My Personal Investment Strategy

It has been over a year now since I had pulled the trigger and assumed control of my investment portfolio. I simply got tired of watching my portfolio go up and down with no real say in the matter. My investments seemed to be growing, but as I took the time to review them, I realized I hadn’t been getting much more out of them than the overall market index. Why in the world am I paying someone to get little more than indexed returns, I can do it myself.

It took me almost a year of reading everything I could find (that made sense to my non-finance oriented brain) on the subject before I felt confident enough to manage my own investments. It all started with Dave Ramsey and his get out of debt lessons. While our family finances were not overextended in any way, it did need a little tweaking to get to a point where we were debt free and much more comfortable.

Climbing up the levels of Dave’s multi step financial freedom ladder, I stepped on the investment rung and simply couldn’t climb high enough to get over it. Investing my money into 4 categories of growth index funds seemed to be just more of the same. Although I applaud Dave’s debt free strategies, his wealth building theories just aren’t for me. I wanted to be more actively involved.

It didn’t make sense to me how he asked his listeners to be so involved with the debt portion of the process, yet he threw in the towel regarding investments and asked everyone to index in growth funds. It was later that I discovered a big portion of his investment strategy involved taking a commission from his recommended “advisors.”

Say what you want regarding this philosophy, but this is not the focus of this writing. I have been investing on my own for some time now and have been keeping my head above water, actually beating the market. I don’t know if this is a result of beginners luck or the countless hours I have put into my self learning, I would like to think the latter, but it is what it is.

My core philosophy is that of being a value investor that is seeking alpha, mostly in the form of fundamentally sound individual securities that are undervalued and pullback buying. Never say never, but you will never see Tesla in my portfolio.

I have studied multiple methods of investing, and I just can’t help but feel a majority of these are closer to gambling than investing. Penny stocks, day trading, hedge funds are way out of my comfort, risk, and quite frankly skill level.

I have previously written regarding active investing vs. indexing. I want to be more involved with my investments, but with work and family responsibilities, as well as taking care of the homestead, I simply do not have much time to keep track of everything I need to be an informed and responsible investor.

I think there are pros and cons with the active vs passive investing concepts, so why not take advantage of them both. I have decided to index with 2/3 of my portfolio and actively manage the other 1/3.

INDEX PORTFOLIO

I will index with mostly mutual funds and maybe a few ETF’s if they are relevant at the time. I plan on taking a majority of this index fund and placing it in the vanguard total stock market fund (VTSAX). This fund offers many advantages over other index funds.

The performance can’t be denied, it has done very well over the last 3, 5, and 10 year time periods. In fact there aren’t many funds, index or otherwise, that can beat it especially considering it has a 0.05% fee. The total cost over a ten year period for every $10,000 is a whopping $64. Investing $10,000 ten years ago would show an almost 80% gain today ($8,000), and don’t forget this includes recovery from the 2008 disaster. All of this for a unbelievable $64 in fees.

I will likely invest no less than 50% of the index allotment in the VTSAX fund. During times of unusual investment opportunities, I may take a small portion (15% or less) and invest it in specific index sectors. An example of this would be today’s financial or biotech market, in the future, who knows, maybe REIT’s will make a comeback after the interest rate scare cools off.

I am not a fan of timing the market, but I do believe strongly in positioning yourself to buy when the opportunity arises and the stock is cheap, from a value perspective that is. I planned on holding onto cash that is allotted for my index funds until the opportunity presented itself and then buy during a pullback or market correction, and it did. Trump won, and I got back into the market.

When the time comes and I have built up another allotment of cash to buy in, I will wait again until the market presents with an opportunity. Rather than dollar cost averaging with cash from a time perspective (quarterly, monthly, bi-monthly, etc) I will average through dips in the market. This assumes we don’t go into some bull market anytime soon, if we do, it’s dollar cost averaging for me. I plan on holding on and weathering any market storm with one exception. If the fund hits the 100 day SMA, I may consider selling, for the simple reason of market reaction, and the opportunity it may create for a buy later on.

MANAGED PORTFOLIO

Take a look at this chart from the Dow Jones Industrial Average. This is a lifetime chart spanning over 100 years. I chose this chart for the simple reason that it provides a good example of market volatility over the last 100 years.

There have been numerous studies, some of which I reviewed in previous posts, that show actively managed funds are rarely an improvement over indexing. I believe this holds especially true over the long haul. I also believe that there is an advantage to buying individual stocks, as they may be a little riskier, but the reward is often worth the risk. If you are picking fundamentally sound companies, at a reasonable price, you significantly reduce your risk as well.

I was born in 1970, so realistically my investing time frame would have started in the early 1990’s. I realize that this chart is difficult to see, but this would have put me about 1/3 of the way up the last significant bull market. Buy and hold would have been a great opportunity for me at the time, and it actually was, because I didn’t know any better. I rode the last 2/3 of that market and did as well as could be expected.

It was around the turn of the century (wow that makes me feel old) that the sideways market (albeit a very volatile sideways market) started to take shape. I can’t say for sure but I don’t think this buy and hold philosophy worked very well for me during this market, in fact I believe I may have missed multiple opportunities for significant growth. let me explain why:

Viewing this 5 year chart from Wal-Mart you may notice a nice price increase from pre-October ’12 (~$52) until now ($72.75), an increase of a little over $20 a share. This is roughly a 28% increase over this period, not bad at all. Throw in dividends and you are likely over 30%.  What you see here is a nice investment, what I see is opportunity missed.

A story of buying on the dip, PE’s and Simple Moving Averages

Before I get started, I suggest you go to your favorite stock research page and bring up a 5 year WalMart daily chart. Make sure you can add a 20 and 50 day simple moving average. Having a way to identify PE ratio trends during this time is helpful, but not critical. Follow along as I describe this journey, hopefully it will make sense.

Lets assume that I had been a holder of this stock in October of 2012. Knowing what I know now, I think this would likely be the case with this blue chip, fairly valued company. The stock had a PE ratio of around 11 at the time and seems like a good value buy. As the stock price went up, the value declined, it started to become a little too expensive from a value perspective.

At its peak around January of 2015, the price was roughly $85 a share and the PE ratio was approaching 19. This in itself would not have been enough to make me want to take profit, but it did raise a few red flags. This had been the start of a significant drop in price for WalMart. I can’t say for sure if I would have taken profit or not at that time (likely not), but what I can tell you is with those evaluations and crossing under the 50 day simple moving average (SMA) in April of the same year I would have definitely taken profits and been happy to do so.

buy-the-dipIn early April 2015 WalMart crossed under the 50 day SMA when the stock price was roughly $80 a share. It eventually stopped falling around November 2015 and started to climb again. There is no way to tell at the time that this was the beginning of another run, so I wait for another SMA to give me some direction. Just after Christmas 2015 WalMArt crossed above the 20 day SMA and had a PE of about 13. It is at this point that I would consider buying again on the dip at a price of $63.50.

Today this stock sits at about $72.75 a share. Lets take a look at a comparison of profit taking with buy and hold vs value evaluation.

Buy and hold profit: Purchase ($52) Current value ($72.75).

Profit of $20.75 a share (28.5%)

Value evaluating: Purchase ($52) Sell ($80), buy again ($63.50) Current Value ($72.75)

Profit of ($28 + $9.25) = $37.25 a share (51.4%)

Doubling down: Lets just say that I did not sell this stock when it crossed the 50 day SMA for whatever reason. Another technique that I have benefited from is doubling down. After a decline in price, buying more shares when you are confident the correction is reversing can often be a nice way to increase profits. There may or may not be a little more risk involved, depending on the stock, but it can average out the loss, and make a lot more money in the long run.

A word of caution here, if you decide to double down, you must be absolutely confident in the fundamentals of this company and know why the price dropped. If the reason was benign, go ahead and double down, if there are potential significant issues, get out.

As you can see by this example, consistently evaluating your portfolio and looking for opportunities can significantly increase your profit. I fully appreciate that this scenario is a hypothetical one, and there is really no way to know if this example would have played out this way had I owned the stock during this period, but it does present me with interesting options and perspective for the future.

There are some that would say hindsight is 20/20 and this is market timing. I disagree. I have been able to accomplish similar gains during my short experience so I know it is possible. There may be, technically, some form of market timing here, but I am not guessing at buying and selling, I am using the data to provide information to make an informed decision. I am continuing to evaluate a company after I have decided to purchase it looking for opportunities to grow. I am buying fairly valued companies, that make money (NOT Tesla) and offer promising gains, not stories (Tesla).

I don’t think this scenario holds true for most companies. It all starts with a great company at a fair price. Too much debt, little growth potential, sub par evaluations, little earnings growth, diminishing return on equity, and you’re out. In order to be successful in this market, I strongly believe each company must be evaluated with a strong objective lens and one must be patient for the good ones to dip in price for reason based on fear and not value. Monitoring the market in relation to a portfolio will allow the savvy investor to reap the benefits later. Good evaluations, studying and patience are what I feel it takes to be successful in this endeavor.

By this point you make think I consider my portfolio as my greatest asset, I would say my greatest asset is my watch-list, it is loaded with good companies waiting for me to buy them when the time is right.

Personal Finance: Retirement Savings

In the last several posts, I have been discussing methods of personal finance, the basics as I see it anyway. I tried, and have been moderately successful, in an attempt to not make this series into a playbook of financial freedom, or even worse “Financial Freedom in Three Minutes per Day” foolishness.  I tried to write about what I thought were the most basic of concepts, and what I thought were the most frequent mistakes that people choose to rob themselves of financial security. Financing a car (or worse leasing), depending on social security,  not living debt free, etc., are the pitfalls I see most often with friends and family who do not own financial security for themselves.

What I would like to show with this post is that investors don’t need to be born with a silver spoon in their mouth, or make a six figure income to become financially secure. Being dedicated to financial freedom and treating debt like the four letter word that it is, is half the battle. Appreciating that one doesn’t need the latest and greatest gadget that just hit the store shelves (that will eventually be lost in a corner in the basement in 6 months) is just the first step in recognizing the downward spiral that is making someone a slave to debt.

in order to start saving for retirement, we have to start somewhere, and becoming debt free or rarely entering into debt is a key concept for future investing. Once debt freedom is achieved, investing will be less of a burden on personal finances, and give little excuse not to do it. In all honesty, investing toward financial freedom can actually be fun in the respect knowing the investor will get to watch all the hard hard work turn into future security.

Lets start off with a few simple illustrations of what money saved now can do for the future. I’m not saying that investing can’t start when you are very young (remember your piggy bank?), in fact it should, but I want to show a more realistic example of somewhere that we all have been, and where we all can be.

Let’s imagine you are finally out of school (military, trade school, college, whatever) and have a few years of working under your belt. Hopefully you are living with minimal debt, but lets assume that you are not.  What does $100 a month do for you in the future.  Well, lets first define what does $100 mean in a practical sense other than 5 Andrew Jackson’s in your wallet. As of today, $100 will buy you:

1. 4-5 new books

2. A few shirts or a couple pairs of jeans

3. 2-3 video games

4. 100 songs for your iPOD

5. A tattoo, a small one I imagine, I have no relevant experience here.

6. A few dinners out with friends

7. A handful of movies in the theater, DVD’s, or downloaded from pay per view

8. A pair of shoes

9. Several Starbucks lattes

10. Gym membership for a year that you will never use

11. A year of Netflix

12. The latest gadget “that you just neeeed.”

13. All of the great accessories for you iPhone

14. Cable for 3/4 of a month

15. I’m really struggling now, so I’ll just end with that, but you get the point.

I am not asking you to give up eating out every month or never buying a pair of shoes again. What I would suggest is a few less dinners out, books from the library instead of buying, coffee brewed at home, and a few less iPOD songs per month and BAM!  $100 in your pocket with really very little sacrifice. Obviously this over exaggerated and exhausting example is for the person who is not already saving, and is trying to rework the excuse that they can’t afford to invest right now.

Now, lets put that $100 to work for you. A simple compounding calculator will prove to you that $100 a month from age 25 – 65 invested properly (Roth, IRA, mutual fund, etc.) with a reasonable rate of return (8% – 12% on average per year) will make a lot of money at retirement. At 8% you will accumulate over $320,000 and at a rate of 12% you will be very close to $1,000,000. The average rate of return of the S&P 500 since 1926 is 11.69%. By the way, this time frame includes the great depression, two of the worst recessions this country has ever seen…yada, yada, and it still averages almost 12%. Disclaimer: This return is not true of late, but looking at the eb and flow over time, I see no reason why this average should not continue.

If that $100 a month were to be put into a Roth IRA, it will grow tax free to withdraw at 59 1/2 years old. No taxes, no penalties, $300,000 – $1,000,000 for you to spend at retirement for just giving up a few lattes, and a couple of extra meals out every month.

Lets say that we can afford a little more, or that you added a little extra each month with bonuses, salary raises, birthday money from Grandma, whatever.

$200 a month @ 8% = $620,000

$200 a month @ 12% = $1.84 MILLION

$300 a month @ 8% = $932,000

$300 a month @ 12% = 2.76 MILLION

$400 a month @ 8% = 1.24 MILLION

$400 a month @ 12% = 3.68 MILLION

Here is a novel thought, just save $25 a week, and put it in a jar, at the end of the year, invest it. Sign up for automatic deduction into a Roth IRA, etc.

The simple harsh reality of it all, that the non retirement planner may realize too late, is that if you do not retire a multi-millionaire, you really have no one to blame but yourself.

Investing: Active vs Passive Management

I recently started researching a methodology for my personal finance investing. I am certainly happy with my results thus far, beating the market as I sit here today writing this, but I occasionally find myself tempted to lean away from what got me here, value investing and patience. I’m not looking for a get rich quick scheme by any means, but I would like something a little more structured, to force me to stay the course.

This quest has brought me to the index vs active management debate. As I read both sides of the argument, I can certainly appreciate each perspective. I have decided to share some of the data I have been finding and possibly use this to entertain a hypothesis for future investment considerations.

Rob Isbitts wrote an article for Marketwatch a few years ago sharing some of the data from a research project his firm completed trying to answer the active vs passive question. The goal of his research was to confirm or deny the theory that active managers consistently beat the market average (index).

Mr Isbitts’s data appear robust including a wide range of inputs in four classes (all US funds), data from all mutual funds, all stocks, and all large cap funds and large cap blended funds over the last 15 years including the two (each) most recent bull and bear markets, as of 2014. I had been happy to see that Mr. Isbitts attempted to eliminate bias by using the Morningstar Direct system and included all stocks/funds that existed during this time-frame to include those that were closed or merged.

Mr. Isbitts’s research appears to have dispelled the theory that active managers were losing to index funds at an overwhelming pace. In fact his research showed that, depending on the investing cycle, each technique may offer some benefit over the other:

  • A majority of the time the index had been a middle of the road performer
  • During bull markets, the index prevailed 80% and 63% of the time respectively.
  • During bear markets, indexing paled in comparison to active funds under performing by 62% – 66% respectively.
  • Generally speaking index funds did outperform active managers 60% of the time however, this is likely due to the fact that the stock market goes up 70% of the time.

I do not discredit Mr. Isbitts data but I would have like to see a few questions answered:

  1. Did the data give enough time for recovery of the bear market? I certainly believe that active funds can outperform indexes during the acute phase of this period, however there was no mention of the recovery period. Did the markets recover to pre-bear levels?
  2. Why was the time frame limited to the last 15 years? I would have liked to see more data points. Basically this data has been derived from a sideways market. This market does give perspective to the ups and downs, however I feel a longer sample would have been more helpful.
  3. In all fairness I may be able to appreciate a justification, fully understanding that the author did not ask for one, in regards to the study time frame, after all investing today is much different than investing on the late 90’s.
  4. What I cannot accept, however, is the fact that the author did not address the issue of associated fees. There is no question that actively managed funds are significantly more expensive than index funds. There is a huge difference between a 0.07% Vanguard indexing fund fee as opposed to a 1%, 1.5% or greater than 2% fees charged by actively managed funds. A return of 8% for an index fund compared to an actively managed fund return of 8.75% with a 1% associated fee is simply not comparing apples to apples. The research would show that the active fund outperformed the index fund, but in reality selecting this particular managed fund would have put less money in the investors pocket.

Needing more information I turned to a Vanguard study that I found using data from the same general time period. On the surface, I didn’t believe this study was very helpful in my quest. I’m not at all saying that it was a poorly done, the data just didn’t seem to give me what I had been looking for. Or did it?

The data from the Vanguard study suggests similar findings to that of Mr. Isbitts, with some differences. However, I realized that during this research I lost perspective of my goal, to identify and implement a more robust strategy for my personal finances.

I had been able to locate a graph that spoke volumes to me. Take a look at this graphic with the perspective of evaluating passive vs active investing ask yourself, is active investing better? The answer I came up with is sometimes yes, and sometimes no. Not very helpful is it? Now look at it again and ask yourself, does actively investing give me a clear advantage over passive investing? The answer I found, is no.

Consider the due diligence that you will have to undergo to pick a winning active investor:

1. You must consider the fund manager, and this is difficult to do. Look at the amount of time they have been overseeing this investment as well as evaluating the success of the fund, in all types of market swings.

2. Consider the portfolio allocation, if you can actually find the complete list, and decide if this is something you are willing to invest in aka, “bet on.”

3. Consider the fees associated with an active fund, which in most cases are considerably higher than indexing funds.

4. I didn’t even mention loaded funds. Index funds traditionally have no load. Managed funds however, may carry a 5% load (fee) or more up front simply for the right to own this fund in addition to annual customary fees.

Now ask yourself where is the advantage in active funds? Basically we are betting on the fact that we will pick the right manager, paying him or her significantly higher fees to consistently do the right thing over and over, year after year, for what?  Sometimes yes and sometimes no.

Translation: sometimes yes + sometimes no = indexing. You are paying this manager to basically index for you while increasing your risk to do so.

For this reason alone, my answer to the question of indexing vs actively managed funds is a simple one, INDEX!

I am sure that there are some fantastic funds and fund managers out there that are well ahead of the curve, but my guess is you will pay for that service as well with higher fees and/or higher entry minimums to have an opportunity to invest in the product. This simply isn’t for me. I will still maintain my role in actively managing my own funds (individual stocks), but in order to decrease my risk, I will certainly look to index a portion of my money to assist me in this quest.

Compost: It Just May Be All You Need

In a previous post I discussed some research findings that suggest a healthy application of compost may be all you really need for your plants to thrive. I reviewed in another post on how I make compost, and several different methods to achieve results of rich “black gold.” In yet another series of posts (starting here) I reviewed my thoughts on growing soil. You might say, I am a believer in healthy soil.

So then, what actually is compost?  Ideally compost is a dark, crumbly material that smells “earthy” that is decomposed organic materials such as leaves, grass, plant matter, manures, etc. In all actuality, composting happens naturally around us and we may not even realize it or take the time to appreciate it. The next time you are taking a hike in the woods, venture off the path and pick up a handful of the “black gold” and see what I mean. It will be earthy smelling, dark and crumbly, as well as a fantastic resource for plants.  What you have just picked up is decades worth of fallen leaves and plant matter that has decomposed with nothing but mother nature to keep an eye on it. Depending on how you make your compost it should have most, if not all, of the macro and micronutrients that you garden will need for a healthy growing season.

So why do we make compost?

Besides the obvious benefit to our gardens there are “fringe benefits” as well of using and making your own compost.

1. Composting reduces the amount of landfill waste. Almost 60% of our municipal waste (13% yard waste, 12% food waste, 34% paper) can be composted and therefore be doing good work in our gardens as opposed to piling up in our landfills.

2. Composting will save you money (as opposed to buying organic inputs) while improving soil tilth, aeration, water holding capacity and returning much needed nutrients.

3. Compost can suppress some soil born disease by out competing the pathogens and adding beneficial microbes.

4. Quite frankly, its just fun to make!

What are the basic considerations when making compost.

This question can be answered in a variety of ways, as it can be as difficult or as complicated as we want to make it. By now, you should know, that I prefer the K.I.S.S. (KEEP IT SUPER SIMPLE) method in just about anything I do. The only materials you really need, at the bare minimal input levels are carbon and nitrogen sources, water, and air. Sure a fork to turn it with, and some fancy barrels to roll it in are nice, but honestly you really only need three things.

Carbon sources (Browns):  Fall leaves, corn stalks, straw*, paper, wood chips/sawdust.

Nitrogen sources (Greens): Vegetable waste, grass clippings, cow manure, horse manure, poultry manure, coffee grounds.

An ideal carbon to nitrogen ratio (C:N) is 30:1. This number is not crucial, but know that too much nitrogen will make it cook hotter, and too little will slow down the process. Do not be confused by the green and brown terms regarding carbon/nitrogen ingredients. Just because something is brown does not automatically render it a carbon source, this is a general statement as there are exceptions:

1. Coffee grounds are an excellent source of nitrogen (and calcium) for the compost pile even though it is brown.

2. Grass, while green, is an excellent nitrogen source, but when it dries to brown, becomes a carbon source.  It is actually recommended to leave your grass clippings on the lawn as they will supply roughly 50% of the feeding for you lawn for the year. The same concerns that I mentioned below regarding straw, should be a consideration for grass as well. Unless you are sure the source of grass is chemical free, it should not be used. Many community composting sites have outlawed the use of grass clippings for this very reason.

3. More on manures in a few minutes.

4. I prefer to use most, if not all, of my kitchen waste in a vermicompost system. This will be covered in another post in detail, but if you do not utilize worm composting for castings, I would highly encourage any gardener to consider it.

5. I think I have covered fall leaves ad nauseum, so no need to be specific here other than use them as much, compost, vermicompost base and whenever you can.

Water.

Water should be added periodically to your compost pile on an as needed basis, and more importantly in the beginning when creating your pile. Rain may not be adequate to fulfill the hydration needs of a compost pile, 40%-60% moisture. To gauge water content of compost, take a handful of it and squeeze it into your fist. If there is no water leakage, it is likely too dry.  If it drips more than a few drops it is too wet.

Air/Temperature

Air and temperature are typically regulated by similar methods, so I have decided to combine them here.  Proper compost turning should give adequate airflow to the pile to create an aerobic process. If your compost pile is slimy or smells foul, it has likely gone anaerobic (lack of air) and could be in trouble. Turn it, turn it, turn it! Anaerobic composting has a high likelihood of growing pathogens as opposed to beneficial microbes and can cause serious health concerns.

You will know when your compost pile needs turned when the internal temperature cools below 140 (60 degrees Celsius) degrees Fahrenheit. At minimum, your pile should be turned at least monthly until finished, if you want compost in a reasonable time period. Ideally your pile should “cook” between 140 – 160 degrees Fahrenheit, that’s 60-71 degrees Celsius for our metric friends in the east, um….and north, well actually in the south too. OK for 98% of the world!  Your compost pile may safely reach as high as 180 degrees Fahrenheit a few days after turning, but should fall to cooking levels within a few days.  Composting temperatures reaching 160 degrees F. should be adequate to kill pathogens as well as weed seeds, anything above a sustained 160 degrees F. risks killing beneficial microbes as well.

If you do not have a compost thermometer it is suggested to dig into the pile and feel the internal temperature. If it is too hot to keep your hand in for more than a few seconds, it should be adequate. The pile should steam when creating any opening or turning.  A small fee of $25 -$50 will save you the trouble of hand testing, as you can find a reasonable compost thermometer on Amazon.

There are a few other items that are required of a good compost pile that you do have some control over.

Time.

Just about any compost pile of any particular C:N ratio will cook in 1-2 years without any work (turning, watering, etc.). Obviously most people do not want to wait that long, therefore turning it can speed up the process and finish in as little as 2-3 months in ideal conditions. Depending on the crop utilization for your compost, it is recommended that a pile sit/cook for a minimum of 6 months if coming in direct contact with the actual fruit or root crops, especially if utilizing manures in your compost pile.

Microbes.

Microbes are likely the single most important component of composting, however you should have little input regarding this. Scattering a few scoops, or shovels of finished compost into you new mix, should get you started with an adequate microbial count.  “Compost activators,” in my opinion, are a waste of time and money. They are mostly nitrogen with some microbes, but do little to gain any significant advantage in your compost pile compared to the cost.  Most research suggests negligible or no advantage in using these products when compared to a few shovels of compost or garden soil.

Size & Outside Temperature.

The size of your compost pile is important. A compost pile larger than 3’x3’x3′ (Thats 1m x 1m x 1m for the other 98%) will be adequate for cooking. Any smaller than this and you will likely have trouble gaining enough thermal mass to reach desired cooking temperatures, resulting in a longer cook. A proper compost pile can be ready in 6 months if cooking over the winter, that same pile can process in half the time during warmer months, especially over the summer.  Outside temperatures play a major factor in composting times, but they are not critical.

What should you not compost?

It is generally advisable to stay away from composting any manure from humans, cats, or dogs (any carnivore really) as the gut flora of these animals increase the likelihood of contaminating your pile with pathogens, even with perfect composting technique and influences. I will not say that this cannot be done safely, as it can be, but you better know EXACTLY what you are doing in these methods as the margin of error is significantly higher. It is my opinion that the risk does not outweigh the benefit in this type of composting, just don’t do it.

 Other products such as milk, dairy, meats, oils, lards, and grease are not advisable to compost. These products do not hold the same pathogen risk as carnivore manure, but they tend to attract rodents and scavengers to your pile, looking for a quick and easy meal (think compost smorgasbord) and can easily destroy a pile looking for an easy snack.

Obviously adding anything treated with herbicides or pesticides is not advisable as these products do not “cook off”, even though some references suggest that they will. If there is any question regarding the viability of your compost, take a cup full and plant a few peas in it or other easy to grow seeds. If the plant sprouts, then dies off, you may have an issue with an herbicide.

*It is becoming more apparent that straw, of any type, is becoming contaminated. Herbicidal products, such as Round-Up (glyphosate) has finally found its way into the product and even with the best composting techniques, may still be present in finished compost. I had been listening to a composting lecture Barbara Pleasant gave at a Mother Earth News conference a few years ago when she discussed these “preliminary findings.” I have since read several articles and spoke to a few people that have had significant failures in their plants that were attributed to herbicides being present in their compost piles due to glyphosate contaminated straw. It is highly recommended that unless you are absolutely positive of a clean source of straw, that you do not use it.

In a nutshell, gather some carbon and nitrogen sources, make a pile in the garden in the fall, and it should be ready by spring planting if you are remotely close. That’s how I do it….

http://nsgl.gso.uri.edu/vsgcp/vsgcpw01002/vsgcpw01002_part9.pdf

WalMart Garden Fail

Have you ever heard the old adage “If it sounds too good to be true, then it probably is.” Well I have, so I guess that means I should have known better.

Rewind three days ago and imagine yourself at the garden center looking through the left over summer clearance garden supplies. You walk by the multiple bins of bulbs and you see they are on clearance. Bulbs that usually sell for $5.98 – $7.98 on sale for $3.00. Great deal right? So you look through a few bins and find several that you like and head to the register. Low and behold at the register these are ringing up for $0.75 – $1. Five packs of assorted bulb packs for under $5. So I did what every red blooded American would do, I went back and picked out 50 more. So I ask again, great deal right? No, not really, but it depends on your perspective.

My plan at the time was to create a huge perennial bed (500 – 600 bulbs) full of lilies, hollyhocks and other perennials for cutting flowers, pollinator attractors, and to generally spiffy up the joint. I had them all spread out so that I could match like packages and so that I would know exactly what I had for planting. It was then when my wife walked through the kitchen and asked “Why did you buy so many annuals, I thought you wanted perennials?” Low and behold…annuals come in bulbs too, oops!

So after I finished organizing everything I realized that about half of my purchase had been annuals. I am not totally opposed to this, but in my region I would need to dig these up before every winter and replant in the spring. I don’t think that’s going to happen. I will keep a few annuals that I really like and save for containers or specific areas of the garden/yard, and return the rest, hopefully there will be perennials left to exchange them.

UPDATE: I originally wrote this post last fall (2015) and the results were pathetic. Of the 300+ bulbs I planted, I would estimate 10% actually grew. I guess there is a reason these things were selling for pennies on the dollar.

Quintuple Composting

This summer I had been watching one of my favorite YouTube sites (J & J Acres) and it really made me think about my evolution in garden composting. In his video ( J & J Hot Compost ) Jared shows how he has built a compost pile using techniques adapted from a Berkeley study and will turn his pile into compost in 18 days. I have composed in almost every way imaginable, but I have never turned anything into compost in 18 days, I’m really interested in seeing how this works out for him.

My methods of composting:

(1) Good Old Fashion Compost Pile. I typically start this in the fall when I “harvest” any plant matter remaining in the garden from dead or dying crops. I also add some grass clippings for the nitrogen value as well as a load or two of chicken manure. I rarely collect grass clippings because the true benefit is leaving them lay to return to the soil and feed your lawn. If you do not have access to animal manures, I don’t think saving a couple weeks of grass clippings as a nitrogen source will hurt anything.

The real workhorse though in this pile is the shredded leaves that I gather and add. It is my opinion that leaf compost is the single greatest thing you can add to your garden, well maybe in a close tie with vermicompost. The products of this compost pile typically go into my raised beds.

(2) Vermicompost. I started vermicomposting a few years ago and wish I would have started even before that. This is by far the easiest method of composting that I do, and offers some of the greatest benefits. I typically use this compost for houseplants and for my favorite plant, my dwarf orange tree. I recently invested in a few additional pounds of worms with the intent of having enough worm casting by spring of next year to make my own seed starting mix of 25% vermicompost, 50% coir, and 25% vermiculite. Should be interesting, if anything, the kids like playing with the worms.

I’m going to rethink my vermicompost methods this winter though, I have seen quite a few guys create habitats outside and do quite well. I have also used 5 gallon buckets, stacking them up three high, and have been successful as well.

(3) Compost Tumbler. This is a relatively new endeavor for me.  Admittedly I have been either too cheap or too busy in the past to buy or build one. I certainly appreciate the ease and results of these devices and was very lucky that I picked one up on craigslist for $60. As soon as I got it, I filled it with kitchen scraps and yard waste and started spinning it. The material has definitely broken down, but I think the weather is just too cold now to see the real benefits. It sits on a frame and is exposed to the elements (wind) during these cold winter nights, which really puts the half nelson on the heat production needed to adequately compost materials. Think of the “Bridge freezes before road” concept. I’m not sure what I will use this compost for, maybe to supplement anything that needs it not otherwise covered by my other composting methods.

(4) Manure Piles. In the past I have always tilled in manure with the fall cleanup that way it is ready for spring planting. I am running out of time this year but my plan is to place large manure piles right in the middle of my gardens and let them compost over winter. In the spring I will then till it in prior to planting. I decided to place these piles in the garden to get the benefit of any leachate being deposited in my garden and not the spot where I compost. Since this compost will be heavy with nitrogen, I’ll reserve it for the heavy feeders like corn, potatoes and melons.

(5) Green Manure.  Almost forgot about this one. Technically I guess this is composting, but its a stretch. Cover crops that I have planted in the fall and summer will be tilled in and add a multitude of organic material and nitrogen fixation to the garden beds. Buckwheat, clover, vetch and winter wheat are my favorites.

Has anyone ever used one of these compost bins?  Let me ask this question another way…Has anyone ever used one of these bins successfully? I have been adding to this compost bin for more than two years. I finally emptied it the other day and was extremely disappointed in the result. I found cornstalks in the bottom that I threw in 2 years ago, still intact with minimal breakdown. Basically all I use this for now is a reservoir for my food scraps until I can move them to a proper compost bin.

Even with all of these methods, I still never seem to have enough compost when I want it. I guess I know what I need to do…..more worms, another tumbler, and bigger piles!!

My Favorite Soil Amendment: Leaf Compost

By now most of the leaves have fallen and everyone is scrambling to get them raked up for the season so that they can get them to the curb for the township to pick them up. I have been busy the last few weeks trying to beat the municipality to the prize.

I do not live “in town” so I have the luxury of not feeling the pressures and headaches of having to get reported to the HOA, to get my fall clean up completed. I just sit back and wait for everyone else to do it! I don’t have many deciduous trees on my property, but this is slowly changing, so my leaf raking is at a minimum. Unfortunately this means I have to depend on others for my fall leaves, and have earned the nickname “Leaf Thief” by a certain Sheriff’s Deputy that I know.

Recently, I got my trailer ready and was out the door at 5 am to score some leaves. I was able to pick up 65 bags in the trailer and another 10 in the truck bed. The next morning I started out at 4 am and was able to score 60+ bags in the trailer and another 10 in the bed. I wish I had more time, because I left at least three times that many at the curb simply because I needed to get to work.

Why do I get up so early to collect leaves you ask? Its simple, but really there are two separate answers here. It is my opinion that the best composts are comprised mostly of #1 worm castings, #2 leaf mulch and #3 animal manures. I use all three and still never seem to have enough. I also add any yard and garden waste to the above, see my previous post (Quintuple Composting ) for more details.

The second part of the answer is that I try to collect these leaves before the traffic rush in the morning because I don’t want to get run over by someone texting, drinking their coffee and trying to change their radio channel while driving 20 mph over the speed limit in an attempt to get to work three minutes quicker, and still be five minutes late. I can be out the door and back home before anyone wakes up leaving enough time to get showered and ready for work/church, etc. This leaves me plenty of time to to whatever with the family after work.

Over the last few years I have perfected my technique in processing fall leaves. Gone are the days of my wife and I raking and lifting, bagging and turning. I can process 50 – 60 bags of leaves in about 45 minutes, by myself. Here is how I do it:

Originally I would dump out 10 bags or so, walk through them to spread them out. I would chop them up with my mower and gather them with my yard rake, then dump them in my composing piles.

My leaf composting has evolved over the years as I would lose a fair amount by mowing over them. I’m not sure where they went though, they must be with that sock I always lose in the dryer. 

These days, I chop them up in a brush mulcher I picked up on Craigslist for $200. This thing is fantastic, it saves me a half day at least.

I just lift up the dump bed, the bags slide down and I process them through. I keep everything in a line instead of in large pile as it is easier to turn with the loader. This pile will end up being about 8 feet wide and 25 feet long.

This is one area near my barn where I have most of my raised beds. The opening of this pile is just wide enough to fit the loader bucket in to turn and eventually remove it for use. I’ll add a few loads of nitrogen source, in the form of animal manures, to each pile and let it cook.

I have this pile cooking in one of the in ground beds. I like to compost this on site, because I don’t lose anything to drainage, it all goes right into the garden. I’ll alternate this site every year among a few of the larger beds I have to “spread the wealth” so to speak. I ended up processing around 370 bags of leaves this year, at 10 lbs a bag (roughly) that’s almost 4,000 lbs of leaf mulch! I even went so far as to approximate how many leaves were involved, 3.8 million!

Just think in a few years, I will have perfected this process even more, when I can sit back and watch my boy have all the fun!

Bonds: Your Grandfathers Investment

stock-bondsA few words about stock/bond ratio and safety: My opinion.

Safety in allocation mixes have traditionally been in the form of a stock/bond mix, i.e. 50/50 for the less aggressive and 80/20 for the 20 something just starting out, as an example. It is my opinion that bonds in this market just aren’t a good investment anymore, nor are they as safe as you may believe.

Why do you ask? Bonds pay very little in the form of a return in this market and interest rates will likely be rising over the next several years, which means even less returns.

Why do interest rates matter? If you buy a 5 or 10 year bond now at 1% – 1.5% return and interest rates rise, you have just lost money due to inflation. If you want to get out of them early, who will buy them at a 1.5% when interest rates rise and the current bond market offers 2% or 4% bonds due to rising rates?

safety-netIf I am going to only get 1% – 1.5% back on my money, there better be a lot less risk than there is currently in the bond market. I think we are all much better off holding cash as opposed to bonds as a safety net.

The old 50/50 mix of yesterday should be 50/50 mix of stock to cash for the person in retirement in my opinion. Get what you can from dividends and growth, while maintaining cash for safety and to buy stock when they become appealing (buy on the dip), or to ladder in a CD, etc.

I certainly do not plan on sitting on bonds when I retire, I want my money to work hard for me so I don’t have to.

2nd Amendment Rights: My Thoughts

This post was originally written shortly after the San Bernadino attack. I had posted this on a previous blogspot blog, which I have since closed and carried over to this forum. The writing is a little old, but the sentiment still holds true.

Over the last few weeks, there have been two disturbing events carried out by terrorists, the first in Paris and most recently in San Bernardino Ca. Our presidents response to this was to call for more gun control laws and use these horrific events as a platform for his agenda. I find this to be disgusting.  He calls on the sympathy of the people to close “gun loopholes” and tighter restrictions on gun purchases.  He states that the best way to stop these events are to close these loopholes and restrict the sales of guns in America.  TRANSLATION: The President of the United States wants to deny US citizen’s their 2nd amendment rights, guaranteed to us under the constitution.

Our president is either lying to the people of the United States or he is ignorant. In fact, I believe he is both. If he were with me right now I would ask him how more restrictive background checks would have prevented these events? The truth is, they wouldn’t have prevented these maniacs from committing evil acts.

How does denying citizen rights prevent these massacres? It has been proven time and time again, that these gun law restrictions simply do not work. I have a better solution. What do you think would have happened if there were armed citizens carrying weapons in the immediate vicinity of the recent California shootings? In Paris? In the movie theatre in Colorado? In our children’s schools? I certainly do not believe that these events would have been prevented, but I am confident that the carnage would not have been as severe. You see the truth of the matter is, these events happened in gun free zones, where citizens had little chance to defend themselves. Gun free zones that our president and his fellow liberals worked hard to establish.  Our leadership has denied citizens of the United States the right to defend themselves while they, and their families, enjoy the benefit of armed guards 24 hours a day.

The fact of the matter is that the liberals have established a foothold in our nations cities. Where are economic policies failing? Where are violent crimes against each other occurring at a staggering rate? Where is a family most susceptible to physical or financial harm? The truth is, any of these events can happen to any American at any time, but the overwhelming concentration is in our cities where the liberal theories have condensed common sense into a talking point on some CNN agenda, otherwise ignoring it in daily practice.
Citizens of these metropolises have become so conditioned my liberal madness, that they have literally drank the Kool Aid for so many generations, they are oblivious to the true threat to their well being, and often take out their frustration on each other.
The FBI reports in 2014 that there have been 160 active shooter incidents between 2000 and 2013.

     1. 486 people killed, 557 wounded.

     2. Active shootings have occurred in 40 out of 50 states, including the District of Columbia

     3. 66% of these shootings ended before the police arrived.

     4. In 64 incidents the duration was 5 minutes or less, in 23 incidents, the duration was in 2 minutes or less.

FBI statement “Even when law enforcement was present or able to respond in minutes, civilians had often had to make life and death decisions, and therefore should be engaged in training and discussions on decisions they may face.”

The very best response times for police have been estimated at 5-7 minutes for shooting events.  According to the previous data, almost one half of these shooter events would have been over before the police arrived. Simply put, the police are not able to defend civilians during an active shooter event. The onus is upon us, citizens, to protect ourselves and our loved ones, and the liberals want to take that protection away from us while enjoying the liberties of armed guards everywhere they go. This double standard is simply unacceptable. What was the very first tactic Adolf Hitler used when enslaving the Jews in Nazi Germany, he took away their means to defend themselves. I’m not trying to make light of those horrific events nor am I incuinating that liberals are Hitler incarnates, but we all know how that turned out.

I have given myself to God, a lamb of God, a sheep in his flock. I refuse to be a sheep to another man. I believe in life ever lasting, but while here on earth I believe in the preservation of life for me and my family over the life of another man committing evil actions. Thou shall not kill, does not mean though shall not defend themselves, it means thou shall not commit murder.

Would we be so willing to give up our right to freedom of speech? Why is it so easy to protect the first amendment but not the second? If you will not Hear my words, then take heed to our forefathers:

     1. A free people ought not only to be armed and disciplined, but they should have sufficient arms and ammunition to maintain a status of independence from any who might attempt to abuse them, which would include their own government.” – George Washington

     2. “That the said Constitution shall never be construed to authorize Congress to infringe the just liberty of the press or the rights of conscience; or to prevent the people of The United States who are peaceable citizens from keeping their own arms…” – Samuel Adams

     3. “…but if circumstances should at any time oblige the government to form an army of any magnitude, that army can never be formidable to the liberties of the people, while there is a large body of citizens, little if at all inferior to them in discipline and use of arms, who stand ready to defend their rights…” – Alexander Hamilton

     4. “The strongest reason for the people to retain the right to keep and bear arms is, as a last resort, to protect themselves against tyranny in government.” – Thomas Jefferson

     5. “Those who hammer their guns into plows, will plow for those who do not.” – Thomas Jefferson

     6. “To preserve liberty, it is essential that the whole body of people always possess arms, and be taught alike especially when young, how to use them.” – Richard Henry Lee

     7. “Americans have the right and advantage of being armed – unlike the citizens of other countries whose governments are afraid to trust the people.” – James Madison

     8. “…to disarm the people – that was the best and most effectual way to enslave them.” – George Mason

Some food for thought:

     1. What’s more frightening, being in the presence of a trained concealed weapons holder or a bad guy hurting you or your family and you have no means to help them?

     2. Isn’t it interesting that a large portion of the people trying to deny our 2nd amendment rights, are the same people that walk around all day with armed guards? (Politicians)

     3. When there is a legitimate threat to you or your families life, what would you rather have a gun or a cell phone. We know by the data discussed previously, it is reasonable to assume that a police officer will likely be there to take information after the fact, not to necessarily save your life in the immediate danger.

     4. My gun will never kill someone that is not trying to hurt me or my family.

     5. Consider the multiple school shootings, theatre shootings, news station shootings… if there were a concealed weapon carrier present with a gun, would it have been a different scenario?

     6. Background checks are a vehicle for the government to keep tabs on gun purchases. It is apparent that it does not deter bad people from doing bad things with guns or obtaining them.

     7. There are more gun laws in the US that I can count. Enforce the ones we have, not create new ones that do not work.

     8. There is only one way to eliminate all gun deaths, accidental or otherwise, and that is to eliminate all guns. Therefore let us also eliminate:

          a. Vehicle deaths by getting rid of all cars.

          b. Hospital deaths by getting rid of all doctors and nurses.

          c. Stabbings by getting rid of all knives.

          d. Plane deaths by eliminating all planes, and vehicles of flight.

Sound ridiculous to you?  Yes, me too, as ridiculous as taking our 2nd amendment rights from us.

The right to bear arms is just.  This right is based in scripture as well as a legal right according to the US and PA constitution. Pay particular attention to the statements of shall not. It is clear and concise. If I signed an agreement stating that I shall not <pick your scenario> then I would certainly struggle to legally back out of this agreement in any court of law, so why is it continued to be argued by politicians?  There is no room for interpretation or back door avenues to deny citizens these rights.

     SCRIPTURE

          1. Do we not remember David slaying the Philistine Goliath with a slingshot?

          2. Luke 22:36 And He (Jesus) said to them, “But now, whoever has a money belt is to take it along, likewise also a bag, and whoever has no sword is to sell his coat and buy one.

          3. Genesis 14:14  And when Abram heard that his relative had been taken captive, he led out his trained men, born in his house, three hundred and eighteen, and went in pursuit as far as Dan.

     US CONSTITUTION

          1. 2nd Amendment: “A well regulated Militia, being necessary to the security of a free State, the right of the people to keep and bear Arms, shall not be infringed.”

          2. In District of Columbia v. Heller (2008), the Supreme Court handed down a landmark decision that held the amendment protects an individual right to possess and carry firearms.

          3. In McDonald v. Chicago (2010), the Court clarified its earlier decisions that limited the amendment’s impact to a restriction on the federal government, expressly holding that the Fourteenth Amendment applies the Second Amendment to state and local governments to the same extent that the Second Amendment applies to the federal government.

     PENNSYLVANIA CONSTITUTION

          1. Right to Bear Arms Article 21: The right of the citizens to bear arms in defense of themselves and the state shall not be questioned.

          2. This is a statement of entirety, there is nothing else in the 21st article regarding this. This is the complete statement regarding this right, it is clear and concise.

Gunfacts.com

  • After passing their concealed carry law, Florida’s homicide rate fell from 36% above the national average to 4% below, and remains below the national average (as of the last reporting period, 2005).
  • Crime rates involving gun owners with carry permits have consistently been about 0.02% of all carry permit holders since Florida’s right-to-carry law started in 1988.
  • In Texas, murder rates fell 50% faster than the national average in the year after their concealed carry law passed. Rape rates fell 93% faster in the first year after enactment, and 500% faster in the second. Assaults fell 250% faster in the second year.
  • More to the point, crime is significantly higher in states without right-to-carry laws.
  • States that disallow concealed carry have violent crime rates 11% higher than national averages.
  • CCW holders have prevented or curtailed mass public shootings – Pearl, Mississippi (Pearl Junior High School), Edinboro, Pennsylvania (Parker Middle School), Winnemucca, Nevada (Players Bar and Grill), Colorado Springs, Colorado (New Life Church), just to name a few.
  • Guns prevent an estimated 2.5 million crimes a year or 6,849 every day. Often the gun is never fired and no blood (including the criminal’s) is shed.
  • 60% of convicted felons admitted that they avoided committing crimes when they knew the victim was armed. 40% of convicted felons admitted that they avoided committing crimes when they thought the victim might be armed.
  • Washington DC has essentially banned gun ownership since 1976 and has a murder rate of 56.9 per 100,000. Across the river in Arlington Virginia, a distance of less than 10 miles, gun ownership is less restricted. There, the murder rate is just 1.6 per 100,000, less than three percent of the Washington, DC rate.
  • Every year, people in the United States use guns to defend themselves against criminals an estimated 2,500,000 times – more than 6,500 people a day, or once every 13 seconds. Of these instances, 15.7% of the people using firearms defensively stated that they “almost certainly” saved their lives by doing so.

I will gladly give up my gun, when the Washington Liberals give up theirs and put themselves on an equal playing field for violent acts by evil men, as they are asking my family to do.

The original inspiration for this post came from the following podcasts: The Christian Survival Network, The Handgun World Podcast and Gun Talk.

Government Ponzi Scheme (Part 2)

 

In a previous post, I discussed my opinion on government gambling in the form of state lottery sales. Today, I want to share with you, a government sponsored ponzi scheme that is worse.

I would like to offer you an investment plan that will cost “only” 15% of your pay each period and “invest it for your future.” We will do this, not because we want to help you, but because we feel you simply aren’t responsible or smart enough to do it for yourself. Not very appealing you say? Wait, it gets better.

In this investment plan we will make these “contributions” mandatory so we are assured get our money from you. Not only this, we will place this money into a fund that is overflowing on paper, but will allow our “elected board” dip into it for their pet projects and to cover their frivolous spending and shortcomings in other positions, essentially leaving the investment pool empty when you actually open the vault door and look inside.

In fact, we will take such good care of this money, when you are ready to retire we will have a significant deficit in funding to the extent that we will likely need to raise our “contribution” rate from your children to make sure it it will survive long enough for you to see any fruit from this tree.

I know what you are thinking, this is awesome, where can I sign up for this plan?!?! The truth is, you already have, it’s called Social Security.

Social Security contributions equal roughly 7.65% of your salary. In all fairness 1.45% of this is allotted to Medicare but then again, what are you really getting in the end for this, a crummy government sponsored healthcare plan.

The good news doesn’t end here, the 7.65% that comes out of your pocket every month is only the tip of the iceberg. The government will take out another 7.65% from your employer under your name as well for your future investment. If you work for yourself, guess what? Your got it, the entire 15.3% is all in your lap.

The government crone will tell you that they take an equal amount from your employer to lessen the burden on you, but who are we kidding here. If the government didn’t take that money, it would likely be given to me in the form of a paycheck, as employers have to “build” this tax into their salary projections.

I recently reviewed my social security statement (and you can too here) and was shocked to see that over the last 30 years the government has taken almost $200,000 from me and my employer in the form of taxation for a program that cannot sustain itself because of government theft, and will likely need to rob my children for me to have any chance of getting what it promised me.

The really disappointing part of this story is that this will continue for me for the next 20 years until I can actually retire at my “full” retirement age of 67.

It’s time to do a little math to see where this “investment” gets me. My SS account tells me that I will get a whopping $2,675 a month when I collect SS at the full retirement age of 67. Not exactly a living wage in the year 2037.

When I started working at age 16, minimum wage was $3.25 and it is now roughly $7.25, an increase of about  225%. This increase is over 30 years, so lets just assume that over the next 20 years minimum wage will at least double to $14.50, make it $15 for good measure.

The moral of this story is the government will be investing my money and supplying an annuity to me in the year 2037 in the form of $2,675 a month, or $15.43 an hour. What this essentially means is the government wants to steal 15% from me and my employer in the form of a Social Security tax that they can “invest” and pay me the equivalent of minimum wage when I retire. I think I can do a little better than that, in fact throwing a dart at a copy of The Wall Street Journal will likely allow me to make better investment choices that the government option. Let me explain…

The average life expectancy for a nonsmoking male in generally good health is about 80 years. If I live to be 80, I would have recouped about $658,000 over the time period.

Lets consider this, I have worked 30 years, with a lot of low wage jobs early on, and had been able to contribute 200k (me and my employer). Projecting 20 years into the future, figuring annual raises, I will likely contribute an additional $375,000, to be VERY conservative, the actual amount will likely be more.

When it is all said and done, living to be 80 years old will allow me to collect $83,000 more from social security than I put into it. This is a whopping 14.4% return over the life of my investment. Pathetic.

I hate to even think about this, but why don’t we figure out how much money I would have made during this time period if the government didn’t “take care” of me and allowed me to make my own investment decisions.

$575,000 divided by a 51 year work history (starting at 16 and working until 67) averages to be roughly $11,274 in yearly contributions. To simply place this number into an investment calculator at 11k a year from 51 years, would not be a fair representation due to the benefits of early compounding. In order to make this data more representational of reality I will divide these funds into 3 time-frames roughly 17 years each, increasing contribution amounts as we go on to account for salary increases and try to negate as much compounding bias as we can in this simple example.

Group 1: (First 17 years) $5,637

Group 2: (Second 17 years) $11,274

Group 3: (Third 17 years) $16,911

Group 1 worth after 17 years: $205,141

Group 1 worth after 51 years: $2.8 million

Group 2 worth after 17 years: $410,721

Group 2 worth after 34 years: $1.52 million

Group 3 worth after 17 years: $616,000

Assuming a 3% increase of salary each year, compounding the smaller amounts earlier and growing the contributions over time as my salary increases, it is likely that investing these social security “contributions”, when invested by me as opposed to the government, would be worth roughly $4.936 million dollars @ an 8% average rate of return each year.

$4.9 million vs. $658,000. Does anyone see the logic in government theft here?

Let’s be reasonable and assume that I can’t count the employer contribution in this scenario, I am still left with $2.45 million dollars if I were allowed to be responsible for my own future and invest these funds (7.65%) without government interference.

Granted, there are likely a number of slight errors in my calculations, as this is as rudimentary as it gets (like performing brain surgery with a butter knife), but I can’t believe there are $2 – $4 million dollars worth of inaccuracies here.

Just for fun, using these evaluations, how long will I need to live to collect SS and break even with the amount of money I could have made investing for myself using the same deductions. The answer? I will need to live to the ripe old age of 144 to break even at $2.45 million and 219 to get to $4.9 million.

I think I’ll live to be 250 years old, just out of spite!