Overseeing and managing my stock portfolio is just like having a part-time job.* To be sure, at $100 an hour** the pay is great. But the truth is I do not need that money*** and spending it does not come easy.**** So I have had to ask myself whether I should "quit" this part-time job and increase my time freedom even more.***** Here is how my thinking went.
My baseline living expenses would still be covered. Heck, at $18,000 a year****** my baseline living expenses get covered by my Social Security pension. And that $18,000 a year includes premiums for insurance to cover just about anything.******* So I do not need my investment part-time job to make ends meet.
I would still have extra money coming in. If I stopped putting time into managing my stocks, the portfolio would still generate a lot of dividends.******** In fact, if I did leave my stock portfolio on "autopilot" it would throw off about $32,000 a year without touching the principal. So I do not need my investment part-time job as a backup to Social Security or to have plenty of spending money in my pocket.
My stock portfolio would still be my ace in the hole. Besides the social security income and besides the stock dividends, I would still have my portfolio's principal value. At the presently accepted 4% so-called safe withdrawal rate, that principal value by itself would keep me solvent for 20-plus years. So I do not need my investment part-time job as a backup to my backup.
So why should I hang on to this part-time job?
There are 2 main reasons to stop. The first reason is that I would reclaim the 8 hours a week that the job eats up. The second -- and really the main reason -- is that I would eliminate the mental pressure that comes from always having cash from dividends and stock sales sitting in the account demanding to be reinvested. If I stopped my stock selling*********, the portfolio would remain fully invested and I would not have to constantly be looking for companies in which to invest. So I would have no reinvestment pressure and no time demand.
But there are other reasons NOT to stop. These reasons cannot be about money, because I have already decided that there is little point in more money. The reasons have to be about the doing. And it turns out I do have such reasons. Like finding the financial research and the learning about how companies operate interesting. Like finding the evaluation and decision-making that comes from that research mentally stimulating. Like finding that those profit-making sales actually feel like emotionally rewarding "scores" in some complex computer game.
So it is not just a job after all. Overseeing and managing my stock portfolio is -- almost -- a hobby. And I can turn it into an actual hobby by removing the pressure to reinvest the cash from sales and dividends. I know I can do that. So I will.
The takeaway: Work is not always just about making money. Sometimes the activity itself is part of the reward... even the main reward. A small adjustment may be all that is needed to make that work feel like it is not work. But we may have to look behind the surface to put all that together. So let's make sure we do look.
* My High Yield, High Risk Investing:
http://retired-to-win.savingadvice.com/2013/12/20/my-high-yi...
** Profiting From Working My Stocks:
http://retired-to-win.savingadvice.com/2014/04/28/profiting-...
*** My Six Lines of Financial Defense:
http://retired-to-win.savingadvice.com/2014/04/29/my-six-lin...
**** Making Sure I Spend That Money!:
http://retired-to-win.savingadvice.com/2014/04/08/making-sur...
***** Optimizing My Use of Time:
http://retired-to-win.savingadvice.com/2014/05/12/optimizing...
****** My $18K Annual Baseline Budget:
http://retired-to-win.savingadvice.com/2013/12/29/my-18k-ann...
******* My Stash-Shielding Insurance:
http://retired-to-win.savingadvice.com/2014/04/10/my-stash-s...
******** Why I Only Buy Dividend Stocks:
http://retired-to-win.savingadvice.com/2014/01/01/why-i-only...
********* What Makes Me Sell a Stock?:
http://retired-to-win.savingadvice.com/2014/01/14/what-makes...
May 17th, 2014 at 06:40 pm 1400352040
May 17th, 2014 at 07:10 pm 1400353857
"Very good points!"
Thank you, Bluebird, but... are you referring to the reasons to stop or the reasons not to stop?
May 18th, 2014 at 01:55 pm 1400421355
Unless circumstances change dramatically for me, I will probably retire with more than I need, so setting up a Donor Advised Fund (or similar) is something I expect to do in the future.
May 19th, 2014 at 06:36 am 1400481368
May 20th, 2014 at 03:30 am 1400556645
May 21st, 2014 at 03:26 pm 1400686001
"Is setting up something like a Vanguard Donor Advised Fund the sort of thing you would consider? You could still enjoy the "hobby" and "mental activity" aspects of investing (though selecting mutual funds isn't as exciting as selecting individual stocks), see your money grow tax free, and then have the satisfaction of seeing the fruits of your labors benefit the charity of your choice.
Unless circumstances change dramatically for me, I will probably retire with more than I need, so setting up a Donor Advised Fund (or similar) is something I expect to do in the future."
Thank you for the idea, scfr. I will think about it, although I believe for now I will "give as I go" from my discretionary fund. In fact, just yesterday I sent off $100 to Best Friends and another $100 to Civil War Trust.