Go With 3% Rule?
I recently wrote a post about asset allocation in which a reader commented whether we should be using 3% safe withdrawal rate in Indian context instead of the 4% safe withdrawal rate that is generally accepted in the US (at least in the past). The commenter also provided a video supporting the 3% rule. I strongly encourage you to watch that first. It makes some good arguments. If you are interested, I’d also suggest you read the paper which contains all the details, assumptions, data and methodology used for the simulations. According to the research paper, it is recommended that one should go with a 3% safe withdrawal rate instead of the generally well known 4% rate.
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How Not To Teach
So this other day, me and my daughter were watching a video where the author was talking about infinity and how if you divide a number by zero you get infinity. My daughter could not understand how anything can be divided into zero parts. Or how attempting to divide something into zero parts blows up into this huge number that we call infinity. Being the smart alec that I am, I thought I could explain her how division works and how something divided by zero gives you infinity. As you can imagine, I made a huge mess of it and it showed me how little I knew about teaching to kids. If you take pleasure in seeing a grown man fumble with math, go on.
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Is The Stock Market Peaking?
I am a little bit concerned. The stock market has been giving great returns for the past 3 years or so. Since the COVID-19 pandemic there has never been a long drawn bear market scenario. How long can this continue? On top of it, I see more and more people getting involved in trading. Some are even quitting their jobs to do trading full time. Generally, when there is euphoria in the market, you see these kind of events happening. New traders, who think they are investors and think they have the know how, enter the stock market just as the market starts peaking. Then, armed with a bunch of algorithms based on back testing, start to do algo trading. When you see more and more of these people, you know the time has come for the market to crash.
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Wisdom From Farm Owners
After having decided not to buy a managed farm and also not to buy farm as a group, we finally settled on what we want. Next we thought it would be a good idea to talk to a few owners of farms to get an idea of what we are going to deal with once we own a farm. We know a couple of folks who are unschoolers and also own a farm. We asked them if we could visit their farm and gain some wisdom. Both families graciously agreed and we visited their farms on two separate occasions and spent a lot of time understanding their philosophy, why they were doing farming, what they learned and what difficulties they faced and how they overcame them. We learned a ton, but in this post I summarize some of our learnings.
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Don't Be Fully Invested
While I encourage everyone to invest as much as possible, I’d also like to advice you to not be fully invested. I know this sounds a bit contradictory, but it actually makes sense if you analyze it. Some of us are excellent savers and investors to that point that any amount that we can save, we immediately think of investing. This is as much of a problem as people having trouble controlling their spending. If you optimize your investments to the point that you no longer have any buffer or flexibility left for unexpected expenses, you are in trouble. I have seen this happen to a couple of friends in the recent past and thought I’d pass on the advice so you can avoid similar mistakes.
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Changes To Solar Controller Setup
A few days ago, we got the exterior of our house painted. I had to move a lot of things out of the way for the painters so they can paint in every nook and corner. During that time I had to disconnect my solar controller electronics setup. What that means is that the solar charge controller takes over the responsibility of deciding when to charge my battery and when to disconnect the grid and let the load run from the battery + solar etc. Unfortunately the way it handles switching between battery, solar and grid is not as optimal as I’d like. Don’t get me wrong, it does a good job, but I always want something better which is why I built my own electronics and software intelligence to go with it to optimize the hell out of the solar panel output.
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Should You Prepay Loan Or Invest?
When you have some savings you might wonder whether to invest the savings or prepay your loan. I have always suggested a simple thumb rule, which is that if you anticipate your investments to give you better returns than the loan interest rate then invest, otherwise prepay your loan instead. Generally, for almost all kinds of loans the return on investment is usually lower than the loan interest. One exception is home loan which has a much lower effective interest rate because you get tax benefits. For most other loans it is better to prepay. That is a very simplistic rule, but does it really work? Let’s find out.
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Group Farming Option
In a previous post I mentioned that there were several options to own a farm. One of them being a managed farm. If you read that post you know why we rejected it. The other option was to go with a few like minded friends and buy a large farm where everyone can take care of it. A similar concept is group farming or community farming. Here too, a bunch of like minded unrelated people can come together, buy a farm and take care of it together. Although we were not too keen on this kind of arrangement, we tried it out. What happened next is coming up.
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