057 – Do you have Loss Aversion?

How do you feel when the market and your portfolio takes a nose dive? How often are you checking you portfolio, networth and performance? Loss aversion is a real thing and many of us suffer from it. As a result, our investor psychology may be affected and we may not follow our plan. Maybe it’s time to do less of the things that lead us down this road. The guys enjoy a fantastic Belgian Dubbel from Red Collar Brewing kindly supplied by Joel this week.

Show Notes to Come…

4 Comments

    1. Hi, thanks for the kind words! We did notice this product, but the Money Mechanic thinks that there is no chance of the payout increasing. If that’s the case then isn’t this more like a pension/annuity flavour?

  1. I understand the payout could go up or down.
    With defined benefit pensions or regular payout annutities, insurance companies take the longevity risk.
    With the new product, the CEO said: “Once they pass away, or if they redeem, they will only get access to their unpaid capital. That’s where the longevity pooling comes together. They’ll leave in the pool, for the benefit of everyone else, any of the returns on their capital.”

    Anyways, income starts at 65, so this may not benefit the FIRE crowd at first. But I’m happy to see the product innovation.

    Cheers!

    1. It seems like a great money making product to me. Basically they just give you return of capital until you run out of money and charge you .70 MER to do it. If you outlive that (~15 years) then they start paying you back your investment returns from the pool. I really don’t think there’s any place for this in the FI community, we’re all DIY enough to plan a better drawdown strategy.

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