Investing Returns
vs.
Retirement Drawdowns
(Why I'm Not Saving for Retirement)

Part 3 of 3

This is Part 3 of my Why I'm Not Saving for Retirement series.

In Part 1 I made the case that investing was superior to what I considered the scarcity-based savings mindset inherent in the standard retirement savings model.

And in Part 2, I shared how having access to my investment capital and returns in the here and now gave me opportunities I wouldn't have otherwise had if I'd been denied access to that capital and those returns until after I'd retired.

And in this article, I'm going to share with you Reason #3 why I'm not saving for retirement, which is that I believe I can generate much greater investing returns than what the managed money industry is capable of delivering (i.e scaled back returns and retirement drawdowns).

The Managed Money Industry - Low Expectations and Poor Performance

Whether we're talking about actively managed mutual funds or some form of passive index investing, the managed money industry has a pretty sad record of building long term wealth for its clients.

Don't get me wrong - I'm not saying I could do any better managing hundreds of millions to tens of billions of dollars of other people's money.

But that's kind of the point - no one can do a good job with such a model given the significant structural disadvantages faced by both of these types of actively and passively managed "investment" vehicles.

From overtrading to too much of an emphasis on diversification to being tied to the whims of a fickle client base that piles in money during market tops and sells in a panic near market bottoms, it's little wonder that the industry has had to lower expectations so much.

In fact, in the CNBC video retirement segment that prompted this 3 part series, the new assumption for retirees is an average annual return of just 5.5%.

A retirement strategy that relies on annual drawdowns to compensate for a lack of investing returns really takes the gold out of your golden years.

5.5% Average Annual Returns!?!

The idea of earning 5.5% annual returns from my investments makes me cringe.

And the realization that other perfectly rationale and, by all accounts, intelligent individuals are settling for this really makes me scratch my head.

Of course, as I argued in Part 1 of this series, what the managed money industry offers isn't, in my opinion, actual investments.

No wonder the individual has to be coerced and bribed with tax incentives and matching corporate contributions, but still ends up working several decades for someone else just to have a shot at a modest retirement.

Important Takeaway

Based on personal experience, a heavy dose of common sense, and a visceral aversion toward mediocrity that tries to disquise itself as sophistication, I have a very important message for you:

You can do much better!

I'm confident in saying that because I have my own Leveraged Investing approach that I advocate and rely on myself, and it's been very good to me (the "leverage" comes from the conservative use of options, not the risky use of debt).

Is it the only way to build real wealth or to generate great returns in the stock market? Of course not. I've always believed there are multiple paths to achieving any kind of important goal or skill.

The trick is to discover and develop the approach that best aligns with your own personality.

But, of course, you must be actively engaged in that discovery and development. That's the only way you can ever hope to escape the vortex of the managed money industry's ingrained mediocrity, its aura of low expectations and lower returns, and a future filled (emptied?) with drawdowns in retirement.

It's the only way you'll ever grow immune to the industry's self-serving messages of bad advice and trite conventional wisdom.

Don't worry though - they probably won't even miss you.

Their messages aren't designed for the self-directed individual, but rather for a much wider audience - those without the aptitude, the interest, or the spirit to believe that they can and should be doing much better.

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