Of course there is no formula for success except perhaps an unconditional acceptance of life and what it brings.
US (Polish-born) composer & pianist (1886 – 1982)
Why have you been so successful in reaching some of your goals, but not others? If you aren’t sure, you are far from alone in your confusion. It turns out that even brilliant, highly accomplished people are pretty lousy when it comes to understanding why they succeed or fail. The intuitive answer — that you are born predisposed to certain talents and lacking in others — is really just one small piece of the puzzle. In fact, decades of research on achievement suggests that successful people reach their goals not simply because of who they are, but more often because of what they do.
1. Get specific. When you set yourself a goal, try to be as specific as possible. "Lose 5 pounds" is a better goal than "lose some weight," because it gives you a clear idea of what success looks like. Knowing exactly what you want to achieve keeps you motivated until you get there. Also, think about the specific actions that need to be taken to reach your goal. Just promising you’ll "eat less" or "sleep more" is too vague — be clear and precise. "I’ll be in bed by 10pm on weeknights" leaves no room for doubt about what you need to do, and whether or not you’ve actually done it.
2. Seize the moment to act on your goals. Given how busy most of us are, and how many goals we are juggling at once, it’s not surprising that we routinely miss opportunities to act on a goal because we simply fail to notice them. Did you really have no time to work out today? No chance at any point to return that phone call? Achieving your goal means grabbing hold of these opportunities before they slip through your fingers.
To seize the moment, decide when and where you will take each action you want to take, in advance. Again, be as specific as possible (e.g., "If it’s Monday, Wednesday, or Friday, I’ll work out for 30 minutes before work.") Studies show that this kind of planning will help your brain to detect and seize the opportunity when it arises, increasing your chances of success by roughly 300%.
3. Know exactly how far you have left to go. Achieving any goal also requires honest and regular monitoring of your progress — if not by others, then by you yourself. If you don’t know how well you are doing, you can’t adjust your behavior or your strategies accordingly. Check your progress frequently — weekly, or even daily, depending on the goal.
4. Be a realistic optimist. When you are setting a goal, by all means engage in lots of positive thinking about how likely you are to achieve it. Believing in your ability to succeed is enormously helpful for creating and sustaining your motivation. But whatever you do, don’t underestimate how difficult it will be to reach your goal. Most goals worth achieving require time, planning, effort, and persistence. Studies show that thinking things will come to you easily and effortlessly leaves you ill-prepared for the journey ahead, and significantly increases the odds of failure.
5. Focus on getting better, rather than being good. Believing you have the ability to reach your goals is important, but so is believing you can get the ability. Many of us believe that our intelligence, our personality, and our physical aptitudes are fixed — that no matter what we do, we won’t improve. As a result, we focus on goals that are all about proving ourselves, rather than developing and acquiring new skills.
Fortunately, decades of research suggest that the belief in fixed ability is completely wrong — abilities of all kinds are profoundly malleable. Embracing the fact that you can change will allow you to make better choices, and reach your fullest potential. People whose goals are about getting better, rather than being good, take difficulty in stride, and appreciate the journey as much as the destination.
6. Have grit. Grit is a willingness to commit to long-term goals, and to persist in the face of difficulty. Studies show that gritty people obtain more education in their lifetime, and earn higher college GPAs. Grit predicts which cadets will stick out their first grueling year at West Point. In fact, grit even predicts which round contestants will make it to at the Scripps National Spelling Bee.
The good news is, if you aren’t particularly gritty now, there is something you can do about it. People who lack grit more often than not believe that they just don’t have the innate abilities successful people have. If that describes your own thinking …. well, there’s no way to put this nicely: you are wrong. As I mentioned earlier, effort, planning, persistence, and good strategies are what it really takes to succeed. Embracing this knowledge will not only help you see yourself and your goals more accurately, but also do wonders for your grit.
7. Build your willpower muscle. Your self-control "muscle" is just like the other muscles in your body — when it doesn’t get much exercise, it becomes weaker over time. But when you give it regular workouts by putting it to good use, it will grow stronger and stronger, and better able to help you successfully reach your goals.
To build willpower, take on a challenge that requires you to do something you’d honestly rather not do. Give up high-fat snacks, do 100 sit-ups a day, stand up straight when you catch yourself slouching, try to learn a new skill. When you find yourself wanting to give in, give up, or just not bother — don’t. Start with just one activity, and make a plan for how you will deal with troubles when they occur ("If I have a craving for a snack, I will eat one piece of fresh or three pieces of dried fruit.") It will be hard in the beginning, but it will get easier, and that’s the whole point. As your strength grows, you can take on more challenges and step-up your self-control workout.
8. Don’t tempt fate. No matter how strong your willpower muscle becomes, it’s important to always respect the fact that it is limited, and if you overtax it you will temporarily run out of steam. Don’t try to take on two challenging tasks at once, if you can help it (like quitting smoking and dieting at the same time). And don’t put yourself in harm’s way — many people are overly-confident in their ability to resist temptation, and as a result they put themselves in situations where temptations abound. Successful people know not to make reaching a goal harder than it already is.
9. Focus on what you will do, not what you won’t do. Do you want to successfully lose weight, quit smoking, or put a lid on your bad temper? Then plan how you will replace bad habits with good ones, rather than focusing only on the bad habits themselves. Research on thought suppression (e.g., "Don’t think about white bears!") has shown that trying to avoid a thought makes it even more active in your mind. The same holds true when it comes to behavior — by trying not to engage in a bad habit, our habits get strengthened rather than broken.
If you want change your ways, ask yourself, What will I do instead? For example, if you are trying to gain control of your temper and stop flying off the handle, you might make a plan like "If I am starting to feel angry, then I will take three deep breaths to calm down." By using deep breathing as a replacement for giving in to your anger, your bad habit will get worn away over time until it disappears completely.
It is my hope that, after reading about the nine things successful people do differently, you have gained some insight into all the things you have been doing right all along. Even more important, I hope are able to identify the mistakes that have derailed you, and use that knowledge to your advantage from now on. Remember, you don’t need to become a different person to become a more successful one. It’s never what you are, but what you do.
Filed under: Career
Copyright: Taken from Ramit’s blog post
WEEK 3 RESULTS
“The short story – today I negotiated a work-from-home arrangement for 2 days per week from my full-time job, with no end date. My commute is 3 hours roundtrip per day, so this saves me 6 hours per week, which I can now spend with my wife and 1yr old daughter. Totally liberating, although it still hasn’t really hit me. Thanks to Ramit for the tips which helped me succeed at this. (and also to Tim Ferriss, I re-read the script in ‘Disappearing Act’ of 4HWW too)
The details –
I work at a large TBTF bank, managing a team of software developers. It’s review season, and I got my annual compensation communication last week, but by phone since I was on vacation. I was disappointed with the compensation (2% increase total from last year, despite ranking pretty well at 4 of 5). My goal: negotiate an increase in my “total compensation”. By the way, I know from research that I make a fair amount more than others in similar jobs, and my job is kinda cool, so I’m not really ready to run out the door.[RAMIT’S NOTE: Notice the amount of preparation Alex has put into his negotiation and the specificity of his goal. 85% of the work is done before you ever step foot in a room to interview or negotiate.]
Script –
Me: As I mentioned last week, I’m disappointed in my compensation this year, considering I performed well, and the bank did fairly well. [went through percentages last year, this year]. It would be one thing if I underperformed, but what really bothers me is the disconnect between performance and pay.
Boss: [checked my percentages, generally nodded, explained about bank performance and 'the way it works']
Me: This disconnect has really made my start to dislike my job. I felt this way last year, and hoped it would get better, but it hasn’t.[RAMIT’S NOTE: He’s expressing disappointment, not anger, and leading the conversation where he wants it to go. Predictably, the boss responds with a...]
Boss [look of concern]
Me: HOWEVER, I also understand your predicament. You have a lot of great performers which you’d like to pay well, but you are at the mercy of pre-determined money pools, and a company whose overall performance is out of your control, at the whim of markets and economies.
Boss [profuse nodding, almost smiling][RAMIT’S NOTE: What Alex just did was extremely sophisticated. He expressed disappointment, then re-framed the conversation to empathize with the boss’s situation. Notice how deeply he gets in his boss’s head -- he’s literally using the eaxct words his boss would use to describe his corporate shackles. When you are deeply in someone else’s head, you will see them irresistibly respond with nods, words like “EXACTLY,” and so on. And you are being ethical as you are simply describing their own situation, perhaps better than they could even articulate it. Alex is doing a masterful job.]
Me: So I’ve been thinking of ways out of this stalemate which don’t involve me leaving the company.
Boss: Oh well that is good, what are you thinking[RAMIT’S NOTE: This is the turning point in the conversation: The boss just essentially invited Alex to write his own ticket. But notice that it took weeks of thinking and planning to get to this point.]
Me: I’d like to propose working from home a few days a week on a regular basis. I am much more productive working from home, and the saved commute time would allow me to put in more hours without sacrificing work-life-balance. I could increase my performance, and also be happier with less commute, so it’s win-win. Of course I’d be in the office for meetings requiring my physical presence, and always available on cell.
Boss: Well that sounds ok, you don’t have to sell it to me. But how many days were you thinking?[RAMIT’S NOTE: “You don’t have to sell it to me.” That’s because he already successfully sold it with his research, top performance, and understanding of the situation. Negotiations don’t have to be a hard sell, which is precisely what Alex is demonstrating. The boss actually WANTS to give Alex his demands!]
Me: 3 days per week
Boss: That sounds like a little much, I’d feel much better about 2 days, which is less than half the time.
Me: Ok I think I can do 2 days.[RAMIT’S NOTE: Classic door-in-the-face technique.]
Boss: Ok good, let’s talk some more about your compensation numbers
Me: [blah blah not listening, huge grin on INSIDE, I can't believe he went for it]Tactics I used:
- Reviewed scripts of other similar situations, and picked key words to reuse
- Wrote out a loose script in advance
- Decided increasing pay was a non-starter at this point, so went for something else (tele-commuting)
- Decided 2 days would be great, so asked for 3 so I had something to give back
- Decided NOT to use the phrase “on a trial basis” on my wife’s recommendation, but instead keep it in my pocket. this was a good idea since I didn’t need it.
- Made a soft threat to quit to make the alternative seem less severe
- Showed I understand his side, and played to his desire to have happy employees and compensate them
- Practiced! I found a conference room 1 hour before to write my script and said it a few times out loud
- Timeboxing – I didn’t have a lot of time to work on this – total prep was 2 hours (15 mins at home night before, 45 mins on bus reading 4HWW & this post, 1 hour at office writing script & practicing). This made me focus, especially in that final hourResults, and why it’s good –
– even though it wasn’t dollars, 6 hours of my life back is worth a lot. also gives lots of flexibility to shift hours around. I increased my total compensation. actually it saves me $30 on commute per week also
- while I worked from home 2-3 times per month previously, a regular arrangement is unheard of, and 2 days/wk is absolutely crazy. Can’t believe I didn’t ask earlier.”
Filed under: Career
Copy of what’s posted at
http://www.freemoneyfinance.com/2010/11/career-insurance-insuring-your-most-valuable-asset.html
For the vast majority of people, their career is their most valuable financial asset. Nothing else they own is likely worth as much (several million dollars over a lifetime). And even if they do have something more valuable (like an investment portfolio), it was probably earned as a result of their career.
As with anything valuable, you need to take steps to protect your career. That’s why financial websites recommend life, health, and disability insurance — to protect/replace the value of your career in case you die, get sick, or are physically unable to work. Having some form of these insurances is generally wise for almost every worker. But there’s another form of insurance that’s equally essential.
This insurance is free, but it will take some work and planning. Its benefits go far beyond the time it takes to implement the steps involved. And in addition to increased income, this insurance may even give you more job satisfaction, less stress, and a longer life. Interested?
I’ll call it "Career Insurance" (creative name, huh?). This Career Insurance is not a product you can buy, but a series of actions you can proactively take to minimize the chance that your career will take a major hit.
These actions can help you avoid the following situations:
- Being fired or laid off. The negative impact of losing your job is not only loss of income but your career progress is halted. You lose valuable time which limits the compounding growth of your earnings. Plus, when you consider that many people have to take a step back career-wise when they finally do find a new position, you realize just how bad a firing or layoff can be.
- Long layoff time. Even taking steps to avoid firing and layoffs, they can still happen. If you are let go, you must focus on minimizing the time that your career is in limbo. The longer you are laid off, the longer your most valuable asset stagnates and the more likely you are to take a job that’s far below your previous level.
- Financial strain. This step doesn’t protect your career per se, but it minimizes the pain associated with losing a job. You’ll have less stress, more energy and extra time to focus on finding new work.
- Physically unable to work. No work = no pay. There are things you can do to prevent illness and injury as well as things you shouldn’t do to maintain good health.
You can protect yourself from these hazards and develop your own Career Insurance by taking the following steps:
Protection from Firing or Layoff
1. Make yourself more valuable/indispensible to your employer. Let’s face it, even in the worst environment imaginable, the ones who keep the ship afloat are the last ones fired from the crew. So deliver more than what’s expected for your position (and more than most or all others in your organization/department). In particular, if you can contribute to the organization’s bottom line on a regular basis by saving it money and/or growing revenue, you’re usually untouchable. Oh, and don’t forget to be likeable as well. Yes, producing jerks are still kept on staff, but they are fired before productive nice guys. 
2. Get a mentor. Having someone above you in the organization who can guide and direct you has many benefits. A mentor can help propel your career by making you more effective, help you accomplish more, and pave the way for promotions and raises. All of these are great reasons for having a mentor. But there are other benefits — Career Insurance benefits. A mentor can watch your back when firings and layoffs occur. He may put in a good report for you in key meetings. At the least, he might be able to give you advanced warnings as to when layoffs could be coming, so you can get a jump on finding a new job.
3. Network inside the company. In addition to having a mentor, you should develop good contacts throughout the company at various levels. Again, these can help protect you in troubled times. Once when my company was facing layoffs, I had another executive speak up on behalf of one of my employees because she had also worked with his department on a key project. In the end, his defense helped sway committee decisions and she was able to keep her job. In short, you never know how or when someone can help you, but the more people you have looking our for your best interests, the better off you are.
Protection to Minimize Layoff Time
1. Network to develop contacts outside your company. Networking is a key way to grow your career. One major benefit: it connects you with people who can assist you in finding new work. Statistics show that a majority of jobs are placed by networking, so the bigger your network, the better chance that you can use it to find a suitable job quickly. So work to broaden your contacts through lunch dates, seminars, trade shows, industry events, volunteer activities, social media, common interests, and more. And of course, a network doesn’t only work when you are out of work. It’s helpful when you’re employed and want to make a change too.
2. Refresh your resume. You should keep track of your work accomplishments on a regular basis — it’s part of a systematic way to get raises and promotions – so you’ll always have a handy list of what you’ve done and how you’ve performed. (BTW, having a system will make sure you don’t forget anything major.) These will allow you to develop an updated resume immediately if you’re let go. In addition, your list will allow you to be sure your resume is full of high-end accomplishments. Update your resume as quickly as possible and get it out to your network pronto.
3. Get an employment contract. While this won’t get you a job faster, it will basically extend your current income for a period of time. The ultimate in protection, an employment contract is usually held by top-level executives and other key personnel. But if you can obtain this status, you know that even if you’re let go, your company will have to pay your salary for the stipulated amount of time — usually six months or a year — even if they fire you. Usually this is more than enough time to find new employment without disrupting your career.
Protection to Minimize Financial Strain
1. Develop outside streams of income. If you get fired, one way to cushion the blow is to have income from other sources. It might not provide the level of earnings you’re used to, but SOME money coming in is certainly better than NO money coming in. Suggestions to bring in more money: develop a hobby as a business, start your own business on weekends or evenings (I like to referee soccer matches), and work on growing your investments (if you have savings/investments they can sometimes be reallocated to produce income.) Consider all the ways that you might be able to earn more money, select one or two that work for you, and start now in getting them developed. Even if you never need them in case of a job loss, the extra income will still come in handy.
2. Increase the amount in your emergency fund. A key reason for having an emergency fund is to provide for your needs in case you lose your job. And the less stable your job situtaion (or the more likely a layoff could be coming), the higher amount you need in an emergency fund. Almost everyone should have at least six months of living expenses saved up in case of a loss in income. If you’re in an uncertain industry, company, or position, work now to bump that up to give yourself protection comensurate with your risk.
Protection from Not Being Able to Work
1. Disability Insurance. Yes, this is a traditional insurance product, so maybe it shouldn’t be part of this post. But it’s also probably the most ignored insurance product on the market — and yet it protects your largest asset. You MUST get some sort of disability insurance coverage. Sometimes this will be provided through your employer, but many times the level of coverage is not adequate. Make sure any disability policy you have will replace at least 60% of your income and will kick in before your emergency fund runs dry.
2. Keep/get in good shape. If your body isn’t functioning fully, you can’t work to your full potential (which isn’t good for your job security.) So follow mom’s suggestions: eat properly, get plenty of rest, exercise, drink water, and keep stress as low as possible.
3. Take precautions against sickness. If you’re sick, you can’t work. At a minimum it will cost you valuable vacation time. And feeling poorly always negatively impacts your performance. So follow mom’s other set of instructions: wash your hands (especially during cold and flu season), take action at the first signs of sickness (drink fluids and get plenty of rest), seek medical help when needed, and "don’t smoke, drink, or chew or hang with those that do". By taking care of your body, you’ll not only be a better employee, you could also get the added benefit of prolonging your life.
Of course, no plan will work 100% of the time. Despite all of these precautions, the perfect storm could occur and sidetrack your career a bit. But Career Insurance will certainly help you weather the storm, minimize any damage, and ultimately move your career along. So get started today developing your own Career Insurance and ensure that your most valuable financial asset is protected the way it should be.
Filed under: Grocery
Asparagus – late April and early May
Broccoli – late February and March
Cauliflower – late March and April
Cranberries – October
Oranges (all but Valencia) – December
Raspberries – mid-August
Strawberries – late June through early August
Sweet Corn – early August to early September
Turnips – February
Watermelon – July
Filed under: Immigration
The USCIS issued instructions
(PDF 32.7KB) August 6, 2009 on how to follow up on cases pending at the USCIS service centers. These instructions should be followed by individuals and organizations inquiring about timelines and generic information. One should NOT rely on general information from the government for legal options, analysis of a particular situation, or advice on how to proceed in a particular immigration case.
First Step : Call NCSC’s Toll-Free Number
The first step in the instructions is to call the National Customer Service Center (NCSC) at their phone number (1.800.375.5283). It is necessary to have the USCIS receipt number and other case-related, identifying information in order to make such inquiries.
It is suggested that one keep the name and/or ID number of the person with whom s/he speaks, as well as the date and time of the call. One should also keep any service request referral number, if there is action taken on the case.
Second Step : eMail Service Center after 30 days
If the NCSC has not been able to resolve the particular matter within 30 days, then it is possible to send an eMail to the service center that has the case. In order to use the eMail service, it is necessary to have the information regarding the initial call to the NCSC; that is, the name and/or ID number of the representative, date and time of the call, and the service request referral number. If no service referral was made, it is necessary to indicate why the NCSC did not take this action.
The eMail addresses for this purpose are as follows:
California Service Center : csc-ncsc-followup@dhs.gov
Vermont Service Center : vsc.ncscfollowup@dhs.gov
Nebraska Service Center : ncscfollowup.nsc@dhs.gov
Texas Service Center : tsc.ncscfollowup@dhs.gov
Third Step : eMail to USCIS Headquarters
If there is still no resolution in the case after 21 days of sending the eMail described in step two, it is possible to eMail the USCIS Headquarters Office of Service Center Operations. This eMail address is SCOPSSCATA@dhs.gov. The USCIS promises a response to these inquiries within ten days.
Conclusion : General Information No Substitute for Legal Advice
Potentially, the case follow-up procedures can be helpful for many situations. Each step requires a waiting time, however. In some situations, such as case denials with time-sensitive deadlines, it is not advisable to wait for NCSC action. There are deadlines (often only 30 days and sometimes 15 days) for challenging certain USCIS decisions. If a case is denied, or if one encounters serious problems otherwise, it is necessary to obtain proper legal advice and not assume that a call to the NCSC is all that is needed.
It should be noted that calls to the NCSC are answered by individuals who provide general immigration information based on scripts. Responses to one’s inquiry should be considered only as a general guideline, and not as a substitute for proper legal advice. We at the Murthy Law Firm sometimes speak with individuals who wish to make an immigration filing, because they think that the NCSC told them they could do so. They may have been told that, in order to do what they wish to do, it is necessary to file a certain form. However, NCSC does not evaluate whether one is legally eligible to file, whether it is the correct procedure for that individual or family, or if other considerations exist that may completely change the equation. Speaking with a knowledgeable lawyer for case-specific, individualized advice as to one’s immigration options is a safer and, actually, much less expensive option in the long run. The NCSC should be used for case follow up and general immigration information only.
Filed under: Finance
You have to be more aggressive with Comcast. Here’s how you start the conversation about lowering the price: "Hi. I’m calling to cancel my service." It’s not like doing that with the gas company or something where they just shrug and say "OK, we’ll have it disconnected in a couple days and send you your final bill soon afterward." No. They turn you over to the Retention department. They act like a desperate, clingy lover that you’re trying to break up with. "Why do you want to leave us? [sob] I thought everything was going great. Is there anything I can do to get you to stay?" It’s hilarious. At that point it’s not time to say "it’s not you; it’s me." Instead, say "my rates have risen to a level where the service is not worth it to me. Also, FiOS is available where I live now, and they’re making some very attractive offers." They’ll definitely make you a new offer. Ask "is that the best you can do?" Finally, "OK, you’ve given me something to consider. Which number should I call back after talking to Verizon?"
Worst case scenario is they call your bluff and you go with fiber optic service, which you were considering doing anyway.
Filed under: Career, Development, Life, Management, Personal Development, Work
Good nuggets from a well written post
You’ll always find yourself in situations where you’re never “paid back” for what you give. But even in those cases, I find a surprising result – there’s usually a positive payback, but it’s really indirect.
I can associate very well to this, as in my current NGPA project, I am not well rewarded with respect to money. However, I go beyond my specified duties and make/made sure people using it had no blocking issues / concerns and that earned me a very nice name and trust in the organization.
So, if you can help someone out without disadvantaging yourself, do it. That means sharing ideas, making connections, and doing little tasks that don’t eat up tons of your time and energy. Don’t worry about the return – if you do it often enough and with enough quality and value, the return will take care of itself.
More than anything in return it makes you a better person. Relevant comment …
I believe, aside from the paybacks, that habitually helping other people helps you by making you a better person. When you help others you become more patient, generous and selfless. When you only look out for yourself you tend to become narcissistic. People who are completely focused on themselves tend to self-destruct, sooner or later.
Nice post:
To Generate Income In Early Retirement
As outlined in this previous post about One Way To Track Your Progress Towards Financial Independence, you can say you’ve reached financial independence when your “passive” investment income equals your monthly expenses (”crossover point”):
The above chart was taken from the Your Money or Your Life, which also says the best way to generate income is by purchasing 30-year Treasury Bonds. But there are a variety of other ways that retirees generate income for retirement. Each one has their own pros and cons.
High-Grade Bonds or Certificates
U.S. Treasury bonds are a very safe and reliable way to generate regular income, as it is guaranteed by the U.S. government and they are very liquid. A similar situation results you invest in bank CDs or other investment-grade corporate or municipal bonds. The primary drawbacks are lower returns, especially relative to inflation. The 30-year bond is currently yielding somewhere around 4.5%. The current real (above inflation) yield for a 20-year TIPS (inflation-indexed bond) is only about 2.20%.
This means that if you want both the highest safety and you wish to only live off the interest of your money without ever touching the principal, you can only withdraw about 2.2% each year. That’s only $183 per month for each $100,000.
60/40 Asset Allocation with 4% Safe Withdrawal Rate
Although there is still much ongoing debate, the “4% rule” is based on on research by William Bergen:
William Bengen, a U.S. researcher, has back-tested a 4% withdrawal rate with a balanced portfolio of U.S. stocks and government bonds earning overall market returns and found that you would have been able to safely withdraw 4% of your portfolio over any 30-year period since 1926. [source]
The general idea is that if you have a portfolio with an asset allocation of 60% stocks/40% bonds, you can withdraw 4% of the portfolio each year with only a small chance of running out of money somewhere down the line. A 4% withdrawal rate would be $333/month for each $100,000. However, your portfolio will experience wilder swings, and this rigid method is very sensitive to the returns in the first years of retirement. If you have a bad decade upfront, your chance of going broke rises quickly.
Income-Focused Mutual Funds
These are mutual funds who primary objective is not growth, but to create a stable income stream from a combination of stock dividends and bond interest. The secondary objective is some capital appreciation, which ideally will help the income stream to keep up with inflation.
A passive index fund example is the Vanguard Target Retirement Income Fund (VTINX), which is currently yielding 4.05%. A popular actively-managed example is the Vanguard Wellesley Income Fund (VWINX), which is currently yielding 4.71%. Both of these funds hold roughly 35% in stocks/65% in bonds. Wellesley has been around since 1929, and many retirees swear by the reliable income it produces.
Managed Payout Mutual Funds
A new breed of mutual funds actually adjusts to help you spend your money as fast as you like. You choose how fast you wish to withdraw your money (3%? 5%? 7%?), and the fund does it’s best to accommodate that without going broke. Vanguard has their Managed Payout Funds, and Fidelity has their Income Replacement Funds.
These funds help you create regular monthly payments like an annuity, but still include risk from the stock market. They are also very new and could be seen as unproven.
Individual Dividend Stocks
I know of several retirees who manage their own portfolios of individual stocks. These people accumulate shares in companies with a history of reliable stock dividends, like General Electric and Coca-Cola, and live off the dividends. An ETF of top dividend producers, DVY, currently yields 5.14%.
I would be wary though that the share value of these stocks can vary widely without the cushion of bonds. DVY has dropped by over 20% so far this year, which is indicative of many similar dividend stocks.
Income Annuity
With a simple version of an immediate annuity, you hand over a lump-sum upfront in return for fixed income payments for life. Of course, if you die early then you don’t get your lump sum back. However, you could live until 110. It’s almost like life insurance in reverse. A special risk here is that your insurance company must stay solvent the entire time, so you must check credit ratings.
I went to ImmediateAnnuities.com and looked into a Joint Annuity, where the income payments keep coming as long as one of us are alive. A rough quote for a 40-year old says that each $100,000 paid will get me about $450 a month. That is the same as saying I can earn 5.4% interest forever, but remember that I lose the principal. Of course, this value goes up with age. For a 60-year old couple, you can get 6.4% forever. At age 70, you can get 7.5% forever.
How much income will a million bucks get you?
Based on these numbers, with $1,000,000 one could get anywhere from $1,830 a month (very little risk, no principal loss) to $5,833 per month (fixed annuity at age 65, all principal is given up). I’d probably end up going with something in between, but it is food for thought.
