This article was first posted June 1, 2006.
Dump & Wait is the term used by some veteran members of the Morningstar Vanguard Diehards forum to describe the retirement investing strategy of self-proclaimed financial advisor and career counselor Rob Bennett. Posting under the screen name hocus, Passion Saving author Rob Bennett has been frequent contributor to that forum and his Dump & Wait strategy has received much discussion.
Bennett maintains that his principal credential as a financial advisor is that he doesn't understand math. This lack of aptitude for arithmetic led Mr. Bennett to divine that it was a good idea to sell all his stocks in 1996 and retire in August 2000 with a portfolio invested entirely in fixed income securities. Most financial experts believe that it is irresponsible and selfish for a husband and father in his mid-40's to quit a job with a six-figure salary and attempt to provide for a Washington D.C area household that includes two small children and a stay-at-home mom with only $400,000 in financial assets. Indeed, Bennett has disclosed that today he draws $38,000/year from his nestegg -- a nearly 10% of assets annual withdraw that is clearly unsustainable over his 40 or 50 year expected liferspan. He also laments that he lacks the money to take his two small boys to Disney World.
Since Rob (hocus) Bennett lacks even rudimentary math skills, he relies on government pensioner John Walter Russell for numerical analysis. This Dynamic Duo of bad retirement planning have remarkably complimentary styles -- while Bennett posts long strings of words without meaning, Russell favors long columns of numbers without value. The recently resurrected SeWeR Research Group forum shows this dynamic in action.
Dump & Wait investing is certainly worthy of study -- if only as an example of bad financial planning and what can happen to those who stray too far from a diversified retirement portfolio.