Tag Archives: Jim Otar

Jim Otar’s Pearls of Wisdom

Guest blog by Steve Thorpe.

Yesterday, I posted a review of Unveiling the Retirement Myth: Advanced Retirement Planning based on Market History by Jim C. Otar, a financial advisor, Certified Financial Planner, and engineer.

In this second post, I share a few quotes that epitomize the reality-based themes and critical insights woven throughout Otar’s text:

Risks

  • Proper retirement planning requires planning for the worst.
  • This book is based on my research of retirement planning involving one hundred and nine years of market history. What you read will be depressing.
  • When it comes to retirement finances, the three main risk factors are longevity risk, market risk, and inflation risk.  A retirement plan must minimize each of these three risk factors to be considered a well-designed plan.
  • Disregard any financial research, any words of wisdom, any gibberish from financial gurus in the media that “markets eventually recover in the long term.” They are not telling you the full story: Yes, markets did always recover in the past, but your distribution portfolio retained a permanent loss for the rest of your life.

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Investing Book Review: Jim Otar’s Unveiling the Retirement Myth

This is a guest blog by By Steve Thorpe.

(Part two of this review, Steve Thorpe’s compilation of the best advice and insights from Unveiling the Retirement Myth by Jim Otar, will run tomorrow.)

For individual investors planning for retirement, basing those plans on averages just doesn’t cut it. For example, one might estimate an investor’s expected life span, future investment returns for a given asset mix, inflation rates, etc. But the investor may live longer than average, the sequence of future investment returns could easily go against him or her, likewise inflation effects can be enormous over time. Bad luck in any of these areas can easily deplete a retiree’s investment portfolio to zero during his lifetime. Unfortunately we are unable to change the luck factors that can so profoundly affect a retiree’s future income stream – or lack thereof.

Jim C. Otar, a financial advisor, Certified Financial Planner, and engineer, clearly explains these topics and more in his book Unveiling the Retirement Myth: Advanced Retirement Planning based on Market History. This review contains only a sampling from this fine body of work; accordingly I’d recommend that you pick up a copy if you want to understand all the details.

Most Research and Many Strategies Are “Just Plain Garbage.”

He covers a lot of ground in the book including: diversification, rebalancing, optimum asset allocation, warning signals of potential diminishing luck, flaws of investment simulations, budgeting for retirement, determinants of a portfolio’s success, and many others. This review will focus mainly on two core insights. First, that luck plays a remarkably large part in how well any retirement plan holds up. Second, that lower withdrawal rates, not savvy asset allocation, is the best defense against bad luck. Continue reading