Living Off the Fruit, Not the Tree

Why I Still Work

Semi-retired life this year has been anything but.

It seems the Good Lord saw fit to bless me with a beautiful new laptop — an Alienware, ironically — and before long I found myself plunged into the deep recesses of software development. Such is life. Just when we think we know what we want, in the very next chapter the theme changes.

One of my goals in semi-retirement has always been balance: time for family, time for travel, time for personal interests, lots of exercise — squash, of course — and yes, some work-related pursuits that stimulate my learning and satisfy my curiosity.

Lately, however, it has felt more like a slog than a pleasure.

That reality has caused me to ask myself a simple question, many times over this year:

Why am I still working?

The answer is not simply because I need another salary cheque..

Recently, while listening to a podcast about investing during one’s sunset years, with Warren Buffett as one of the references, the penny dropped. Here was the label for a principle that has quietly guided much of my thinking for almost a decade:

Live off the fruit, not the tree.

Sometimes you know something to be true, yet you have never quite found the words to express it. You know that you know, but cannot fully articulate why. That was the moment for me. The phrase gave language to something that had shaped many of my financial decisions — and, perhaps, my work raison d’être — over the past decade of work , or slog. he, he.

It is a principle that becomes particularly important when one transitions from investing mainly for capital growth to investing for capital preservation, preservation, preservation …

When we were young bucks, our focus was on growing our savings, our retirement annuities and our capital base. We had decades ahead of us and could therefore afford to take greater risks. Time was on our side. If markets crashed — even if  our RAs were impacted — there was usually enough time for recover from such setbacks.

As we enter our sunset years, however, the equation changes.

We can no longer afford the same level of risk. A major market crash at the wrong time — is there ever a good time? — can permanently damage a retirement portfolio. This is particularly so, if we are no longer earning an income, and must be simultaneously drawing income from the portfolio. How else are we to to fund our living expenses and our lifestyle…..

But that is exactly what we must avoid as much as possible: using up the very capital that is meant to keep producing income for us.

So the question in the sunset years is NOT any longer whether we have built a big enough tree. The better question is:

How do we preserve the tree, but still enjoy the fruit?

What if the fruit came in the form of dividends?

Dividend Strategy

This fruit can take many forms. It may be dividends from shares, interest from bonds or fixed deposits, rental income from property, income from an annuity, or any other income stream produced by the assets we have built over time.

Many mature companies, such as Coca-Cola, have built reputations for paying regular dividends over long periods. Nothing in the market is crash-proof, of course, but these types of companies are usually the sort of “guys” you don’t lose sleep over.

Or even part-time owner, full-time business — he, he.

Of course, dividends are seen by the finance gurus as passive income. My business “dividends” are anything but passive. They still demand a lot of active hard work. Let me not kid you.

However, where possible, I’m sure you would agree that we should rather live from the income produced by our assets than from the assets themselves.

Of course, life is rarely that neat.

Sometimes we need to draw capital. Emergencies happen. Travel opportunities tempt us beyond our budget. None of us knows how many seasons our tree will ultimately enjoy.

But for me, the key is to structure our “investment” so that most of our lifestyle is funded by the fruit. Let’s give the tree its best chance of remaining healthy and resilient.

So this brings me back to the question that started this article:

Why am I still working?

So yes, partly because I enjoy solving problems and learning new things. Partly because work provides purpose and intellectual stimulation.

But yea, you’ve probably guessed by now that there is another reason.

The income generated from my work is also a type of fruit.

Every consulting engagement, every software enhancement, every problem solved for a client allows me to meet some of my living expenses without taking another slice from the tree I spent decades growing.

In that sense, as I alluded to earlier , continuing to work is not really about earning more money.

It is about giving the tree a little more time to grow, and more time to keep producing fruit for the people who depend on it.

And that, at least for me, is a worthwhile reason to keep showing up.

Or at least, that’s what I keep telling myself.
He, he.

PS in my next post I will dive deeper into this strategy for living off the Dividends