⛏ Retiring on Junior Gains

Greetings Contrarian,

This is another Sunday edition, with your most pressing question. This is an excellent one:

Dear Future-retiree-in-training,

If you currently have a decent amount invested in great value companies, with a decent amount of diversification to avoid complete ruin, yes, it may be possible to "retire" on the gains made by getting the timing right on these commodities.

But here's why you shouldn't go about it this way:

1- Retiring with a lump sum and feeding yourself off it is a bad strategy.

People are living longer (unless you're in the US, sorry), and eating your money seeds and hoping not to die before you're poor is not how most people dream of retiring.

2- Retirement is instead the ability to receive enough income passively as to replace your current income so that working becomes unnecessary.

Speculating in resource stocks, as much as we absolutely love it, tends to give you a lump sum, but no passive income.

That's a problem.

So the questions you must ask yourself are:

What lump sum is needed to generate enough passive income through dividend / bond / real estate rental investing?

Once that number is reached, will you be able to invest it in passive-income generating vehicles, or will the thrill of multi-baggers make you come back for more?

There's no shame in admitting you'll probably move onto the next big thing (see what we did there?), but fooling yourself produces no profit, literally.

What we are doing instead:

• Is that a realistic gain from where your current stocks are? Remember, junior mining investing is a race between dilution and value creation as mentioned here and everything that can go wrong, will go wrong eventually.

• Start dipping your toe into passive-income generating investments right now. You don't want to be in your late years having no idea where to put your money but junior mining stocks, because it could coincide with a long and deep bear market that will make your lump sum... insufficient.

• Play around with this compound interest calculator. Figure out how much you need to generate dividend-wise in order to snowball your way into retirement while keeping the cashflow running.

Do remember that even though these things are possible, the riskier companies in a fast crash may get you a very undesirable NO BID situation, which would be extremely hard to come back from. This is what you must avoid at all costs.So for good measure: never ever ever go all in.

Happy speculating (responsibly),

The Editor

DISCLAIMER: None of this is financial advice. This newsletter is strictly educational/entertainment and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.