How do you observe aging?

This is really a post about “investing as we age” or better yet, “investing as I age”. I’ve found aging to be a weird thing. PROFOUND Jim. Stop the presses. Wait, are there still “presses”? Ok…stop the WordPresses!

You see, aging is one of those things, that you really can’t effectively “watch”. I mean, maybe if you had a GoPro time lapse of your entire life, you might be able to do it…but, that’s not practical (yet), and doesn’t sound particularly fun. I’m the kind of person who has always “kidded” myself about looking younger than my actual age. Or maybe imaging that I’m still attractive to people 20+ years younger than me. That’s “possible” but highly improbable. That’s investing as we age.

My friend John

My friend is in his early 60s. Nice guy. Semi-retired. Get’s a decent pension and does the “bar tending thing” as a side gig to supplement his income. John likes to dabble in the market and has tried some various investment strategies. We chat and watch the charts on CNBC some afternoons.

Everyone has regrets

John first told me about his $300K loss when I first started hanging out at his place, 2 or 3 years ago now. He lost a “big nut” like that speculating on Y2K investments, back at the turn of the century. You remember…when all the computers were going to “stop working” when the calendar year flipped to 2000. I don’t know all the details, and frankly, I don’t want to know. Partly, because I feign that I’m above it, and think, “that could never happen to me”. More directly, because I’m scared shitless of something like that happening to me.

So I run the numbers in my head and figure, John was in his early to mid-40’s when that happened to him. Hmmm…I’m older than that now. So why am I still chasing after the “sexy investments”? Losing $10K on Fitbit or any number of other things that weren’t “risk appropriate” for my timeline. I’ve written a little bit about this in the recent past, about how I’m becoming a better investor. I’m not there yet.

It’s not about the dollar amount of the loss, per se. It’s about the tinge of serious regret in his voice, when he says…”I really wish I had that $300K back again.” It’s just painful for me. It’s kind of like looking into a mirror and remembering my own “good investments gone bad”, but nothing on that scale. I’ve met other people in this kind of situation. Day traders. Bernie Madoff survivor’s. People that pulled big money out to invest in real estate before the 2008 crash. The list goes on. Then you stop and think…”Wow, what if that happened to me?”. When you’re young, you always think, “I can always make more money.” As you age, it’s possible, but never quite as easy.

There’s a reason for traditional, shifting asset mixes

You know how they tell you those various percentage distributions for each age bracket? You know what I’m talking about. The proper mix of stocks and bonds. 70/30 in your 30’s, 60/40 in your 40’s, etc. Well…when you have a hard time “visualizing” your own aging, you might think you can “cheat” them.

You start telling yourself, “Meh…I’m 50+, but I REALLY fall into the 40+ category.”

You don’t.

Unless you’re willing to go on a wild ride, you shouldn’t really be tempting fate that way. In fact, it’s more than a “wild ride”. When you do that, you shift the probability that the market will work against you. I’m thankful to John for helping me realize that. I’m glad I’m in a position where I can give him a $20 tip after some “day drinking”, but I wouldn’t trade places with him for…well $300,000.