We have a special treat for listeners to our podcast Intelligent Investor this Christmas, because the guest on our latest episode is none other than Larry Swedroe.
Larry is a Principal and Director of Research for Buckingham Strategic Wealth, an independent member of the BAM Alliance, and is best known as a prolific writer of books and articles on investing.
In the interview, Larry talks about his long career and his passion for evidence-based investing. He also discusses his latest book, Your Complete Guide to a Successful and Secure Retirement, which he has co-authored with Kevin Grogan and other colleagues at Buckingham.
Unlike his previous books, which have very much focussed on investing, the new book is much more holistic. Planning for a successful life in retirement, says Larry, is every bit as important as planning to have enough money.
Here are some the things he has to say.
Why the book fills a gap
"There are good books on retirement, but none of them has the depth and breadth that this book has. It covers so many important topics, including having a plan for a successful life in retirement, which is as important as having enough money.”
Most people fail to plan for retirement
“One of the sad things in life we have a lot of experience of (at Buckingham) is that most people don’t plan for a life in retirement. For a lot of people their reason to get up in the morning is tied up in work, and when they don’t have that they tend to lose meaning in their life.”
The worst thing that can happen
“It’s important for people to understand they are likely to live much longer and they need to make sure that they plan for that. I can’t think of anything worse than being alive without having financial assets to support an acceptable lifestyle.”
Is investing a science?
“Investing is not a science in the same way as physics, in which we have laws. In investing we have theories and hypotheses, buy we can apply a scientific method to analysing investing strategies, so I think it’s still an appropriate use (of the word).”
Improving indexing through intelligent design
“While indexing has certainly been a very good strategy — it outperforms the vast majority of active strategies — there are some very clear negatives that the research reveals that can be avoided by intelligent design. In addition, you can get deeper exposures to the key factors we think drive returns.”
Active management isn’t bad
“Active management isn’t bad in and of itself. On a gross basis all investors have to get the same return, whether you’re active or passive. Active underperforms simply because it has higher expenses.”
Why cede control to an active manager?
“If you use an active fund that sticks to its knitting, and has very low turnover, then you have a good shot. The problem is, why do you want to cede control to an active manager? They could always change their strategy, style drift or decide to time markets, and those things tend to be negative.”
No reason not to go passive
“Even if you can find (a good manager), I can’t see a good reason to choose one because you always have good passive alternatives.”
Right person, right place, right time
“I got very lucky in my career. I’ve been in the forefront of what I think are the four big revolutions in finance. I just happened to be the right person in the right place and time.”
Why he does what he does
“I took this job as a way to give back. I write my books and blogs to try to educate people on what I think is the prudent investment strategy, so they can live a better life rather than working with the sharks on Wall Street, whose job mostly is to transfer assets from your wallets to their wallets.”
You can listen to the interview with Larry Swedroe here:
Intelligent Adviser Podcast: Episode 12
You’ll also find the podcast on iTunes.
Please do share the podcast, and even better, leave a review. We would also love to hear your thoughts on what Larry has to say.