Did you notice that I forgot to check my balances and obsess over my GVUL investments on September 1st? I did, but not until nearly the end of the month. I’m proud of myself for that.
By now screwing around with these investments I didn’t risk making a stupid short-term move on what I intend to be a long-term investment. Would you be surprised to hear that me looking at these investments (or not looking) appears to have zero impact on their performance?
(If you’re just joining us, this is the latest update on our GVUL Investing Experiment.)
So how did we do for the past two months?
Overall, I like what I’m seeing. It’s been less than a year and I’m already up a minimum of 5.52%, with my best performer up nearly 9% before tax. That passive index fund with miniscule fees of just 0.015% still leads the pack at 7.04% ROI, even accounting for top-tier capital gains tax.
I can’t pass up the opportunity to point out that the outrageously expensive fund run by a bunch of 50-pound brains at BlackRock is currently the worst performer in this group. This continues to prove the S&P’s data saying that most actively-managed funds fail to perform as well as the market overall.
This experiment is too young to conclude whether the BlackRock fund’s performance is better or worse overall. However, as a cheap shot, we can project the values of these investments into the future. If that BlackRock fund were to continue only earning 5.52% per year, when I retire in just over 20 years it would be worth $2,928.28. However, if FXAIX continues at 7.04% per year (an after-tax return) it would be worth $3,895.81 in 20 years. The fancy, expensive BlackRock fund would be worth a full 33% less than my passive, low-fee index fund, even with its massive tax advantages.
I don’t know how this will actually turn out, but at this point the very expensive GVUL investment scheme has failed to prove its value.
Unused Basis
Note that if I cashed out my GVUL investments right now, I’d pay zero capital gains tax on them because the IRS allows my company’s insurance premium payments to increase the basis of my investments. Though cool, I can’t help but notice that my unused basis continues to increase. This means the company is paying more in insurance premiums than my investments are gaining in value.
This isn’t a problem, per se. However, if the trend continues I could potentially end up leaving lots of premium payment dollars on the table. I don’t love that. I hope compound interest kicks in on those investments soon!
How Much is Enough?
I dedicated an entire chapter of my book to asking this question: “How much is enough?”
Does it matter that much whether my investments are making 5.52% or 7.04% after tax?
No, it truly doesn’t. If you want to debate me on that, I’d love to go against you over some frosty beverages on my next layover. I’ll be in Denver and Bozeman later this week. Hit me up!
Let’s step beyond the scope of our experiment and say that instead of investing $1,000 as a round number, we’re talking about an overall investment balance of $1,000,000. (Yes, if you apply Pilot Math in your life you can absolutely reach this with at least 20 years remaining in your career.)
We’re splitting hairs between ending up with $2.9M and $3.8M after 20 years. Is that difference significant? Sure. However, I believe that most pilots could put a Treasure Bath of $2.9M to excellent use helping them live a wonderful life. Would a pilot’s life be significantly better with an extra $900K? Maybe if they bought a share in an F4U. Otherwise, I don’t think it’d make that much difference.
A balance of $2.9M is enough to provide $116,000 in annual passive income for at least 30 years, if not generations after you die. If you can’t live a great life on that amount of spending, you’re doing it wrong.
I assert that each of us has better things to do in life than obsess over percentage points in our investments. Is it okay to seek ways to optimize and improve investment performance? Sure, as long as you’re enjoying other parts of life too.
Enjoying Life
I forgot to check on my investments at the start of September in part because there have just been so many better things to do in life.
My kids started school, and I’ve enjoyed things like watching my daughter run cross country races.
I ran cross country back in the day. I was never very fast, but I enjoyed it. I’m proud and happy to see that my daughter is learning to enjoy a healthy pastime that I also love.
My son opted to continue doing virtual school this year. As of October 1st, he’s nearly finished with several of this semester’s classes. Some of those are high school classes he’s taking as an 8th grader. We’ve supplemented his education by setting up a Minecraft server on an old PC, and I signed us both up for a course in Python programming using Raspberry Pi computers. He’s going to be lightyears ahead of his peers when he gets to college, and he’ll be able to use our college savings to help pay for a PhD program, instead of wasting that money on Gen Ed classes. Thank goodness he got some smartypants genes from his smoking hot mom!
I’ve also gotten to do lots of fun flying. One student just earned her Glider Flight Instructor rating (CFIG). During training I realized that of roughly 200 hours in my Pipistrel, I’d only spent a couple in the left seat until recently. I always put my father-in-law, wife, kids, friends, or students in the left seat, so I even sit right seat when I fly solo. It was weird to get back into the left seat. It was also lots of fun playing bad student!
I also got to finish an insurance checkout for a neighbor at my local airport. He bought a gorgeous Piper Vagabond over a year ago, and has needed 15 landings and a few hours for insurance. Between living out of state and a couple maintenance squawks, he hadn’t been able to fly solo or take it home. I thoroughly enjoyed flying a classic aircraft as we finished up his requirements!
I also recently gained the privilege of helping sponsor a Fairchild PT-19 new to the CAF’s Tampa Bay Wing. We took over stewardship for this beauty way back in June, but only had one pilot qualified to fly her.
After several months of waiting for paperwork to stack up high enough, I got to spend a day at Airbase Georgia flying their PT-19 with a living legend of aviation, Major General (Retired) George Harrison.
I’d just finished reading Fighter Pilot (Robin Olds’ biography) and mentioned it to my instructor. He said, “Oh yeah, I flew F-4s with those guys in Vietnam. They were great. I got my Mission Commander qualification as a First Lieutenant one time when I was flying #3 on a mission with Chappie James. He had to drop out, so I became MC by default. I made it back that day, so I got to continue flying as mission commander from then on. That was pretty cool for a young lieutenant.”
#AmericanBadass
That was just the tip of the iceberg on his combat experience in Vietnam. He was a great, easy going instructor and kind person. What a treat it was to spend a day and fly with him!
Airbase Georgia’s PT-19 was in tip-top shape, and flew wonderfully. As much as I enjoyed it, this was one of the less-exciting aircraft in their hangar.
My visit to Falcon Field took place on the way to a work trip. Almost as soon as I got back, my home unit put me to work. I got to spend yesterday checking out another pilot in our PT-19. We now have 3 qualified pilots. The other two will be instructors soon, and we’ll be building up to a cadre of at least a dozen pilots. We’re planning to give rides and attend airshows, and I’m looking forward to all of it.
Not to be outdone by airplanes, my wife got us tickets to see Edwin McCain, Collective Soul, and Hootie and the Blowfish for Hootie’s 30-year reunion tour. She isn’t always into the crowds and overdone volume of big concerts, so it was a special treat to spend the night rocking out with her.
I’ll be doing pretty amazing if I look half as ripped or sound one tenth as good as Darius Rucker when I’m his age ten years from now. That man can sing!
Be Excellent to Each Other, and…
I don’t post all of this to brag. I hope it helps make the point that you and I all have better things to do than obsess about the minutiae of our investments. That’s the beauty of passive investing and passive income.
Invest as much of your income as you can stand in low-fee index funds. Set it, forget it, and move on to better things!
The market will experience dips and bumps along the way. However, as long as you aren’t spending like a moron and you invest as much as possible, you almost can’t help but succeed. Focusing on living a fun, balanced life with your family helps make that happen.
See you for another update in a month, or two, or something.































