I love sailing. It is the primary reason that I moved to Florida several years ago. My wife and I own a Catalina 30 that we use as our weekend getaway. Its a comfortable floating camper that has an amazing view of Coconut Grove and Miami Florida. We can easily reach many great anchorages in the northern Keys from our marina in Miami.
When I lived up north, I had a home on a small lake and I used to race sailboats with the other sailors on the lake. Sailboat racing involves several upwind legs where a marker is placed directly upward from a starting line. The boats need to sail up to the mark and around it. Since sailboats can only sail at about a 45° angle into the wind, it doesn’t matter whether you start off going left or right, it is the same distance to the mark.
However, if the wind shifts to one side or the other, then one side (tack) will push you farther away from the mark and the other tack will bring you closer to the mark. The advantage goes to a sailor that can spot the wind shifts and chooses the “tack” most favored by the wind direction.
Each time you tack (change direction), the boat slows down and you have to regain momentum and speed. It’s generally not a good idea to tack on every single little windshift. Instead it is best to wait until you are sure the change in direction is persistant.
This is a great analogy for life in general as well as your retirement savings strategies. Each time you change directions, it takes time to build up speed again. You have to make up for trading commissions, for example. You don’t want to make big changes with every little change in the winds of life. But if the wind shift is persistant and you keep getting pushed further away from where you want to go, you need to make a change.
I followed the conventional wisdom for many years. I kept my savings in stock mutual funds despite the constant cycle of market booms and busts. I thought that if I hung in there long enough, everything would average out. Now that I am getting nearer to retirement age, I find that the winds of the stock market can push me further away from my goal.
Just as I could easily spot a windshift coming when I was racing sailboats, I can now see the record highs of the Dow Jones Industrial Average, the long bull market, and the looming correction as a change in wind direction. It’s time to get on a new tack and head closer to the finish line.
By utilizing an overfunded equity indexed universal life insurance product, I can maximize my cash accumulation, lock in market gains and prevent any loss of principal due to market conditions. My retirement savings will still take part in market gains, but I won’t have to worry when the market crashes.
I plan to put this “wind shift” to use putting distance between myself and the other boats. Don’t be left behind.