Don’t Push Your Luck (Physically or Financially)

By Dr. Anthony Ellis, WCI Columnist

People take all sorts of risks with their money, with their health, and even with their life. Mountaineering guides say that getting away with a risky decision once or twice can trick climbers into believing that their success was due to good decisions. Pushing your luck a third or fourth time can be what kills you. You do not always get the chance to make necessary adjustments to the risks you take. At the edge of adrenaline and dopamine, you can get a terminal surprise.

Sometimes, though, you do get a message to reevaluate these risks. I got two recently.

In 2014, a leukemic “blast crisis” killed one of the best men I had ever known in a week. My father-in-law’s death was unanticipated, and I agreed with my wife when she said at the time that “it cracked her mind open” with its suddenness and ruthlessness. One week, Sam was digging a four-foot-deep trench in his backyard to fix the drain tiles, and the next week, he was simply gone.

I canceled my triathlon series and hunkered down with the family to grieve the passing of the family patriarch. I had to assume that role since I was the next patriarch in line. After navigating the immediate aftermath for months, I was restless and felt like I needed to do something that was life-affirming to feel alive again. I found my “mountain to climb”—a 5,000-meter swim across a chain of connected lakes. The long-distance Swim to the Moon near Hell (Michigan) caught my attention.

Swimming Across Hell

I had previously completed my longest open-water swim around Harrington Sound in Bermuda in 2009. I knew the training required to go from pool “fitness swimming” to open-water swimming would take months. At age 50, I felt more like 40. I trained for five months and hit the chain of lakes in the best shape of my life. I finished Swim to the Moon without incident and felt like I had a delightful story for my future nursing home years:

“I swam across four lakes near Hell.”

I went back again at age 55 and found it to be more difficult despite similar training. I finished about 12 minutes slower, as five years of time passing made itself known in my body. I also had a foot cramp that required me to drag the foot dorsiflexed the last 500 meters. That was new.

Fast forward to 2024 and my semi-retired “60 is the new 50” self. My New Year’s resolution was to go back and do it a third time. I trained again from February to August. My average waking heart rate dropped every month, eventually to about 48, as I increased the distances and made it to 4,000 meters in training, just as I had in 2019. I figured that was good enough. It had already worked twice to train up to 80% of the distance and wing it on race day for the actual 5,000-meter swim. My wife thought it was a bad idea and said “it would make [her] mad if [I] died.” I never considered it much of a possibility and laughed it off. Of course, at 60 years old, 2.5 hours of swimming in 76-degree water did not have to go well:

“Past performance is no guarantee of future results.”

I was up at 4:30am; on the road at 5:30; and in the water, excited, at 7:30. The first mile was easy and fun. I looked at my watch and saw 33 minutes and thought, “Too fast.” It's funny now that I thought I might do better than I did at age 55 based on this split time. The second mile was harder, and I was getting tired. It was not much fun. The water was about six degrees cooler (76 degrees) than the pool I had trained in, and I was getting cold.

Then, I made a mistake.

At the pontoon aid station at about the two-mile mark, I drank a half cup of Gatorade as usual, but I also squeezed a packet of “Gu” in my mouth hoping the sugar would give me a needed boost for my flagging energy. I paid no heed to the fact that, in my practice swims, I ate and drank nothing. I took off swimming again and my stomach rejected the Gu within 300 meters as my GI tract had shut down with the effort to that point.

You have not lived until you are treading water in the middle of a lake retching with a mile of the race left to go. Other swimmers stopped and asked if I was alright. That was not a confidence booster.

The last half-mile was gritty. I really wanted the swim to be over. I was a little scared despite all the aid kayaks that were usually within 100 meters. Nauseated, tired, and cold, I worried I had bitten off more than I could chew. In the last 500 meters, I started dry-heaving which made breathing difficult, and my stroke broke down. My left hand was tingling, and I turned onto my back and floated for a minute of rest at times. I got the same foot cramp again, and I was dragging my flexed foot. I had to grab the back of an aid kayak and hang on to catch my breath as I considered quitting within sight of the finish line. I barely finished the race 20 minutes slower than my time at age 55.

As I walked onto the shore, I saw a fellow fall on the ground in the shallows and then struggle to stand back up. Luckily, he too made it on, and we exchanged a glance that said, “It whooped me too, friend.”

More information here:

Heroes of My Life — Part 1 

The Heroes of My Life — Part 2

Taking Too Much Risk in Life and with My Money

I learned from the experience. For me, 60 is not the new 50. I was under-trained and I did not have the reserve of my younger self. My body composition is different with 17% body fat, and I weighed in at 212 pounds, not my prior 202. I also have less muscle despite swimming twice a week and hiking vacations with up to 120 kilometers of distance in a week. Taking anything by mouth when physically stressed and cold was a big mistake. I also learned that I have nothing to prove anymore and did not really need to take this risk. I was scared in the last 500 meters and thought of my family. On the way back home, I was thinking about the race and got emotional. I decided that I am not going to do it again at age 65. I will still swim miles in the pool, but three miles in open water is not my game anymore.

As you move up the risk ladder, the chance you can have a negative outcome increases. I found this out in another way last summer by chasing cash yields. The past year had been a wonderful time to have cash. Interest rate hikes to cool inflation allowed high-yield savings accounts to pay about 5% and shorter-term CDs to pay up to 5.75%.

High-yield cash options that I had not seen in years could obtain this return with minimal or no risk. I used them all. I had notable amounts of my emergency fund cash stash invested at a platform that offered short-term notes, supply chain finance loans, and other alternative investments. I thought I was being careful. I made sure the “wallet funds” were in FDIC-insured banks. I mostly invested this “safe” money in “short-term notes” and “supply chain finance” debt that the platform offered. They varied, but we were paying about 1% better rates than one-year CDs and up to 2% better than liquid high-yield savings accounts or money market funds. The platform was paying an illiquidity premium for the six- and nine-month notes. The yield tracker in the platform calculated my eventual average return on these at 7.2%.

I was not paying close attention to my “wallet funds,” and when the short-term or other notes matured, I would normally move this money back to my high-yield savings account at Empower at 4.7% or pick another offer. To his credit, my financial advisor told me in early 2024 that he felt it was not worth the differential payout risk, and this led to the accumulation of funds in the wallet where I thought the balance was safe. He said that one should take their risk in the equities basket and not in the “debt instrument basket.” I had planned to move those funds to CDs, but I let my wallet account balance grow thinking it was safe . . .  and I am busy . . .  and I will get to it later.

I kept pushing my luck . . .

In May, I got a notice from the platform that my “wallet funds” could not be withdrawn and were frozen because of some problem with the “program banks” that held these wallet funds. The details are boring, but it seems one of these banks engaged in a bankruptcy issue. The platform implied it knew where my money was and it was “working diligently” on “getting this resolved.” Individual emails were not answered in a timely manner, and I began to worry that I might have to file an FDIC claim. The company never told me which of its program banks had the money and simply expected me (and thousands of others) to wait for months.

The spring and summer months ticked away, and the company said the wallet funds were no longer functional and that payouts from any notes would bypass the wallet and go directly to my bank. The platform asked me to make sure my bank transfer numbers were up to date despite having sent prior interest payments directly to my bank for years. I found the “in a crisis” customer service to be lacking and rarely got anything but group emails about the issue. My trust level dropped significantly. I started looking up details on the internet and saw the platform was named in an SEC suit.

Finally, after about four months of worrying that I might have lost the equivalent of two years of children’s college tuition money, the funds appeared in my bank account by direct transfer. It was strange to me that the platform’s app still showed the amount in my defunct wallet account for about two weeks. None of this was inspiring, and I have only two short-term notes left to mature there. I have stopped using the platform.

More information here:

All the Money Mistakes I’ve Made (and How It Cost Me an Even Earlier Retirement)

The Risk of Retirement

Lessons Learned

I learned from this event. First, my idea of how “FDIC insured” works was wrong. The company never even told me which “program bank” had my funds. I asked how to file a claim and never got an answer. Since it was working on “getting the funds back from these banks,” there was likely no FDIC claim to make as the money was not really gone. I lost sleep over this. I emailed Jim Dahle about this. I worried for months about this—as is my nature, it seems.

The 1%-2% over CD and HYS rates were not worth the risk and the worry. The interest from this type of cash investment gets taxed at your federal marginal rate, making the difference even smaller. While this issue was “being resolved,” my funds were unavailable, and I was not paid any illiquidity premium on this money.

Two lessons in risk in one summer. Lucky me. Since these two lessons, I have been thinking more about risk. My “risk profile” has changed to swimming in the pool and really taking no risk with my “no risk” money. I do not need to have a heart attack in a lake to prove anything, and I do not need the risk of small financial platforms.

I prefer a long life and good sleep. If you push your luck too often, you might get a lesson you would rather avoid.

What risks have you taken that you later decided weren't worth it? Has that risk-reward ratio changed as you get closer to retirement? What else can be learned from these lessons?

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