Master Life Faster: Newsletter

How to Retire at 35

Posted in Newsletter by Paul Lem, M.D. on November 6, 2008

Volume 1, Issue 2
WEALTHY: Retire faster with dividend-paying stocks
HEALTHY: Are you getting enough Vitamin D?
SOCIAL: Unmasking the Face by Paul Ekman

“The question isn’t at what age I want to retire, it’s at what income.”
-George Foreman

Retire Faster With Dividend-paying Stocks

cashing-in-on-the-american-dreamIn 1984, accountant Paul Terhorst retired at the age of 35. How did he do it? After selling his house, his net worth was $490,000. Paul then invested his money in Certificates of Deposit (CDs) that were paying 8% in interest at the time. In this way, he earned almost $40,000 a year. To stretch their retirement dollars, Paul and his wife moved to Buenos Aires, Argentina, where they bought a condo for about $20,000. From this home base, they traveled the world on a budget that averaged about $50 per day.

To follow in Paul’s footsteps, the first step is saving enough money. How long will it take? For a quick estimate, check out this handy calculator from MSN Finance: .

The second step is investing your money so that it generates enough income to let you retire. According to , 1-year CDs are only paying about 3.50% right now. A better alternative is investing in dividend-paying stocks. This way, you generate income from dividends, and you also make money when your stocks go up in value.

When investment firm Tweedy, Browne reviewed the evidence for dividends, they discovered the following:

  • from 1802-2002, dividends accounted for over 70 percent of the return for stocks
  • from 1970-2005, high dividend yield stocks produced more return with less risk than their low-yield counterparts
  • during bear markets from 1970-1996, the best strategy was investing in high dividend yield stocks

The evidence is compelling that high dividend yield stocks are a good investment, especially in bear markets. So which stocks should you buy? Since you’ll be counting on the dividends for your income, it’s a good idea to pick blue chip stocks . I like to think of blue chips as companies that you couldn’t compete against even if you had $10 billion to spend and your pick of the 10 best managers in the world. Thanks to the stock market crash in October, there are some great sales on blue chips that pay high dividends.

Here are some ideas for American blue chips, and their current dividend yield:

  • Altria Group (MO): 7.02%,
  • Coca-Cola (K): 3.40%
  • General Electric (GE): 6.22%
  • Home Depot (HD): 4.06%
  • Merck (MRK): 5.29%
  • Toyota Motor (TM): 3.61%
  • Wells Fargo (WFC): 4.29%

And here are some ideas for Canadian blue chips:

  • Bank of Nova Scotia (BNS): 4.90%
  • Canadian National Railway (CNR): 1.80%
  • EnCana (ECA): 3.10%
  • Husky Energy (HSE): 5.50%
  • Power Corp (POW): 4.10%
  • TD Bank (TD): 4.30%

When should you start buying? Warren Buffett says that the time is now . Personally, I’m inclined to wait 3-6 months to see the effects of lower corporate earnings, higher unemployment, and more home foreclosures. Of course, dollar cost averaging is a compromise between waiting and buying now. Whichever course you choose, I think you’ll be very pleased with your returns in 5 years if you invest some money every 2-3 months over the next year.

User review of Cashing in on the American Dream:

Tweedy, Brown Company LLC. The high dividend yield return advantage: an examination of empirical data associating investment in high dividend yield securities with attractive returns over long measurement periods. Full Article .

Gombola MJ, Liu FL. (1993). Dividend yields and stock returns: evidence of time variation between bull and bear markets. Financial Review . 28(3): 303-327. Abstract .

“Turn your face to the sun and the shadows fall behind you.”
-Maori proverb

Are You Getting Enough Vitamin D?

SunVitamin D is associated with many health benefits, including keeping bones strong, and reducing the risks for cancer, diabetes, and heart disease. Last month, the American Academy of Pediatrics recommended that children should get 400 International Units (IU) of Vitamin D per day. This was double the previously recommended amount of 200 IU per day. For adults, the Canadian Cancer Society recommends 1,000 IU per day.

What’s the best way to get enough Vitamin D? The answer is sunlight.

When ultraviolet radiation from the sun hits your skin, it causes Vitamin D to be produced.  Fifteen minutes of sunshine twice a week is all it takes for your body to make the recommended amount (people who have dark skin or who live at higher latitudes may need to stay in the sun a bit longer). In our evolutionary past, humans lived on the sunny African savannah, and everyone produced more than enough Vitamin D. But these days, most of us work indoors, and our kids would rather play Nintendo than run around outside.

That’s why it’s a good idea to eat foods that contain Vitamin D. Some of the healthiest sources of Vitamin D include:

  • Salmon: 360 IU per 3.5 ounces
  • Shrimp: 129 IU per 3 ounces
  • Eggs: 25 IU per yolk
  • Low-fat milk, fortified: 100 IU per cup
  • Soy milk, fortified: 100 IU per cup

Even though I eat a lot of fish and walk a lot in the sun, I usually take a Vitamin D supplement a few times a week (1,000 IU per tablet). I also take a multivitamin a few times a week (400 IU of Vitamin D per tablet). Are you and your family getting enough Vitamin D? Now’s the time to adjust your diet before the dark winter months arrive.


Wagner CL et al. (2008). Prevention of rickets and Vitamin D deficiency in infants, children, and adolescents. Pediatrics . 122: 1142-1152. Full Article .

Canadian Cancer Society. (2007). Vitamin D recommendations . Reference .

“It’s not what you say, it’s what people hear…and see.”
-Frank Luntz

Unmasking the Face

The human face can make 43 distinct facial movements. There are over 10,000 combinations of movements, although only about 3,000 represent meaningful expressions. The world’s leading expert in interpreting these facial expressions is Paul Ekman , a psychologist at the University of California Medical School at San Francisco. Ekman has worked with animators at Pixar to give lifelike expressions to cartoon characters, and he’s trained FBI and CIA agents to spot criminals and terrorists based on clues from their faces, voices, and body language.

In Unmasking the Face, Ekman reveals how to read people’s faces and know what they’re thinking or feeling. The first step is paying closer attention. Most facial expressions of emotion are brief. Macro-expressions are the most common, and these last only a few seconds. When someone is trying to control his emotions, the only hint may be a micro-expression that lasts a fraction of a second. Blink and it’s gone! Of course, there’s a balance between observing closely, and staring too much (you don’t want people to think that you’re a creep).

The second step is training yourself to correctly identify the emotions you see. Ekman breaks down 6 emotions that are shared by all races and cultures:

  1. Surprise
  2. Fear
  3. Disgust
  4. Anger
  5. Happiness
  6. Sadness

For example, what emotion is the old man displaying in the photo below? It’s happiness. According to Ekman, the tell-tale signs are: (1) the corners of the lips are drawn back and slightly up, (2) the mouth is open and the teeth (or what’s left of them) are parted in a wide grin, (3) “naso-labial folds” appear from the nose out and down to the area beyond the corners of the mouth, (4) the cheeks are raised up, and (5) there are lines below the eye. But perhaps the most important sign is the “crow’s-feet” that wrinkle the corners of the eyes. This wrinkling is caused by contraction of the orbicularis oculi muscle around the eye. This muscle is not usually under conscious control, which makes it a reliable indicator of a genuine smile .

At the back of the book, Ekman provides 50 photos of people displaying the 6 emotions separately, and in combination. To become a master of reading facial expressions, Ekman recommends practicing with the facial blueprints until you can identify them without thinking. Following Ekman’s advice, I photocopied the photos, and I’ve been using them as flashcards to quiz myself. Does it work? In the past week, I’ve definitely noticed myself paying more attention to people’s facial expressions. Time will tell if it improves my poker game.

Copyright 2008 by Paul Lem, M.D. All Rights Reserved.
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