In the local personal fiance blogosphere, Andy Schmidt stands out for many reasons. His height, his background as a C-level executive in an MNC who opted for early retirement, and also the genre of his blog – Taking Care of My Own Business.
Andy writes about the behavioural aspect of investing. It is a topic few choose to write on, and even lesser would like to read about. After all, not many of us would like to be reminded of our biases and our sub-optimal decision making abilities.
I reached out to Andy late last year and we had a great time chatting. I cannot remember when was the last time I came across someone as open minded and as intellectually humble and nimble.
He has kindly agreed to share his story with our readers.
Tell us about yourself.
I am a 47 year old German, who has been living in Singapore since 1997. I have three kids and one wife.
She is Singaporean. She calls me lazy. I prefer to call myself a ‘minimalist’ who is attempting to get the most out of life with the least effort. Being a minimalist requires a bit of creativity, living in the now, and not following the herd blindly.
In general I am an optimist living in our world of abundance, on the road of becoming a rational optimist. That road is long and winding and my journey on it is documented on my blog.
What sparked off your decision to ‘retire’?
The decision was not a sudden or impulsive one. Already when I started work back in 1989 I dreamt about not having to work till 65.
I do not know what triggered me (must have been the education by my frugal and prudent parents – thank you guys) but with one of my first paychecks I went to the bank and set up a Regular Savings Plan into unit trusts (ETFs were not heard of back then).
I kept going, occasionally increased the contribution and started to invest directly in the stock market. Mainly in blue chips, but – as I was young – frequently also into some hot tips and penny stocks.
By now I can tell you the first two approaches paid off thanks to patience and the magic of compounding whereas the third – undeniably more thrilling approach – did not thanks to greed, stupidity and impatience.
You obviously left at the pinnacle of your career. Was it a very difficult decision to make?
Actually it was more like at the plateau of my career. The promotions got less frequent, increments got ever smaller and recognition for the work done hard to get by.
Yes, it was still not an easy decision. After all I had spent my entire professional life in that one single company in various functions with varying areas of responsibility. The company was overall very good to me and I have no regrets staying loyal to them for 23 years.
One of the key events, however, were those farewell parties when long-serving colleagues left for retirement. Asking them after a few beers about their biggest regret in their career they said something along the line of “not having spent enough time with the family and especially the kids at an age when it mattered the most (the period before their 16th birthday)”.
Without fail I heard this over and over again. I told myself that I shall not have that same regret in my life and listen to the ‘age-experienced’. I discussed this with my wife quite often and she supported me in my goal to not experience that same regret.
So, when I felt I had enough (of money, of politics, of the corporate life) I ended my ‘life by default’ by handing in my notice letter and commenced my ‘life by design’.
Because who says, that the sequence in life has to be:
learning –> earning –> yearning (for retirement)?
learning –> earning –> enjoying + further learning –> earning –> retiring + still earning?
So I decided to ‘borrow’ a few years from my retirement, bring them forward and to enjoy them right now. Certainly not sticking to my preferred approach of delayed gratification in that regard. 😀
Any advice for folks planning for early retirement? How did you do your sums to ensure that you are adequately covered?
Stop dreaming, start doing. Now.
While working for others (which the majority of us do) never forget about taking care of your own business. I often hear that people cannot even save 5% of their gross annual income. Based on an average working day, this comes to only 22 minutes a day working for yourself and your retirement. I guess those guys just don’t try hard enough.
To be able to retire early one should save at least 20%, make it a habit and stick with it for the long run by reminding oneself of the ultimate purpose. It takes will-power because it is a lot more fun to spend money than to invest it (= lock it up for much later consumption). It’s always our choice.
Hmm, what is adequately covered? I am afraid that I don’t know that magic number for my case. Life is full of uncertainties. Nothing endures but change. Needs and wants will change and so will expenses. There is always a risk in everything we do. And there are always ways to reduce risks. So, be brave and take risks.
Worst case, if money runs out I can get back to work.
What keeps you busy nowadays? Is retirement as you had imagined?
Yes and no. Yes, in regards to the power I do have over my own time and how I want to spend it. Right off the bat I wanted to spend it on widening my horizon. Working in one company for so many years unfortunately made my perspectives very narrow. Way too narrow for comfort. There is so much out there that I did not know. I was wondering how I managed to get that far in life without having known so many things.
As I started work straight away after my A-levels and never attended university, I was quite curious how studying at university would be. A friend pointed me towards a cost-optimized alternative: Massive Open Online Courses.
I tried that out, enjoyed it, and completed about 30 Coursera courses by now. The topics ranged from Sustainability to Genetics to Energy to Food Systems to Randomness to Economics.
By now my curiosity for new subjects has diminished a bit. Which brings me straight to the ‘No’ answer.
We are habitual creatures and being retired for 3+ years now has created a feeling of unproductivity in me (despite my generally lazy demeanor). I started missing the social interaction with a diverse group of people like I always had at work. Don’t get me wrong, but spending the majority of my time with my kids and wife can get a bit of one-dimensional.
So I decided that my retirement will not be permanent. In fact I have started to get a bit more active in the business world again while advising a startup company and exploring other business opportunities. One thing is for certain I have no urge to step back into the corporate life as I do not expect enough new stuff in that MNC-sector. I prefer to contribute in a different capacity in the SME-sector going forward.
How and why did you start blogging?
Curiosity. I read that people can make lots of money online. So I wanted to find out how. I attended two or three of those “free” internet marketing seminars. Enlightened I thought to myself: “Well, I have time, so why should I go for the expensive crash course when I could chose the inexpensive learning by doing approach. After all there is www.GIYF.com to help me.”
It certainly took me much longer to get my website up and running that way. And it is definitely not perfect. But I managed to get an online presence. Young readers might think now “what’s the challenge in that?” But I grew up as a passive user of Windows having hardly created anything outside that domain. So for me it was a success.
The theme of my website – Taking Care of my Own Business – was very clear to me right from the start. I had too many conversations with co-workers and relatives that showed me the huge lack in that regard and in regards to financial education in Singapore.
I get the impression that the focus in Singapore is only on teaching the young how to earn money, but not how to spend money. The secrets to getting financially independent though are mainly in the domain of “how-to-spend-money.” A few good rules of thumb internalized in the early years will make a huge monetary difference in the long run.
Scanning the financial blogger-sphere in more detail I found many bright people who are doing a great job teaching the ‘technicalities’ of growing money.
From own experience I can confirm that 95% (or is it 99%?) of long term investing success is however dependent on our emotions, our brain, our mind, our thinking…in one word, our investor-behavior. This “skill” is at the bottom of an investor’s hierarchy of needs. It’s the foundation.
Unfortunately it is not easy at all because we are biased by nature and that leads us to irrational decisions. And as it is not that easy we tend to focus on learning the ‘technicalities’ because that type of learning is closer to the way we were taught in the education system and thus more familiar to us.
I am convinced that only the combination of opting for a simple, straightforward investing strategy and managing our complex emotions and biases is the path to success.
That’s why I write mainly about investor behavior and how that is influenced by our dear biases. Writing about biases helps me to understand my own mind better.
Andy does not blog that often but when he does, they are always thought provoking stuff. I am looking forward!
Dive, snowboard and have moved house five times in the last ten years. Miraculously filled up every single page in my passport before it expired. Manage risk for a living.