I started investing in 1985 and have been 100% in equities for decades, guided by the ideas of Warren Buffett, Charlie Munger, Benjamin Graham and other value investors. The power of compounding is almost unbelievable, but you have to be uncommonly patient and frugal. About two years ago I slowly and opportunistically started selling equities. I am now 40% equities with the remainder of my portfolio in hand-picked Treasuries, preferred bank shares, energy pipeline/transmission partnerships like EPD and MPLX, closed end income funds and Nuveen municipal bond funds. I've experienced several market cycles and drops in individual stocks of 50% or more. I fully expect a correction and intend to then shift a sizeable amount of money into a S&P 500 index because the historical average annual return of the S&P 500 generates more return than I need. In fact, the current income generated by the 60% of fixed income is more than I spend, so there doesn't appear to be any rational reason to risk what I have, for stuff I don't need. Yes, I fully intend to invest opportunistically in the future, but will continue to be guided by Warren Buffett who said "I like to go for cinches. I like to shoot fish in a barrel. But I like to do it after the water has run out." I'll collect income while I wait and I'll continue to own fixed income assets going forward. This financial position of independence, of not having to worry about money has taken me decades to achieve, and I value it more than shiny bling.
For decades I researched purchasing long-term care insurance, but either I was too young and didn’t make long-term care a priority or the premiums were too high or when I became serious about getting a policy, almost all of the insurance companies had left the industry either through divestiture or bankruptcy because they had miscalculated the cost of long-term care and found themselves in an unprofitable business.
One of the remaining long-term care insurance companies, Mutual of Omaha, sent me a mailer through my university affiliation. I scheduled a ZOOM call and talked with a knowledgeable and professional salesman who quantified the cost of long-term care for my wife and I. His pitch was solid: invest a few thousand dollars a year by paying premiums and when you reach certain ages when you typically need long-term care, you’ll have $750K available for you and your wife.
Mutual of Omaha is a quality company and their offer made sense.
We scheduled a second follow-up call. I thought about our conversation and focused on the $750K my wife and I seem to need for long-term care.
I had Mutual of Omaha’s estimated number of years before my wife or I needed long-term care, as well as the dollar amount needed for care.
Using my HP-12C calculator and the forward internal rate of return function, I calculated how much money I would need to invest today in a S&P 500 Index Fund (which historically has compounded by 9% per annum), so that by the age my wife and I probably need long-term care, we would have $750K available to us. The dollar amount needed today for long-term care tomorrow was calculated, approximately $250K.
I opened up a separate account with Fidelity solely for funding our long-term care to deter any temptation to use the money for another purpose. That money today is compounding. If Mutual of Omaha is correct and if the S&P 500 index continues its historical average rate of return, we should be fine. I know that life doesn’t happen as we plan, but I no longer worry about funding our long-term care.
During our second call, I explained my self-funding approach to the Mutual of Omaha representative, who graciously said that I had thought about this subject a great deal. We ended the conversation on a cordial note. The benefit of this self-funding approach is that if we don’t need the $750K for long-term care, our heirs will inherit the money.
Hi Dick, After reading your post I'm not sure what you are worried about and why, given your income, you are looking at your portfolio every day and even hourly. You've set up a system, it seems to have worked for you for years, why should it fail you in the future? If it ain't broke... So you know, my financial set-up is somewhat similar to Jackie who commented earlier. I've spent decades saving and investing (two different skills) and I'm super frugal for reasons that I don't really understand, other than I value freedom from financial worry more than I value stuff. After decades of investing 100% in equities, I have enough money now to withstand whatever happens in the future, although if push comes to shove, I can live less affluently and be happy. For the past two years I've been patiently selling equities (now 55% of my portfolio) and buying fixed income investments such as preferred shares and investing in master limited partnerships of energy transfer companies, both of which currently compare well (if you are willing to put in the time and effort to buy right) to the historical annual return from the S&P 500 index. I no longer need to take on unnecessary risk to live my life. I'm not trying to score big: I have enough. Or as Warren Buffett said so well: "never risk what you have and need, for what we don't have and don't need.” Of course, I wouldn't object to more money, and that's probably true of you and the other commentators, but don't drive yourself nuts. Tom
Comments
I started investing in 1985 and have been 100% in equities for decades, guided by the ideas of Warren Buffett, Charlie Munger, Benjamin Graham and other value investors. The power of compounding is almost unbelievable, but you have to be uncommonly patient and frugal. About two years ago I slowly and opportunistically started selling equities. I am now 40% equities with the remainder of my portfolio in hand-picked Treasuries, preferred bank shares, energy pipeline/transmission partnerships like EPD and MPLX, closed end income funds and Nuveen municipal bond funds. I've experienced several market cycles and drops in individual stocks of 50% or more. I fully expect a correction and intend to then shift a sizeable amount of money into a S&P 500 index because the historical average annual return of the S&P 500 generates more return than I need. In fact, the current income generated by the 60% of fixed income is more than I spend, so there doesn't appear to be any rational reason to risk what I have, for stuff I don't need. Yes, I fully intend to invest opportunistically in the future, but will continue to be guided by Warren Buffett who said "I like to go for cinches. I like to shoot fish in a barrel. But I like to do it after the water has run out." I'll collect income while I wait and I'll continue to own fixed income assets going forward. This financial position of independence, of not having to worry about money has taken me decades to achieve, and I value it more than shiny bling.
Post: Not Staying the Course
Link to comment from September 20, 2025
For decades I researched purchasing long-term care insurance, but either I was too young and didn’t make long-term care a priority or the premiums were too high or when I became serious about getting a policy, almost all of the insurance companies had left the industry either through divestiture or bankruptcy because they had miscalculated the cost of long-term care and found themselves in an unprofitable business. One of the remaining long-term care insurance companies, Mutual of Omaha, sent me a mailer through my university affiliation. I scheduled a ZOOM call and talked with a knowledgeable and professional salesman who quantified the cost of long-term care for my wife and I. His pitch was solid: invest a few thousand dollars a year by paying premiums and when you reach certain ages when you typically need long-term care, you’ll have $750K available for you and your wife. Mutual of Omaha is a quality company and their offer made sense. We scheduled a second follow-up call. I thought about our conversation and focused on the $750K my wife and I seem to need for long-term care. I had Mutual of Omaha’s estimated number of years before my wife or I needed long-term care, as well as the dollar amount needed for care. Using my HP-12C calculator and the forward internal rate of return function, I calculated how much money I would need to invest today in a S&P 500 Index Fund (which historically has compounded by 9% per annum), so that by the age my wife and I probably need long-term care, we would have $750K available to us. The dollar amount needed today for long-term care tomorrow was calculated, approximately $250K. I opened up a separate account with Fidelity solely for funding our long-term care to deter any temptation to use the money for another purpose. That money today is compounding. If Mutual of Omaha is correct and if the S&P 500 index continues its historical average rate of return, we should be fine. I know that life doesn’t happen as we plan, but I no longer worry about funding our long-term care. During our second call, I explained my self-funding approach to the Mutual of Omaha representative, who graciously said that I had thought about this subject a great deal. We ended the conversation on a cordial note. The benefit of this self-funding approach is that if we don’t need the $750K for long-term care, our heirs will inherit the money.
Post: How Are You Planning to Pay for Potential Long Term Care Expenses?
Link to comment from February 8, 2025
Hi Dick, After reading your post I'm not sure what you are worried about and why, given your income, you are looking at your portfolio every day and even hourly. You've set up a system, it seems to have worked for you for years, why should it fail you in the future? If it ain't broke... So you know, my financial set-up is somewhat similar to Jackie who commented earlier. I've spent decades saving and investing (two different skills) and I'm super frugal for reasons that I don't really understand, other than I value freedom from financial worry more than I value stuff. After decades of investing 100% in equities, I have enough money now to withstand whatever happens in the future, although if push comes to shove, I can live less affluently and be happy. For the past two years I've been patiently selling equities (now 55% of my portfolio) and buying fixed income investments such as preferred shares and investing in master limited partnerships of energy transfer companies, both of which currently compare well (if you are willing to put in the time and effort to buy right) to the historical annual return from the S&P 500 index. I no longer need to take on unnecessary risk to live my life. I'm not trying to score big: I have enough. Or as Warren Buffett said so well: "never risk what you have and need, for what we don't have and don't need.” Of course, I wouldn't object to more money, and that's probably true of you and the other commentators, but don't drive yourself nuts. Tom
Post: Obsessed with a financial stress-less retirement
Link to comment from January 11, 2025