What is Middlescence, and how does it change your investing?
Middlescence is a time of life with unique challenges — including investing.
Yes, middlescence is a real word—meaning—the middle part of your life, especially when it is filled with readjustment and self-doubt.
It is the time between the initial accumulation of assets, and de-accumulation (or, said another way, retirement).
Investing during your middlescence comes after you have put away some of your nest egg, but start again with a new set of goals. The goal posts often move during middlescence.
What is middlescence, and how should one invest during this challenging time of life?
Middlescence vs Midlife Crisis
Middlescence is the time between, say, 45 and “retirement.” It is not, per say, a crisis.
The classic Midlife Crisis may arrive during your middlescence, but a crisis is (hopefully) limited in scope, whereas the middle part of your life is broad.
You will face new challenges during the middle part of your investing career, not just acute emotional issues that may or may not lead to rash purchases, infidelity, or other perfidious acts.
In essence, a midlife crisis describes an acute event often in reaction to some other event. Middlescence, on the other hand, is a long series of changing attitudes and goals in response to getting older. While a midlife crisis may lead to one or more poor financial decisions, middlescence may put your entire retirement at risk.
What are the investing challenges during middlescence?
Investing and Middlescence
So, what are some of the mistakes you can make while investing in Middlescence?
Taking Too Much Risk
Now, especially during a prolonged bull market, you might be tempted to leverage your investments, to not pay off debt, or to invest via options or other highly risky strategies. As an investor becomes more seasoned, there is a tendency to move toward complexity before returning back to tried-and-true (evidence based) basics that work.
Taking Too Little Risk
Conversely, those who have been “burned” before by market volatility may be loath to take the reasonable risk that you need to take in order to reach your future goals. Some are all in cash and will lose purchasing power over middlescence.
The classic, buying an expensive car, home, or new spouse. No advice here, aside from one house, one spouse, one job.
Not Taking Some Money off the Table
Take some money off the table when you have won the game. Remember, stocks are actually riskier the longer you hold them. While you don’t need to stop playing once you won the game, de-risking your portfolio 5-10 years before you plan withdrawals is important.
While you earn more money, it is easy to get on the hedonic treadmill and tough to get off. Remember the income stops at some point, and the lower you keep your expenses the sooner you can get off.
Botox the Investments
Trying to botox your investments to get rid of the wrinkles? We all have wrinkles from “poor” decisions in the past—prior advisors have sold us whole life, or annuities, or expensive mutual funds. Take care when unwinding these positions as you can create new problems. Sometimes botox-ing your investments just leaves you expressionless rather than wrinkleless.
Change in Goals
And perhaps the most important mistakes in middlescence come from changing goals. What goals do you have now that you have met all of your goals? Is it a midlife crisis to have accomplished everything you set out to by mid-life?
Interlude: What Is a Midlife Crisis?
The idea of midlife crisis has been around since Freudian times.
There is no definition or diagnostic criteria for a midlife crisis, though it usually is considered one of emotional crisis vs a longer period of burning ennui (which is typical for middlescence).
The actual crisis can be one of abrupt behavior change in once set financial or other habits. Compare this to the more chronic form, which is represented by the Happiness U-Curve.
The Happiness U-Curve
Above, you can see multiple studies displaying happiness over time. While happiness is difficult to study, you can see the bulk of the results demonstrate happiness decreasing from teen age years until the mid-40’s. Then, it levels off for a while, but goes up until the late 60’s before leveling out again.
Thus, middlescence is marked by this important milestone: life is hard but it only gets better from here!
What Can You Do At the Bottom of the U Shaped Curve?
So, instead of making investment mistakes, what might one consider instead?
Investing should not be a hobby. It should be boring. Find something better to do with your time than practicing speculation for fun.
The seven-year itch applies to jobs as well. What about trying something different in your life? I’ve done ID, primary care, hospital medicine, and then back to ID. The hospital won’t love you back, so change up your life with a job change.
Or, better yet, change careers. New side gigs and non-clinical employment are hot items on Physician FaceBook groups. Find out why I’m leaving medicine soon.
If you no longer need your salary, check out ikigai and see what you are missing out on.
Buy a New Car
Or lease one. Why not? You deserve it now since you are Financial Independent. What people don’t understand about financial independence, though, is that (some of us, anyway) we got there by NOT wanting more. We are fine with the old car. A new car would just hurt us, and new cloths itch and burn our skin.
On the other hand if you have met all your goals, it is a fine goal to let lose a bit and make those purchases you believe will bring you joy.
Financial Decisions and Middlescence
Finally, you have done it! You may be getting close to coast FIRE. As long as you enjoy doing what you are doing, you may not need to save any more, just support your current lifestyle with earnings. If you let your current investments age, they may double or more before you need them. And, the longer you work, the less you need in the future.
Coast FIRE is a time of lifestyle design via conscious effort. Time to break you out of the rat race.
For middlescence is fraught with new goals and new ideas. What are your new goals now that you have reached your goals?
Personally, I’m working on a family mission statement: Be Passionate. Grow. Learn. Share. Have Fun.
Still a work in progress.
What does Middlescence mean to you? What about your long- vs short-term goals?
While it may be time to de-risk your portfolio a bit, it is not time to de-risk your life. In fact, step out of the current and in to the next phase of your life.
Go Out In a Blaze of Glory
Think about who you were a decade ago. Are you almost unrecognizable now compared to your prior self?
A decade from now and you will be just as different.
People seem to think that their current self is their “real” self. That is not true, and you will be as different a person 10 years from now as you were while wearing the short white coat.
You have a long way to go.
It is just Halftime. Time for adjustments. The glass is half full.
Likely, you have reached your peak as a physician. You still remember most of what you knew in residency, you might still be looking at journals now and again, and you still have the technical skills of youth.
From here, it will be all downhill. Remember, you get worse as a physician the older you get. Seriously.
But you will become a better person.
During middlescence we again take more risks, this time unfettered by the naiveté of youth. This is the bottom of the U-Curve; the exciting part is the rest of your life. Choose wisely with your newfound wisdom.