My Cousin Irving’s End of the World Investment Strategy

I got a call recently from my cousin Irving (not his real name, of course), and he was quite perturbed. I asked him what was wrong, and he wanted to know if the insurance company that managed his 401(k) is safe. I said, “What the heck are you talking about, Irv?  It’s a huge company, and as far as I know, it’s solid.”  Irv then asked, “If I put all my money into the guaranteed account, is it safe?”  I told him that his money is as safe as the company is, and since the company’s always advertising on TV with celebrities singing catchy jingles, I think it’s in good shape.  “But,” I said, “if you’re that concerned, do your research and check out the company’s finances.”

I asked him why he was so anxious, and he started ranting.  He believed that the United States was going to be in a nuclear war with North Korea.  He went on to say that it’s actually Russia that is backing North Korea, and they will enter the war, too.  I told Irv that he was being a little reactionary, but he persisted and wanted to know where his money would be safe. “Well,” I suggested, “U.S. bonds may be a safe–but not guaranteed–place to be during an economic or political crisis.”  Irv immediately shot back, “Bonds suck, and they aren’t getting any return, so I sold all my bonds several months ago.  Now I’m invested 100% in stocks.”

I tried to explain to Irv that combining stocks and bonds is a good thing because each will have its day in the sun, and historically, when stocks go down, bonds usually go up. But Irv wasn’t buying any of it. He told me that he also sold his Euro-Pacific fund (which, by the way, has been doing quite well in the last year) because of a nuclear war risk.  I said, “Irv, if there’s a nuclear Armageddon, your money won’t be worth much anyway.”

Nonetheless, Irv persisted with his Magical Thinking argument that he could time the market, pick the best funds and get a great return with no risk. I told Irv his reasoning goes against the research of many economists who have won Nobel prizes for their studies of market behavior.

Our disagreement was rapidly devolving, but I tried one more tactic.  I reminded Irv that he was going to retire soon, and he should be more concerned with income rather than trying to get the best return. Irv yelled back, “Dude, all you do is stick to your orthodoxy–your discipline of not trying to pick the winners and not trying to outguess the markets. What kind of advisor are you, anyway? I retorted, “Irv, I think you just answered your own question.”

Like I always say, investing should be boring.  If you want excitement, try hang gliding.  If you want to gamble with your money, go to Vegas.

Two Insurances that Can Save Your Life: One is Cheap, the Other is FREE

You’ve finally arrived.  To get here, you worked hard, saved and made sacrifices to ensure that you would not outlive your money.  Now you expect to live a long, healthy life.  Ahhhh…Retirement.

To celebrate this milestone, you plan a once-in-a-lifetime European vacation. One where you’ll experience all the great sites, art and culture in France and Germany, including their fine cuisine and wines.  Your final destination, though, promises to be the most meaningful.  You’ll explore your ancestry in Romania, specifically the region of Transylvania.

So far, the trip has been dreamlike, but in an instant, your life changes. The car you’re riding in flips over.  You are in the backseat, but you didn’t fasten your seatbelt (like so many of us neglect to do when we’re backseat passengers).  You wake up in a remote hospital to find out that your neck and back have been severed.  If you survive, you’ll be paralyzed.  To make matters worse, the authorities want to arrest your brother, who was driving the car, for causing the accident and injuring you, even though no other cars were involved.

The whole scene is unimaginable, and it starts to resemble Dante’s Inferno with the nine rings of hell.  Because you are in a developing country, the healthcare is barbaric compared to ours in the United States.  There are very few qualified surgeons, the aftercare is atrocious and the hospital is filthy.  What’s more, when you are moved into the Intensive Care Unit after surgery, you discover it isn’t air-conditioned, and Romania is in the midst of one of its worse heatwaves on record.  Your caregivers open the windows to let some air in. You slip in and out of consciousness, and death may be a preferable outcome.

Sadly, this is a true story, and it’s happened to someone I know.  Some things, like accidents, are unavoidable.  However, if you’re traveling overseas, you can better protect yourself by purchasing a travel health insurance policy which may cover any medical expenses you might incur away from home.  Some policies may even cover an air ambulance back to home or to a nearer, more modern country with better medical facilities.  Policies like this typically cost under $200 per person for a couple in their sixties.  That’s your fist lifesaving insurance, and it’s pretty darn cheap!

The other “free” insurance is your seat belt.  Buckle up even if you’re riding in the in the back seat. Many of are guilty of not doing so, especially in taxis or Ubers.  It could save you or someone you love.