From the Founder – Should your Investment Plan be Agnostic?


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I don’t know about you, but when I hear the word agnostic, I think of religion, but this term can be used in other settings.

As you may know, I love to read about retirement, and one of my favorite authors is Wade Pfau, Ph.D. In some of his books, Dr. Pfau argues that if someone wants to determine the ‘optimal’ retirement plan for them, it is a requirement for them to be agnostic about the various solutions available to them.

Think of it this way: imagine we are making a huge pot of soup as an analogy for retirement planning. In this scenario, we aim to make the ‘best’ pot of soup. We have access to all kinds of different foods and spices to put into the pot of soup. We may not know which mix will work the best, but to have the best chance of making the ‘best’ soup, we should consider all of the various foods and spices.

Retirement planning is similar in many ways. In an effort to find the ‘best’ retirement plan for you, we should be willing to consider every kind of planning and investment option out there. The analogy even allows for all of our different tastes. Just like someone may prefer potato soup to chicken noodle, with retirement, some of us may choose to retire earlier and be a homebody, while others may wish to work part-time and travel the world. I’m sure you can think of dozens of ways we all would have different preferences.

As we look more closely at attempting to be agnostic in our retirement planning, some philosophies need to be put to the side. Think about if you’ve ever heard of any of the following:

  • Everyone should delay their Social Security as long as possible
  • Everyone should pay off their house before they retire
  • Every married person with a pension should elect the joint payout option

The agnostic retirement planner would never say these things. Sure, delaying your Social Security might be your best choice – but maybe it’s not. Why don’t we run the numbers and see how it looks?

We believe attempting to be agnostic gives us the best chance to find your best plan. The same holds for your investments.

You may have heard of some of the following before:

  • No one should put money into annuities
  • No one should have permanent life insurance
  • No retirees should risk their principal in the stock market
  • All mutual fund fees are a rip-off

The religion of investments is real! There are probably more opinions than there are people! But if we want the best chance of making our nest egg last as long as possible, shouldn’t we be willing to consider all of the options?

This is on my mind right now because of the spike in interest rates in our country over the last year. Last month, I mentioned how those rate changes have affected the value of real estate and how we believe it could be a great time to allocate toward specific types of real estate.

Bonds are another category of investments dramatically affected by the changes in interest rates. If you’ve followed us for any time, we have not recommended allocating to bond for a long time. In fact, the last time we recommended bonds was 2008! Someone might argue that this doesn’t sound very agnostic!

Ah, but we didn’t avoid bonds because it was a belief. We avoided bonds because the Fed dropped interest rates to close to 0%, and we didn’t feel they had the opportunity to perform well.

We believe that this has proven to be accurate. In fact, in DALBAR’s most recent analysis of investor behavior, the average bond investor ‘earned’ an average of -2.31% per year over the last five years. Yes, that means they lost over 11%!

So what has changed? As you know, the Fed has increased rates faster than at any point in history. In fact, rates are higher than they’ve ever been since 2008. What a coincidence!

Since we try to be agnostic, our advisor team periodically reviews the various investment options for you; we believe that now is the first time we can generate a solid yield from bond investments in a very long time.

Pat Strubbe

Founder & Managing Partner


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