[Book: Living off Your Money, by M. McClung (Prime Harvesting)]

[siamond]

I was quite honored to be selected as early reviewer for a new book, which can be found on Amazon here:
http://www.amazon.com/Living-Off-Your-M ... 0997403411

This book is such a breath of fresh air for anybody with a bit of an analytical mind. The author obviously reflected for years on the best strategies to be used by retirees when it comes to manage one's portfolio and 'harvest' it during a happy retirement. But instead of rehashing the same old, same old (and pretty much flawed) basic recommendations, or picking his own favorite ideas, he provides a very thorough analysis on multiple facets of the problem, facets coming from an overall framework assembling the whole picture when combined. And he doesn't hesitate to challenge the common wisdom in multiple respects, while staying perfectly factual, discussing many alternatives, explaining and justifying his entire analysis step by step, even going to the lengths of testing out of sample with UK and Japan historical data and stress-testing his findings. Now that is pretty admirable intellectual honesty if you ask me.

I am not quite sure to agree with every conclusion being drawn, nor every aspect of methodology, but this books contains enough novel material to truly challenge the reader to explore some avenues you may have never thought of before. A fascinating read for sure. As a bonus, there is a remarkably easy to use Excel spreadsheet which allows you to implement the key conclusions of the book for your own retirement 'harvesting'. It always amuses me that we focus a lot on an IPS (investment plans) and stop there. Well, Michael fills the gap, and provides a lot of tools for your 'harvesting plan', and this is much appreciated.

PS. I was sold after reading that the author perceives risk (for retirees) as loss of income (over the entire retirement period) instead of loss of value (of one's portfolio at one point in time). Loss of income vs loss of value. There is so much wisdom (and factual truth) to this simple statement.

[JasonF]

I look forward to downloading the Kindle version, if one becomes available.

[sperry8]

$60??! No thanks. When he releases it on Kindle and at a reasonable price (say $15 or less) I'll consider.

[Fieldsy1024]

$60 bucks.....

no thanks

[InvestorNewb]

Bogleheads are a tough (frugal) crowd.

[Da5id]

Living off Your Money:

Step 1 - use the library instead of buying expensive hardcovers
Step 2 - invest the saved money
Step 3 - Profit!

[littlebird]

The author is apparently trying to protect himself against loss of income.

[LateStarter1975]

$60 bucks.....

no thanks

+1
Most of the personal finance and investing books I have bought from amazon were for $0.01 + $3.99 shipping (I always buy used). I have not bought a book that cost me more than $10 total. And I have read over 100 books in the last 3 years. So, yeah, no thanks for that price!

[letsgobobby]

For those not willing to shell out $60, can you provide a synopsis? What unorthodox conclusions does he reach with his unique insights?

[SmileyFace]

It's hard-cover - assume a paperback version will come out eventually at a more reasonable price. Its only 374 pages - not sure how he justifies the price tag.

[Fieldsy1024]

It's hard-cover - assume a paperback version will come out eventually at a more reasonable price. Its only 374 pages - not sure how he justifies the price tag.

Every time I bought new or used books on Amazon, Hard/Paperbacks are usually the same. I prefer paperbacks to be honest....and used.

[SmileyFace]

It's hard-cover - assume a paperback version will come out eventually at a more reasonable price. Its only 374 pages - not sure how he justifies the price tag.

Every time I bought new or used books on Amazon, Hard/Paperbacks are usually the same. I prefer paperbacks to be honest....and used.

But typically the Hard-Cover price doesn't drop until after the Paperback comes out. You pay a new-release premium with Hard-Covers (similar to new Movie releases, etc.) - although I'm not used to a $60 price-tag.

[SeeMoe]

If the book is a unique and thought provoking revelation for retirees as the post suggests, then the $60.00 bucks is a steal. Chump change that pays for itself the first day of retirement. [OT comment removed by admin LadyGeek]
SeeMoe..

[jmndu99]

Living off Your Money:

Step 1 - use the library instead of buying expensive hardcovers
Step 2 - invest the saved money
Step 3 - Profit!

+1

[TravelGeek]

If the book is a unique and thought provoking revelation for retirees as the post suggests, then the $60.00 bucks is a steal. Chump change that pays for itself the first day of retirement. [OT comment removed by admin LadyGeek]
SeeMoe..

Well, I glanced at (scrolled through) the first three chapters, and they didn't look like a "fast buck" book. I agree with you; $60 bucks may sound like a lot, but it really is insignificant if it positively impacts the way I "live off my money".

So I loaded the 100+ page PDF on my iPad for tomorrow's airplane ride (inflight entertainment) and also submitted the book as a suggestion to my local library.

[TravelGeek]

$60 bucks.....

no thanks

+1
Most of the personal finance and investing books I have bought from amazon were for $0.01 + $3.99 shipping (I always buy used). I have not bought a book that cost me more than $10 total. And I have read over 100 books in the last 3 years. So, yeah, no thanks for that price!

It's available as a "used" book on Amazon. For up to $80.

[dbr]

PS. I was sold after reading that the author perceives risk (for retirees) as loss of income (over the entire retirement period) instead of loss of value (of one's portfolio at one point in time). Loss of income vs loss of value. There is so much wisdom (and factual truth) to this simple statement.

I skimmed some of the first three chapters of material and would say the discussion is quite promising. As to price, Jim Otar's long book is available online for $4.99 - $15.99 in pdf format. That might be a better model for how to distribute this sort of thing, but one should be sympathetic to the trials of authorship.

[AlohaJoe]

In an attempt to move the conversation closer to siamond's original intent and away from the unfortunately predictable comments about paying for content in the modern world....

I thought the book was a kind of spiritual successor to Jim Otar's Unveiling the Retirement Myth, though much, much better (more details, less ego). It focuses not on the accumulation phase but on the decumulation phase, which has much less ink spilt on it. There are reams written on safe withdrawal rates, a smaller amount on withdrawal strategies, but very little that tries to present a holistic picture of how things could work for a retiree's finances. It even includes a pretty good chapter on Guaranteed Income and variants for people who prefer a "safety first" instead of "probabilistic success" approach.

The book isn't quite "popular finance", since it is too heavy on math, charts, and graphs without any anecdotes on how Mr. and Mrs. Jones were able to travel Europe for 12-months after retirement by following this simple 3-step plan. But it is a kind of middle ground between the more academic papers you can find on SSRN.

It is heavily reliant on backtesting, though the author makes several attempts to use different data sources, give the SBBI a "hair cut" to simulate terrible future returns, and so on. But if you're the kind of person who thinks backtesting is of limited or no use (Milevsky, Bogle, and many others) then you're not going to be convinced by the approach (or the results, most likely).

Even if you're not convinced by the author's final recommendations, I found the book extremely interesting intellectually, a "fun" read, and spurred me to do a lot more investigation, reading, and research on the topics.

Unfortunately retirement research rarely seems to engage with one another (how often do you see Pfau testing Guyton's Decision Rules against global data?) but it would be cool to see others respond to the research and suggestions of the author, either to battle-harden them or to advance the state of thinking for retirees everywhere.

[coachz]

I like how amazon has a used one for $70 !

[Rob54keep]

I'll look for it in my library late this year.

[coachz]

I just submitted it for interlibrary loan through my library. They usually can get me new books for a buck within a few months.

[Da5id]

I just submitted it for interlibrary loan through my library. They usually can get me new books for a buck within a few months.

I tend to do this for any books/movies I want. Forgetting the price, I don't need more clutter in my house. If I think I"ll read a book a number of times, happy to buy it (though $60 does seem high for any book). If I'm going to read it once, have no urge to buy it and add to clutter (or buy it and donate it to library).

[coachz]

I wonder if libraries have limits on the price they'll pay for a book.

[Chip]

$60 bucks may sound like a lot, but it really is insignificant if it positively impacts the way I "live off my money".

Absolutely. I've spent $60 on much less important things over just the past week. For example, a nice lunch after a long bike ride. $67 for the two of us. I guess we should have gone home and eaten peanut butter sandwiches instead.

I read the free download of the first three chapters. Thanks for making it available, Michael.

If nothing else, the author's work showing that simple annual rebalancing to a fixed stock/bond ratio is among the worst of the possible strategies to use makes it worth the $60. To me at least. And no, I have no association with author, don't know him, blah, blah.

[JasonF]

I just downloaded and browsed the free preview and agree that this is much heavier content than a lot of the "pop finance" books I've read lately. In fact, the last several books I purchased felt like a ripoff @ $10 since the content could be addressed in a blog post - the author just was understandably maximizing revenue opportunities.

[coachz]

Bogleheads discount ?

[SimpleGift]

After a quick review of the free, three chapter PDF download, a few thoughts:

• 1. This book appears to be structured much like an academic textbook, with an exhaustive analysis and comparison of nearly every withdrawal strategy known to humankind. This isn’t a criticism, but rather an observation, as the book will mostly appeal to the more wonkish among retirees. This may also partly explain the book’s hefty price tag.
  
  2. In his backtesting of portfolio withdrawal strategies, the author makes new contributions to the literature, I believe, by adding Japan (1950-2010) and United Kingdom (1923-2010) asset return databases to the usual Ibottson and Shiller U.S. databases.
  
  3. The author himself describes this book as “a 75-page how-to book wrapped in a much larger why-it’s-so book.” To reach a wider audience, one suggestion might be to make the 75-page how-to book available via a PDF download or Kindle version at a reduced price. If more wonkish retirees then want to dig deeper into the background research, they could refer to the original volume.

All in all, this is a book I might purchase and study — not so much for my own personal retirement planning (which was set years ago and has been working well) — but just to be able to follow future discussions of it on the Bogleheads Forum.

[Selu Gadu]

Living off Your Money:

Step 1 - use the library instead of buying expensive hardcovers
Step 2 - invest the saved money
Step 3 - Profit!

+1

I also use Thriftbooks if I absolutely want a copy for my library at home. Most are ex-public library, apparently, and condition can be problematic, but they are usually cheap.

[dbr]

3. The author himself describes this book as “a 75-page how-to book wrapped in a much larger why-it’s-so book.” To reach a wider audience, one suggestion might be to make the 75-page how-to book available via a PDF download or Kindle version at a reduced price. If more wonkish retirees then want to dig deeper into the background research, they could refer to the original volume.[/list]
All in all, this is a book I might purchase and study — not so much for my own personal retirement planning (which was set years ago and has been working well) — but just to be able to follow future discussions of it on the Bogleheads Forum.

Otar's book has the same characteristic. I think he explicitly recommends reading the introductions and conclusions to chapters while skipping the middle if a "how to" overview is desired.

[siamond]

3. The author himself describes this book as “a 75-page how-to book wrapped in a much larger why-it’s-so book.” To reach a wider audience, one suggestion might be to make the 75-page how-to book available via a PDF download or Kindle version at a reduced price. If more wonkish retirees then want to dig deeper into the background research, they could refer to the original volume.[/list]
All in all, this is a book I might purchase and study — not so much for my own personal retirement planning (which was set years ago and has been working well) — but just to be able to follow future discussions of it on the Bogleheads Forum.

Otar's book has the same characteristic. I think he explicitly recommends reading the introductions and conclusions to chapters while skipping the middle if a "how to" overview is desired.

McClung's book is structured like that, making it easy to skip the 'dig deep' material. Personally, being one of those 'wonkish' retirees, I would find little value in reading unusual recommendations without studying the "why" (which is remarkably elaborate in this book, hence my glowing review), but yes indeed, this book can be read at multiple levels.

Oh, and by the way, I have no relation with the author, etc, etc. I was just very pleased to finally find a detailed book on a topic close to my heart, which goes several extra miles in intellectual honesty and creativity. Even if I don't necessarily subscribe to everything he wrote. Totally agreed with the way AlohaJoe described it, it's a book that makes you think.

[SimpleGift]

Otar's book has the same characteristic. I think he explicitly recommends reading the introductions and conclusions to chapters while skipping the middle if a "how to" overview is desired.

Right. After plowing through over 500 pages of Mr. Otar’s book (“Unveiling the Retirement Myth"), what I mostly remember is his simplified green-gray-red zone strategy — determined by dividing total assets by annual withdrawals. From this, I learned more than from any other source about which retirees likely need to annuitize, which are on the borderline and which are likely safe from sequence-of-returns risk.

I haven’t yet had the chance to review Mr. McClung’s book in its entirety, but I suspect its primary audience will be mostly financial planners and academics, rather than actual retirees themselves. If his “Prime Harvesting Strategy” is indeed new and revolutionary, perhaps retirees could benefit from a less-expensive, more streamlined version of his original volume.

[coachz]

I can't wait to see some debate on topics from this book. It seem like it is going to really provide some insight into 'Living off your money".
This appears to be his first book. What a first book !

His spreadsheet: http://livingoffyourmoney.com/home/more

[prudent]

This is the kind of book I'm likely to buy FOR the local library. Maybe not mainstream enough for the library to purchase itself, but having it show up when people search by subject in the county-wide online catalog gets it in front of a lot of potential readers.

[LadyGeek]

A few posts were removed. This thread is locked for moderator review.

[LadyGeek]

This thread is now unlocked.

[coachz]

I am reading the free three chapters and while there appear to be a number of minor typos, the thoughtfulness is intriguing.

[jginseattle]

Thanks for the recommendation. I put in a request for purchase at the local library.

[pkcrafter]

The author of the book, Michael McClung, posted earlier in this thread, but that post is now gone. What happened?

LadyGeek?

Paul

[joebh]

I look forward to downloading the Kindle version, if one becomes available.

You can get the PDF version from the website and have it converted to Kindle version by sending it to your free Kindle email account with CONVERT in the title.

Of course the PDF costs $50.

That's too much for my taste, but you could do this today if you like.

[coachz]

The free chapters speak of "market invariates" as consistent behaviours or data that DOES predict the future. Does the rest of the book go into how these are identified. It seems the whole book is setting to be based on these so it seems critical that these are explained thoroughly.

I'm also suprised taxes get only a mention on page 276 per the table of contents. I expected an entire chapter on it considering the title.

[Mel Lindauer]

The author of the book, Michael McClung, posted earlier in this thread, but that post is now gone. What happened?

LadyGeek?

Paul

I'm responding via PM, Paul.

[Sheepdog]

Too late for me. I had to learn by this great forum and the professor of hard knocks and he and you all did okay.

[JasonF]

I look forward to downloading the Kindle version, if one becomes available.

You can get the PDF version from the website and have it converted to Kindle version by sending it to your free Kindle email account with CONVERT in the title.

Of course the PDF costs $50.

That's too much for my taste, but you could do this today if you like.

Correct. I purchased the pdf and will read it in the app Goodreader. This app can export notes & highlights similar to Kindle.

[Sam2]

Where is the link to download the first three chapters?

Thank you.

[SimpleGift]

Sam, the download link for the three free chapters is at the bottom right of this web page:

http://livingoffyourmoney.com/

[IlikeJackB]

Where is the link to download the first three chapters?

Thank you.

Scroll down and click "Preview it now". http://livingoffyourmoney.com

[johnra]

There are many books on saving and investing to help with the accumulation stage in life. But there are very few books on withdrawing and investing in the spending phase. According to the author, there are a handful of models for this, but when back-tested and compared against each other with standardized methodology, significant variance in performance. Interestngly, age-dependent models (100-120 minus age equals allocation to stocks) do not perform well compared to other models. The most intuitive for me to understand is bonds-first, but a few other models are significant and discussed.

[coachz]

Has anyone read the book and is able to comment on this please? The free chapters speak of "market invariates" as consistent behaviours or data that DOES predict the LIKELY future. Does the rest of the book go into how these are identified. It seems the whole book is setting to be based on these so it seems critical that these are explained thoroughly.

I'm also suprised taxes get only a mention on page 276 per the table of contents. I expected an entire chapter on it considering the title.

[sixtyforty]

I've looked through the first three chapters and it looks like a very interesting book. My big concern with this book is how the backtesting was done. What data did he use ? How accurate was that data ? Were the programs and data maybe verified by an independent firm ? The reason I'm concerned about this is... I myself have written hundreds of investment models (Amibroker/Fidelity Wealthlab Pro) each with extensive backtesting. I can tell you it doesn't take much to skew the results, much of the time by accident. I'm really hoping there was no curve-fitting or data mining in the back testing, It's very easy to do, even without realizing it.

For example, if he tested his models from 19xx through 2000 (in-sample data) and formulated his opinion on what worked best, leaving the data from 2000 through 2016 (out-of sample data) untouched. Then applied the models to the out-of-sample data, what would be the results ? IMO, the models are only validated, after they are proven with "out of sample" data.

[LadyGeek]

^^^ On a relevant note, are you aware we have an on-going backtesting project of our own? See the wiki: Simba's backtesting spreadsheet

The on-going discussion is here: Simba's backtesting spreadsheet, you are more than welcome to participate.