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Friday, October 8, 2010

Hit The Road?

Regular readers of this blog know I am a huge fan of indexing. The evidence is overwhelmingly in favor of low-cost, low-turnover, "capture market returns" approach recommended by Buffett, Bogle, Bernstein, Ellis, Malkiel and many others--especially for those investing retirement assets.

In fact, I only work with clients who subscribe to this approach. Still, like those mentioned above, I believe that there is some room for individual stock picking for those willing to do the research. I allow up to 20% of investable assets for myself and my clients to be invested in this way. Some like to do research and find undervalued stocks. I like to think in terms of themes and the solutions to problems on a big scale. This was brought to mind by the post at "Invest It Wisely" where Kevin reviewed a new site .

The problem I am interested in is considerably broader than the "how do I build a website" etc. you'll find at that site. I am interested in how the retirement problem in this country will be resolved. Recent estimates are that more than half of baby boomers will not be able to retire to a lifestyle they are used to. Many will be hard up.

Figuring out the path that will be taken, I believe, will result in an investment opportunity. Admittedly, I went down one dead end (so far) and came close to going off a cliff. I had convinced myself a few years back, when housing prices were moving steadily higher, that reverse mortgages would be the key (I know: reverse mortgages are laden with fees and an area where abuses can occur). Still, it seemed to me that they were, in some cases, the only thing standing between some seniors going hungry etc. and living normally. The unlocking of home equity seemed to be a key. At the time, I read a lot about CountryWide Financial and how they were coming up with some clever innovations in this area and thought they would be a great investment. Looking back, I clearly dodged a bullet.

Still, the same problem is out there. I should say, up front, that I believe I have an advantage in thinking this through in that I have always considered myself everyman from the perspective of if I like something or am thinking along certain lines, then many people are doing likewise.

Along this vein, I have been thinking of motor homes. I have talked with the wife about selling our home (on which there is no mortgage) and buying a motor home. This will result in a nice chunk of money for retirement that actually, unlike the IRA, can be drawn down tax-free. With the motor home, we can spend 4 months visiting my son and daughter-in-law in Alaska, then spend some time down South and make our way to Assateague camp grounds in spring to be near my oldest daughter and son-in-law in D.C. This solution frees up investment funds and enables the newly retired a way to visit children who might be scattered around the country and live fairly cheaply. Is this a solution?

To get specific, should I take a position in Winnebago, or is there some other way to play this? Winnebago now looks pretty ugly and is losing money. What do you think? Is this a solution for many to a looming retirement crisis? Remember, we are not a generation that adapts well to hardship.


  1. My in-laws and a lot of their friends spend their summers at the Delaware beaches and winter in Florida. They sold their houses in the DC metro area, and typically own a mobile home in DE and rent a mobile home in FL. Not quite an RV, but it is a slightly different option to consider.

  2. Interesting. I've talked to motor home owners at Assateague, where my wife and I camp each year and they enjoy living out of a motor home. Some become camp hosts for the summer so they are rent free. They are a short walk from the Atlantic Ocean. Fall comes and the campground shuts down they head South. Early Spring they are up into the Canadian Rockies. They tell me, and I've found this to be the case, that campers are some of the best people you'll meet. Everyone is willing to lend a helping hand etc.

  3. I am looking to protect myself by paying down the mortgage more quickly and devoting a large amount of income to purchasing assets. I don't want to set myself up for failure by failing to save for the years ahead by leading a debt-ridden consumerist lifestyle.

    The mobile home lifestyle might be quite interesting! You would have a lot of mobility and be able to travel. I personally want to do some more backpacking and see more of the world, and continue learning more about what's out there.

    Thanks for the mention!

  4. David Waz said..........

    Boy have I got a deal for you Pops! Check this out:

    LOL!!! Good luck talking Mom into this one, but it ain't for lack of trying. I am on your side, though we'll have to negotiate the four months part. How about two and a half? LOL, j/k, once the guest cabin is done you can stay as long as you want. I do need some investors for the guest cabin though, know anyone?

    Yeah your right about being camp hosts, that is the key to being rent free!

  5. Ha!Ha! Couldn't sneak it past anonymous. Shouldn't you be splitting fire wood rather than reading blogs!

  6. I love it! My wife and I don't own a home, and now I'm thinking, why should we?

  7. Re: Andrew Hey I think we're on the same page. The world is an amazing place and life is precious. For some reason most people tie themselves down and in their lifetime only see/experience a sliver.
    In America people are brainwashed from the time they are toddlers on sexual orientation, the need to marry, and the need to own a house, among other things. As a result many people are miserable. For example, I know people who are married only because that's what society says they should do. Their marriages don't last long and they go through all kinds of trauma.
    To me, owning a house goes along the same lines. It's the "American Dream". Not only does it affect individuals but it has resulted in a massive misdirection of resources in my opinion, manifested by the economic malaise the Western world is trying to climb out of.