LIKE MANY IMMIGRANTS living in the U.S., I regularly return to my hometown to visit family and friends. My trips to Kolkata are usually short and jam-packed, seeing not just contemporaries, but also the older generation, including aunts and uncles, my parents’ friends and my friends’ parents. My two recent visits—one last fall and the other this spring—were no exception, but I had mixed feelings this time. Most of the older generation are now in their 70s and early 80s, and two of them had passed away since my last pre-pandemic visit. I was happy to be able to catch up with the rest. But I was also saddened and surprised to find that, since my last visit, a few didn’t seem to be doing well emotionally, as if they’re struggling to find meaning in life. On the surface, health problems and mobility issues are to blame, but that alone doesn’t explain such a change within a few short years. With most of their family members or adult children living elsewhere, these folks have no one to lean on for day-to-day support. They resist getting professional in-home senior care services or moving to retirement communities. This mental block is cultural and emotional, not financial. Meanwhile, the rest of my older acquaintances seem to be having a great time in their golden years. They, too, face health and mobility issues, but these don’t appear to affect their positive outlook on life. The best example is my maternal aunt—my mother’s younger sister—whom I call Mashi. Despite dealing with several family tragedies within the past year, including losing her husband of 50 years after a long period of ill-health, Mashi remains upbeat and full of energy. If you were to guess her age based on appearance and activities, you’d probably be off by at least 10 years. What’s the secret to the higher life satisfaction of these older folks? I’m not sure about the others, but for Mashi, I can think of six factors: 1. Keeping busy with a purpose. I’ve never seen Mashi sitting idle and wondering what to do with her spare time. Words like sedentary and lazy don’t exist in her dictionary. Even at this age, she still feels responsible for the smooth running and upkeep of her household, which includes her younger son and his family, who live with her. Mashi’s younger son—my cousin—is a doctor, his wife also has a career, and they have a four-year-old son who started kindergarten last year. Both my cousin and his wife assist with the household’s upkeep as best they can, and there’s also domestic help for certain chores. Still, Mashi is deeply involved with the remaining day-to-day work. It’s almost as if the household would cease to function if she were away for even a short time. 2. Nurturing relationships. Mashi makes a big effort to stay connected with all of her family and close friends—the quality I admire most about her. Her daily routine includes spending a few hours with her grandson, chitchatting with neighbors, talking to her older son’s family—they live abroad—and catching up with my mother over the phone. She’s also regularly in touch with her late husband’s extended family and friends. She rarely misses social gatherings, be it a puja celebration with in-laws, birthdays or special events of friends and acquaintances. [xyz-ihs snippet="Mobile-Subscribe"]  3. Healthy eating. Mashi has resisted today’s lifestyle of junk food and frequent dining out. To be sure, she’s curious about food and doesn’t mind other cuisines for a change. But her staple meals involve homemade food with fresh vegetables, legumes and grains, plenty of fish and occasionally eggs or meat. She loves to make traditional Bengali dishes with seasonal vegetables. Whenever I visit her, I enjoy tasting what she’s making that day. 4. Regular physical exercise. No, Mashi doesn’t go to a health club, swimming pool or any fitness center. Instead, she gets her physical exercise simply by choosing to walk whenever she needs to go anywhere within a one-mile radius. She finds one excuse or another every day to get out of the house for a brisk walk. Often, the trip involves getting fresh vegetables and groceries from the neighborhood bazaars, picking up monthly provisions from convenience stores, buying a gift for an upcoming family event, or paying a visit to her in-laws who live close by. Even the pandemic lockdown didn’t change her walking habit. 5. Personal time. Despite a busy daily life, Mashi sets aside time to relax. Her favorite hobby is gardening. Living in a congested city, she doesn’t have the luxury of a backyard garden. Instead, she uses her home’s two terraces to grow a variety of plants in pots of various sizes. The small terrace on the second floor doesn’t get much sunlight, and the one on the fourth floor has no shade. She regularly moves pots between the terraces, prunes and weeds them, and treats the soil with tea leaves. According to her, looking after her plants is the most relaxing part of her day. 6. Financial security. Mashi doesn’t come across as wealthy, but she’s financially comfortable, thanks to a lifetime pension, retirement savings left by my late uncle and a decent-sized house. Both her sons are capable of offering financial support, but I doubt she’d ever need or ask for help. She can afford to spend beyond her regular expenses without worrying about outliving her money. Mashi is in her 70s, but—given that she’s hardly changed since her early 60s—I have a feeling that she’ll be the same in her 80s, too. Sanjib Saha is a software engineer by profession, but he's now transitioning to early retirement. Self-taught in investments, he passed the Series 65 licensing exam as a non-industry candidate. Sanjib is passionate about raising financial literacy and enjoys helping others with their finances. Check out his earlier articles. [xyz-ihs snippet="Donate"]

AS A CHILD GROWING up in India, I was taught about the six seasons of Bengal: summer, monsoons, autumn, late autumn, winter and spring. From my recollection, some seasons felt distinct, while others were subtle and transitory. Still, each season had unique characteristics, making it different from the others. A HumbleDollar Voices question—if you could live your financial life again, what would you do differently?—reminded me of the six seasons. How so? Our financial life can also pass through as many as six seasons. I started my financial life with the idea that there were only two seasons: working years and retirement. If I’d recognized the six seasons beforehand and acted accordingly, I could’ve done much better with my most valuable asset—time. What are the six seasons of our financial life? 1. Summer: Financial learning. Bengali New Year starts with summer, arguably the most unpleasant season. Yet the hope of a new beginning overshadows the discomfort from heat and humidity. Similarly, we often start our adult financial life with an occasional stumble and fall. But the thrill of independence trumps any hardships. This is a period to make financial mistakes and learn from them. To explore and settle on a career path. To find a partner and plan a family. The shorter this season, the better. Those who manage to jumpstart their wealth building—saving for housing and retirement—have better odds of enjoying the seasons that follow. 2. Monsoons: Full-throttle saving. The rainy season in Bengal is disruptive. Growing up, I used to hate getting stranded at home because of heavy rain or waterlogging. Instead of playing outside or being with my friends, I had to study or do chores. On the bright side, the extra focus on studies lightened the academic pressure for the rest of the year. The second season in our financial life comes almost as abruptly. We focus mostly on career advancement and earning money, rather than recreation and personal enjoyment. Overwhelming financial responsibilities—for family and housing—force us to reduce waste and streamline spending. Our savings rate rises sharply. 3. Autumn: Slower accumulation. The autumn is highlighted by the festival of Durga Puja, the most enjoyable time of the year for most Bengalis. People slow down to soak up the celebratory mood. [xyz-ihs snippet="Mobile-Subscribe"] The third season in financial life feels the same way. A lifestyle of all work and no play seems unappealing. Our focus tilts away from the career rat race and toward family and other priorities. It isn’t uncommon to scale back career aspirations and make more time for children, or to give up a job altogether to care for an elderly family member. We still earn enough to save a bit toward future financial goals. But we also make a conscious choice to value life outside of work, even when it means less income. 4. Late Autumn: Financial security. Depending on how the prior seasons have turned out, there’s a good chance we can dial back work even further and earn just enough for ongoing living expenses. When can we do this? First, near-term financial needs, such as college education for the kids, must be funded by now. Second, enough must already be saved toward our future financial goals for compounding to take care of the rest. For instance, retirement accounts must have a reasonable balance and enough time to grow before they are tapped. To be clear, we’d still be financially dependent on our jobs during this season, even if we don’t especially like our work. Though we don’t care much about saving anymore, we still need a minimum income to pay the bills. Getting to this stage is when we begin to feel financially secure. How? We know that we have enough for the future, and thus we can choose to spend more time on personal and family interests. 5. Winter: Financial independence. My childhood friends and I used to look forward to the winter months. It was not only the time for school holidays, but also for the seasonal savors. Similarly, we all look forward to financial independence. We may not be wealthy, but we’ve met our financial obligations to others and ourselves. Debts are either paid off or accounted for. Our nest egg is larger and we no longer fear tapping it. We can now choose either to stop working or to work only for enjoyment and supplemental income. From now on, our time is ours. 6. Spring: Conventional retirement. The king of seasons is aptly called the golden age of financial life. Withdrawals from our nest egg may fall as we become eligible for Social Security, Medicare and any other retirement benefits. On the flip side, this final season involves some unique uncertainties. There’s longevity risk, unexpected health issues, and the possible loss of a partner and dependence on others. Still, it’s the season to reflect and be thankful for life’s diverse experiences. Sanjib Saha is a software engineer by profession, but he's now transitioning to early retirement. Self-taught in investments, he passed the Series 65 licensing exam as a non-industry candidate. Sanjib is passionate about raising financial literacy and enjoys helping others with their finances. Check out his earlier articles. [xyz-ihs snippet="Donate"]

IT BAFFLES ME that people often favor stock-picking over index funds—and yet they fail to measure their portfolio’s performance against a proper benchmark. I’m not talking about those who buy a few individual stocks for entertainment or education. For them, it’s a worthwhile pastime and the stakes are low. But there are others who ignore the evidence and arguments against active management, and devote serious money to picking stocks and timing the market in hopes they’ll earn market-beating returns. This group includes a number of people I know—folks I otherwise admire for their intelligence, critical thinking and self-awareness. These acquaintances are do-it-yourself investors who actively manage their investment accounts, and they do so with confidence. I’ve probed a little to find out what lies behind this confidence. My conclusion: Improper benchmarking is a common cause. In other words, many think their strategy has played out well, but—in reality—their investments have lagged behind an appropriate market benchmark. Why don’t they realize this? I’ve spotted two mistakes. First, they’re misled by the outsized performance of a few stock picks. I have a friend from work, whom I’ll call Techie. A few years ago, he researched and bought a dozen stocks—all members of the popular Nasdaq 100 Index. A few years later, Techie’s picks rode the bull wave upward. Two stocks did especially well, the rest not so much. The net result: Techie’s portfolio underperformed the indexes that his investments should have been benchmarked against. Yet the outperformance of the two picks, coupled with his portfolio’s overall gain, gave Techie false confidence in his stock-picking skills. That brings me to the second error that I’ve seen drive overconfidence. This mistake affects people who make regular contributions to—and withdrawals from—their investment account. At issue is comparing an account’s dollar-weighted return to a benchmark index’s time-weighted return. To illustrate the difference between the two, suppose you were inspired by Warren Buffett’s advice at Berkshire Hathaway’s 2004 shareholder meeting and started putting $100 in the S&P 500 each month. Ten years later, your account balance would have been close to $20,000, a handsome dollar-weighted return of more than 9% a year. But the standard benchmark return for the S&P 500 over that period was much lower—a time-weighted return of around 7%. Why the difference? The time-weighted return assumes you bought at the beginning of the 10 years and simply held on. Meanwhile, the higher dollar-weighted return reflects the fact that you were buying regularly during a stretch when the market experienced a significant downturn and subsequent recovery. That sequence of returns would have bolstered your performance, because some of your $100 monthly investments bought the S&P 500 at very low prices. But you didn’t truly outperform the benchmark—because you were invested in the benchmark. The appearance of outperformance reflects not stock-picking ability, but rather the benefit of your mechanical dollar-cost averaging over the 10-year stretch. This performance misinterpretation affected someone I’ll call Lucky. We both started at the same company in early 2000. We both put our annual bonus—a sizable chunk of our income—in our investment accounts. We both traded up to larger homes near the peak of the housing market in 2006. The down payment required us to sell investments at market highs. We also shared similar risk profiles. The only difference between us is that Lucky had always favored stock-picking over indexing. He didn’t time the market or chase hot stocks. Instead, he put his money in large, well-known companies. He continued on this path because he thought he was consistently beating the S&P 500. A few years ago, Lucky casually mentioned his consistent outperformance to me. We both use the same brokerage firm, which reports your account’s dollar-weighted return and compares it to popular market benchmarks. Lucky’s mistake: He didn’t read the fine-print and hence failed to realize that he was comparing apples to oranges—his dollar-weighted return to the S&P 500’s time-weighted return. My suggestion to both Lucky and Techie: Check that your stock picks really are measuring up—and consider index funds instead. A software engineer by profession, Sanjib Saha is transitioning to early retirement. His previous articles include It'll Cost You, Mind the Trap and A Rich Life. Self-taught in investments, Sanjib passed the Series 65 licensing exam as a non-industry candidate. He's passionate about raising financial literacy and enjoys helping others with their finances.  [xyz-ihs snippet="Donate"]

I’VE BEEN WORKING from home for nearly two months. Many friends and coworkers are tired of the lockdown. I seem to be an oddball: I feel happier and less stressed. I’m not oblivious to the reality of today’s pandemic. As I write this, my uncle abroad is facing a hard time getting urgent medical care. Millions of others across the globe are also suffering. Against such a gloomy backdrop, I feel almost guilty in seeing a positive side to the lockdown. Examples? For me, the biggest benefit has been the time and energy saved by not commuting. I also like being able to weave small personal chores in between office work. I can plan my hours better and get more done in a day. I’ve also been better able to manage my health. My weight resembles the growth chart of an inflation-protected Treasury bond fund. Occasional short-term fluctuations in either direction are common, but things creep slowly upward over time. Stuck at home, I figured I could devote extra time to better eating and fitness habits. Though I try to eat a balanced diet, with lots of vegetables, fruits and fish, I wasn’t consistent in my good eating habits. Now that there’s more time to prepare healthier and tastier meals, I have no excuses. I’ve been cooking every other day. Meanwhile, there’s no morning rush to get ready to leave for work. When the weather gods smile, I start my day with a walk. There’s an abundance of blooming trees and songbirds in our area. My cousin, who lives next door, joins me in the evening, when I take a second walk to help me unwind. The good eating and the exercise seem to be working. I feel healthier and more energetic. I’ll miss that sense of wellbeing when things get back to normal. Time at home has also given me more time for my portfolio. Early in the market decline, I did some spring cleaning, including buying a leveraged, closed-end real estate investment trust (REIT) fund. Anticipating the market might fall further, I also placed a low-ball limit order to buy its non-leveraged sibling. I didn’t expect the order to get filled quickly, but it was. It turned out that equity REITs had a terrible week, collectively dropping more than 40% from their recent peak. On top of that, this particular closed-end fund saw a widening of its discount from net asset value, which is the value of the fund’s portfolio on a per-share basis. I got lucky that both happened simultaneously, pushing the market price below my limit price. When the dust settled, I realized that a thorny and longstanding issue with my portfolio was gone. My income from dividends and fund distributions was low—a result of the prolonged period of low interest rates and high stock valuations. The recent purchases took care of that anemic income. Fingers crossed, the new estimated portfolio income will cover much of my ongoing discretionary expenses. To be sure, income from stock investments is never guaranteed. In difficult times, dividends may be reduced, suspended or stopped permanently. My most prized gain in this lockdown period has been reconnecting with college buddies. The 10 of us lived in the same wing of a student hostel. Since then, we’ve each ended up in a different part of the globe. But we recently managed to regroup over the internet. The global stay-at-home mandate made it possible to find time for all of us to chat together. In addition, I found more time for my passion for financial education. I volunteer with a nonprofit organization devoted to investor education. Its local chapter collaborated with the city library to host a series of free online educational talks during April, which is financial literacy month. I was tasked with giving two webinars about planning and financial independence. That means this time at home gave me the chance to do something I’d never done before: give a presentation to the general public. A software engineer by profession, Sanjib Saha is transitioning to early retirement. His previous articles include Ready or Not, Spring Cleaning and Working the Plans. Self-taught in investments, Sanjib passed the Series 65 licensing exam as a non-industry candidate. He's passionate about raising financial literacy and enjoys helping others with their finances. [xyz-ihs snippet="Donate"]

LIVING IN THE PACIFIC Northwest, my favorite time of year is summer. I love the extra daylight and relief from the nagging rain. In recent years, there’s been an additional reason to look forward to summer: I get to see my paycheck again. Some background: A few years ago, in an online investment forum, another participant—I’ll call him Dave—gave me a tip for early retirement. He suggested that I practice living off my investment portfolio even while working. Many early retirees, in Dave’s opinion, spend too little in the initial years because they struggle with depleting their savings. I decided to give it a try. As a first step, I maxed out my payroll 401(k) contribution. The leftover money in each paycheck went to the employee stock purchase plan and additional tax withholding. These various payroll deductions exhausted my entire part-time pay. That meant I had to cover all my expenses with my investment accounts. As Dave suspected, I’ve had a hard time spending from my brokerage account, especially if it involved selling investments. I figured that a monthly cash distribution would work better psychologically. This prompted me to look for more income-generating investments, such as closed-end bond, utility and real estate funds. Their monthly distributions cover my groceries and utilities. For most of my other funds, the first-quarter distributions arrive in April, just in time to take care of the property tax payments. I tend to defer big-ticket expenses until later months when I start seeing my paycheck again. Recently, extra cash showed up in my bank account on payday. It’s a sign that that my total 401(k) contribution—pretax, catchup and after-tax investments—reached the maximum annual limit. The paycheck drought is over for another year.

WHETHER MONEY BUYS happiness is a matter of debate, but a recent incident reinforced my conviction that financial security does indeed help. The incident would’ve caused me considerable distress a few years ago, when I was earning more but was still dependent on my fulltime job’s paycheck. My newfound financial security, however, transformed the situation into a truly memorable experience. My wife, Bonny, and I both enjoy attending Indian music and dance performances. We make it a point to see the live shows put on by local groups and, if the ticket prices are reasonable, also those featuring artists visiting from India. This year, Bonny was keen to see a dance-drama performance by a touring group from India. Although the show was scheduled for July, Bonny wasted no time securing two tickets when reservations opened in March. I got the sense that the tickets came with a hefty price tag. As the date drew nearer, Bonny’s excitement built. On the day of the event, she repeatedly urged me to hurry up and get ready, with the half-joking threat to leave me behind if I delayed any further. Both of us got dressed up and were about to head out when Bonny received a text message. It was from a friend who’d purchased tickets in the same row as us. She was curious if we changed our seats because she couldn’t spot us in the theater. Bonny responded with a touch of impatience, assuring her that we’d be there shortly. Her friend called within minutes to say the show had just finished. Bonny was perplexed, while I hastily jumped to the conclusion that she must have misremembered the showtime. Bonny, however, was adamant that she had purchased tickets for a 7 p.m. performance, and the screenshots of the tickets saved on her phone backed up her claim. Yet it appeared that the actual showtime was 1 p.m. Whatever the source of confusion, Bonny quickly came to the painful realization that she’d missed the show she’d so eagerly anticipated. She looked despondent as she slumped into a chair, covering her face with her hands, as though she’d let slip a once-in-a-lifetime opportunity. My reaction? A decade ago, I’d have initially delved into the cause of the mix-up, and then channeled all my energy into seeking a full or partial refund. The idea of squandering a few hundred dollars for nothing would’ve been inconceivable, and I wouldn’t have hesitated to try every avenue to recoup the loss. But surprisingly, this time around, the monetary loss was the last thing on my mind. Clearly, the recent years of financial security had changed my priorities and values. My foremost concern was to alleviate Bonny’s distress. An online search revealed the reason Bonny was so eager to attend the performance. It wasn’t just any dance drama; it was India’s first Broadway-style musical play, a theatrical reproduction of the legendary Indian movie Mughal-e-Azam. Now, it was my turn to comprehend the magnitude of what we’d missed. I found out that the touring group still had three more cities to visit over the next three weekends. Fortunately, their next stop was Vancouver, just a few hours’ drive across the border. There were still a few tickets within our budget available for the Friday show. Without hesitation, I bought two tickets. When I shared the new plan with Bonny—that we’d drive to Vancouver the following Friday to watch the same performance—she was thrilled. She still couldn’t shake off the surprise from the mix-up, and took it upon herself to investigate and request a refund. It turned out that the event organizers had indeed rescheduled the original performance to 1 p.m., but we hadn’t received any notification. After some back-and-forth between the ticketing agency and the organizers, Bonny secured two complimentary tickets for the upcoming Vancouver show, which we could pick up from the box office an hour before the performance. That meant we now had four tickets to the Vancouver performance. Bonny contacted friends to see if anyone would be interested in purchasing our two extra tickets. Within hours, she found a buyer who was happy to acquire them without the pesky convenience fees. We were relieved that we could partially recoup the money Bonny had spent on the missed performance. The following Friday, we set off early for Vancouver. The drive was uneventful, and we arrived in the afternoon. After enjoying a leisurely meal at a local restaurant and exploring the downtown, we made our way to the Queen Elizabeth Theatre in time to pick up our complimentary tickets. The tickets were for the mezzanine, toward the rear of the auditorium. Considering it was a last-minute arrangement, the seats turned out to be better than we expected. Before heading inside, we opted to linger in front of the theater to snap some photos. After a few minutes, Bonny’s phone rang. It was the theater representative who gave us the complimentary tickets. She asked us to see her at the box office because, apparently, she had even better tickets to offer. We were left in disbelief when we received the new tickets. They placed us in the center of the sixth row in the orchestra section—some of the best seats for experiencing a live performance. Later, I discovered that these tickets were priced at four times what we had originally paid. In a hurry, we entered the auditorium and grabbed our seats, not wanting to give the representative a chance to change her mind. Watching the performance from such close proximity was an unforgettable experience. We were completely captivated and entranced. Three hours passed by in the blink of an eye. As the performance came to an end, we unanimously declared it the best live show we’d ever witnessed. Sanjib Saha is a software engineer by profession, but he's now transitioning to early retirement. Self-taught in investments, he passed the Series 65 licensing exam as a non-industry candidate. Sanjib is passionate about raising financial literacy and enjoys helping others with their finances. Check out his earlier articles. [xyz-ihs snippet="Donate"]