Month: November 2017

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Catching Up The Last Week – Part 2

Monday, November 13

We decided to do something different on Monday so instead of visiting churches we visited a synagogue!  There are approximately 14 synagogues in Rome but the largest and most prominent is Tempio Maggiore di Roma.  The downstairs area of the synagogue houses a museum that contains Jewish artifacts going back many hundreds of years.  Because of the many persecutions over the centuries these artifacts were hidden over and over again in order to preserve them (history of the Jews in Italy).

(Interior of the synagogue.  The synagogue is multi-denominational.)

Near the synagogue is the ruin of a house built by Caesar Octavian (a.k.a. Augustus, the first emperor) for his sister, Octavia.  It is in the process of being restored.  Next to that house is the remnant of the Teatro Marcello.  It was completed during the reign of Augustus and was the largest amphitheater in the world at the time.  The bottom stories of the theater are a ruin.  In the 16th century a residence was built on top of the theater.  That residence is divided into multiple apartments, which are in use to this very day.

(Theatre of Marcello.  We’re convinced that George Lucas got the idea for “Imperial Walkers” from the ruin to the right.)

We also saw Chiesa di Santa Maria in Portico in Campitelli, Palazzo Mattei (the courtyard area is open to the public), Piazza Mattei with it’s famous Turtle Fountain, St Maria Sopra Minerva Basilica, Chiesa di Santa Maria Maddalena, San Luigi dei Francesi (contains three Caravaggio paintings), Sant’Andrea della Valle and Arciconfraternita Di Maria Ss. Del Carmine In Trastevere.

We hadn’t planned on visiting quite that many churches that day but every time we turned a corner there was another.  It was a good day!

(Piazza Mattei.  The turtles were added to the fountain by Bernini later.)

(St Maria Sopra Minerva Basilica.  There was a wedding in progress.)

Tuesday, November 14

Right near our apartment is the Basilica di San Crisogono, which dates from the fourth century.  A long list of Borghese clerics were associated with this church and are buried there.  The Borghese family also funded a rebuild in the 17th century.  There are excavations below the present day church that show the original structure.  Some frescos have survived.

Along the way to our day’s destination (Museo Nazionale Romano – Palazzo Altemps) we visited several churches including Santissimo Sudario all’Argentina (the church for the military), San Marcello al Corso and Chiesa di Sant’Ignazio di Loyola.

(From San Marcello al Corso)

Our last stop of the day was the museum.  It had a great many sculptures from antiquity.  Most had been recreated using parts from the originals.  The third floor of the museum featured many beautiful frescos from excavated villas; it was worth the climb!

(Suicide of a Gaul.  This sculpture was in excellent condition.)

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Catching Up The Last Week

Sorry, we’re a little behind on reporting our activities.  It’s not because we’ve slowed down.  On the contrary, we’ve been so busy we haven’t had time to write.  Here’s a synopsis of the past week or so…

Friday, November 10

Our goal was to visit the Basilica of Santa Maria Maggiore.  Along the way we encountered the Church of Mary of Perpetual Help so, of course, we had to take a look.  The church contains a famous Byzantine icon that dates from the 15th century.

The Basilica of Santa Maria Maggiore sits at the apex of the Esquiline Hill, one of the seven hills of Rome.  One of the things that the church is famous for is its major sacred relic: pieces of wood that were part of Jesus’ manger.  The church also contains a famous, unsupported, spiral staircase that was designed by the famous sculptor Gian Lorenzo Bernini.  He and his family are interred within the church.

(Notice the wood in the middle of the silver container)

Next we went to The Papal Archbasilica of St. John Lateran.  This church is considered to be the “home” church of the Pope – not St Peter’s Basilica, as you might expect.  Here, in the middle of the apse, is the Pope’s chair.

(The apse is sparsely furnished containing only the Pope’s chair)

On the way home we encountered The Basilica dei Santi Giovanni e Paolo al Celio.  It’s a Gothic style church in the Spanish Tradition.

Saturday, November 11

We took the day off from sightseeing in order go grocery shopping and do some laundry.  Oh, the glamorous life we lead!

Sunday, November 12

On Sunday morning we went to the “Portuguese Market”.  This is an open air market in Trastevere.  Our expectation was that they would be selling mostly agricultural products.  In fact, they sold everything but agricultural products.  The market extended for over a mile and they had just about anything you could think of including clothing, shoes, leather goods, household items and antiques.  The prices were absolutely incredible.  Too bad we don’t have any room in our luggage for anything else!

(“I’m Overwhelmed!”)

After the market we crossed The Tiber and stopped at The Parrocchia Santa Maria Liberatrice on our way to the Aventine Hill.  This church seems to be the main church for the Testaccio district.

After ascending a very long set of steps we reached the top of the Aventine Hill and were treated to a beautiful park containing orange trees and panoramic views of Rome.

We visited all three churches on the Hill: The Basilica di Santa Sabina all’Aventino, The Basilica S.S. Bonifacio e Alessio and St Anselm.

(St Anselm.  A church, monastery and college dating from the early 1900s)

At the bottom of the hill we stumbled upon a wonderful food market, which is only open on weekends.  The market features cheeses, meats, olive oils, baked goods and produce (and of course gelato).  We ate a good dinner that night!

To be continued…

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Luggage Saga Update (and amusing story)

I checked my bank account this morning.  British Airways made restitution in full.  Will wonders never cease?  I guess that’s the end of that saga.  I promise, there will be more silly travel adventures – like this one…

When we got to Rome we took our iPhones to the nearest TIM store (TIM is the biggest cell phone service provider in Italy) and purchased service.  We received two new SIM cards and two new phone numbers.  We were told to turn off our phones and wait 10 minutes before trying the new service.  10 minutes later we were getting great Internet service.

The next day we realized that we should put each other’s phone numbers into our contacts in case we needed to call one another.  It’s hard enough remembering the numbers we’ve had for 20 years – there’s no chance of remembering these European style phone numbers.

After trying, unsuccessfully, to phone each other for 20 minutes we decided to go back to the TIM store and get some help.  We just needed some assistance figuring out how to dial city codes; there was nothing wrong with the service.  I’m sure that the TIM store guy got an amusing story to tell his friends about dumb Americans.

Service here is good and cheap (not inexpensive – cheap!).  We each pay $10 per month and each get 10 gigs of data and 1,000 minutes of phone calls.  So far we’ve only made one phone call 😋.

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Retirement Planning – Part 5

Goal Planning

Perhaps you’ve never heard of Goal Planning?  It’s actually an ancient concept but an easy one to grasp.  In our case it boils down to this: what boxes do we have to check and what investment performance do we have to achieve in order to retire comfortably?

In my previous article I talked about an investment strategy that I believe should work well for most people.  It’s a very aggressive strategy and not to everyone’s taste.  But, is it really necessary to “set our hair on fire”?  Maybe not.  Perhaps a more modest investment strategy, one with a lot less risk, will achieve our goals. That’s what goal planning will tell us.

If you want to retire to a 10,000 square foot waterfront  house in Malibu, CA then you’re going to need a lot more money than someone who just wants to putter around the house and visit the grandkids once a month.  Not everyone’s idea of retirement is the same.  Some people have no concept of what their life in retirement will look like.  Let’s take a crack at our checklist.

  1. What do you want to do in retirement?  It’s no accident that this question is first because everything you do will depend on the answer.  Don’t know?  Guess!  If you really don’t know it’s best to assume that you will continue your current lifestyle.  You can always change your answer later, but in order to proceed you’ll have to have some “goal” to work towards.
  2. Create a budget that represents your expenses today.  This sounds easy.  Everyone knows what they spend on fixed expenses like mortgage, electricity, phone, etc., but many people don’t realize what they spend on variable groceries, restaurants, gas for the car, etc.  You may be surprised.  When I first started tracking my expenses I was shocked at some of the things I saw!
  3. Create a budget for your life in retirement.  There’s some advice on how to do that below.
  4. Create a financial projection.  This will tell you how much money you should expect to have in the future.
  5. Create a budget for your current life that will allow you to achieve your goals.

Now we’ve come to the hard part.  Until this point you’ve been a passive reader; now you become an active participant.

Let’s assume you’ve decided what you want do once you retire.  Congratulations,  you have some goal to work towards.  Next, let’s make a budget of our current expenses.  Why?  First, you may want to keep your current lifestyle in retirement and this will give you some idea of what monies you’ll need.  Second, assuming you will have a different lifestyle in retirement, your current expenses will give you some sort of jumping off point for creating a new budget.  Let’s look at our sample budget.

Note: This budget is completely fictitious and is unlikely to reflect your lifestyle/expenses; in order to get something out of this exercise you’ll have to enter real numbers and real categories and get realistic numbers.

The thing you should notice is that is doesn’t include any savings.  That’s because savings is what we’re trying to solve for.  Now let’s assume that we’re going to keep this general lifestyle when we retire.  Let’s make a similar budget and eliminate all of the things that will no longer be necessary (also shown on the sample budget).

When we compare our retirement expenses with our current expenses we notice that the value dropped by approximately 40%.  Why?  Well, the kids are out of the house, no more college expenses, the mortgage is paid off, you no longer have a high income so your taxes are reduced, and so forth.   If you don’t want to make a detailed retirement budget just take 60% of your current budget and you should be in the ballpark.

Note: All dollar figures are in “today’s” money.  We’ll include inflation in our financial projection.

Creating a financial projection is a difficult thing to do.  Predicting the future is hard and there are many different methodologies for trying to do so.  For our purposes I will show a plan that uses linear projections.  I like this methodology because it’s simple and as likely to give a good long term estimate as any other methodology.

The model shown illustrates the following…

  • A couple, both of whom are 30 years old
  • They will both retire in 37 years at age 67
  • They have no retirement savings at present
  • They will save $24,000 per year
  • Their retirement expenses will be  $64,000 per year
  • Their portfolio will make about 6% year over year
  • The rate of inflation is 2.5% per year over year
  • Their combined social security is $58,800 per year at age 67
  • Their social security is adjusted upwards by 0.5% each year
  • At age 80 Social Security income for person 1 is dropped (someone dies)

The model (PDF version or Excel version) shows that the portfolio balance peaks at around age 67 at just under 2.3 million dollars and there is enough money to last until age 91.  The model has a fudge factor that automatically makes it a little more conservative than straight math would.  Interestingly the future value of $64,000 (the expenses) at age 67 is about $160,000.  Wow!

Of course, in order for these numbers to be meaningful for you, you have to plug in your own values.  The spreadsheet contains two tabs: one is assumptions and the other is calculations.  If you don’t like the results you got jigger the numbers until you do.  Just remember to keep your assumptions realistic or else the model will be meaningless.

You can easily get your projected social security values from The United States Social Security Administration.

Now, go back and play with all of your budgets and plug in new values into the model and see what makes sense for you.  These are all meant to be living documents and, if I were you, I would update them all about once a year.  That’ll give you a good idea of where you stand.  I wish you well!

That should wrap up our series on retirement planning.  I hope you enjoyed reading about it as much as I enjoyed writing about it.  If it helps you, so much the better.  Feel free to ask questions, I love to see people succeed.

(This will be the last time I will say this –  I am not a professional financial planner.  This article is meant only for illustrative purposes.  You should check with your own financial advisor before embarking on any retirement plan.)

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Coffee in Rome

The coffee culture in Rome is very different from the coffee culture in the U.S. There are no Starbucks here (the closest one is in Austria!)  It was rumored that there was a Dunkin Donuts near the Spanish Steps but no trace of it can be found.  Only tourists walk around with cups of coffee.  In popular areas the shops offer “American Style Take Away”,  which is coffee served in paper cups for the tourists.

Italians drink their coffee at home or in a cafe.  It is served in small ceramic cups with a saucer and a spoon.  They drink it either sitting down at a table or standing at the bar.  The price of the coffee is actually cheaper by about €0.50 (about $0.60) if you drink it standing at the bar.  They charge extra for sitting down.  Take away coffee is usually more expensive by about €0.50.

There are many choices for the type of coffee you can order here.  I have tried them all and enjoyed each one.  Most cafes do not advertise the brand of coffee they are serving, but they all have gleaming espresso machines that can make many cups of delicious espresso at a time.

Espresso is finely ground coffee brewed for a short time in an espresso machine.  You order it by asking for a “Caffe”.  It is served in a very small cup.  It is typically not served with milk and is very strong.  It is often served with a glass of sparkling water.  You should drink the water first, then use your spoon to eat some of the froth on top, then drink your coffee.  It is delicious.  This is the only coffee you should drink after noon.  There is some belief in Italy that you should not drink hot milk later in the day for proper digestion.

A Caffe Latte is an espresso with milk.  In Italy a Caffe is an espresso.  Latte is milk.  Caffe Latte should be served with a small amount of foam on top.

Caffe Americano is  prepared by brewing espresso with added hot water, giving it a similar strength to drip coffee.  It can be served with or without milk.

A Macchiato is basically an espresso with a small amount of foamed milk on top.  The word macchiato means “spotted” or “marked” in Italian.  There is a small “spot” of foamed milk on the top of the coffee.

A Cappuccino is usually a mixture of espresso, milk and foam – approximately a third of each.  You can order a dry cappuccino which means it has lots of foam (about half the cup) or you can order a wet cappuccino that has less foam and more milk.

(Cappuccino)

I found a very amusing article from the London Telegraph about ordering coffee in Italy.  The  telegraph article gives tips on ordering properly.   I have tried to follow the advice in the article.

The only thing I do not like about the coffee in Italy is that it is always served in small cups.  I miss my large coffees in the U.S. and the small sizes here, though wonderful, still leave me wanting more.  I guess I will get accustomed to it eventually.

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Gelato and Credit Cards

Gelato is the Italian word for ice cream.  It is made using a custard base similar to American ice cream but has a higher proportion of milk and a lower proportion of cream and eggs (or no eggs at all).  As a result, it has less fat.  (This makes it a health food.)  It is churned at a slower rate which incorporates less air.  The final product is a denser, creamier ice cream.  It is delicious and one of our favorite things to eat!

Italian gelato makers produced 595 million liters (157 gallons) of gelato last year.  That is 19% of the total EU production, according to BloombergMarkets.  That puts Italy at number one for European ice cream producers.  Based on the number of Gelaterias we have seen in Rome and the amount of gelato that we have eaten here this does not surprise me.

We have tried to sample as many flavors of gelato from as many shops as possible.  As we mentioned in an earlier post, one of our favorite shops is Pompi (Via della Croce, 82, near the Spanish Steps).  They offer many flavors including my favorite, fondante (dark chocolate).  They also offer about four flavors in a non-milk option including the fondante.  Most gelaterias do not offer this.

The one problem with Pompi and most Gelaterias is that they do not take credit cards – only cash.  We like to use credit cards for everything for many reasons.  So I have decided to do a search for Gelaterias who have great gelato and take credit cards.  I will post them when I find them.

The first Gelateria we found that has many choices of flavors and takes credit cards is Gelateria Del Viale in the Piazza Giuseppe Gioachino Belli, 9 in Trastevere.  It is just around the corner from our apartment!  It is open every day from 10 am to 12 am.  We have sampled the fondante, the chocolate (milk chocolate) and the amarena (sour cherry).  They are all delicious – very creamy and full of flavor.  They also have vegan options but we have not tried them.  A small cup costs 3 euros and you can get two flavors in it.  We find that the small sizes, in general,  are big enough to share.  This is one of our favorite places, so far, and not just because they take credit cards.

(Some of the flavors at Gelateria Del Viale)

Gelateria Del Viale is also near John Cabot University.  We met a student from the University there getting the largest size gelato possible (5 euros).  She said she needed it to help deal with the stress of school.  We sympathized with her.  This is a great location for the students and the Gelateria!

We will continue to research this topic as we are touring Rome.  I will post again when I find another great Gelateria that takes credit cards.

(Chocolate Gelato)

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Retirement Planning – Part 4

Investment Strategy 

Traditional investment strategies typically look something like this: invest 60% of your money in equities and 40% in fixed income using a wide range of mutual funds.  Using this strategy your portfolio will be somewhat well diversified, not too volatile, will have less than average gains and will make your advisor/fund provider a lot of money.

How about a portfolio consisting entirely of stocks?  Equities have great long term performance, they’re cheap and easy to buy and sell and they have no expenses of any kind.  On the down side they are rather volatile and a portfolio consisting only of equities would not be well diversified.  Besides, who has the time and expertise to choose individual stocks and manage such a portfolio?  Let’s try to address these shortcomings.

Volatility: How can we prevent this?  We can’t!  What we can do is realize that investing for retirement is a long term proposition and in that context volatility isn’t really a big issue.  Yes, on a month-to-month basis your portfolio value will swing like a tree in a hurricane but if you look at your portfolio in five year intervals the only thing you’re likely to see is more money.

Diversity: What is the purpose of diversity?  Its main use is to lower volatility.  We just decided that volatility wasn’t really an issue so there’s no need to worry about diversity.

Time and Expertise: Instead of purchasing stocks outright let’s buy an index fund.  The index defines what stocks we are buying so there’s no time consuming research or maintenance.  All we have to do is pick the right index fund.

Index funds are conceptually similar to mutual funds.  The performance of the fund is designed to match the performance of the index it is tracking.  With index funds there’s rarely a transaction fee to purchases and sales, the expense charges are very low and they normally don’t have 12B-1 fees.  They’re as close to free as you’re going to get.  Never heard of index funds before?  Not likely.  I’ll bet you’ve seen commercials on TV for “Spider” funds for years.  Well, Spider is just a brand name; it’s like saying “Kleenex” instead of “tissues”.  Index funds have been around for years and they’re available from just about any brokerage.

That leaves just one problem: what index fund should we buy?  How about The Standard and Poor’s 500 index or S&P 500?

The S&P 500 is the gold standard by which all other investments are measured.  Whenever anyone talks about how their portfolio performed they speak about it relative to the performance of the S&P 500.  Professional money managers spend their careers trying to figure out how to best the S&P 500 year after year.  Very few succeed.  While it may not be possible for us mortals to beat the performance of the S&P we can match it without any effort at all.

So, what kind of returns can you expect?  I’ve prepared a data sheet (click here) that shows the performance of the S&P 500 since its inception in 1928.  There are several things worth noting…

  1. The index has been VERY volatile
  2. Since 1928 it has returned an average of 11.42% each year
  3. In the past 30 years its ranged from a high of 37.20% to a low of -36.55%
  4. In the past 15 years the average return was 8.28%
  5. In the past 30 years the average return was 11.51%

In summary, if you’re investing for the long term, want a good return on your money, don’t want to pay high fees and don’t want to spend a lot of time managing your portfolio investing in an S&P 500 index fund might just be a good way to go.  If you have any questions or need more information please don’t hesitate to contact me.

Next up, let’s talk about goal planning.

(How many times can I say this –  I am not a professional financial planner.  This article is meant only for illustrative purposes.  You should check with your own financial advisor before embarking on any retirement plan.)

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Three Church Thursday

It was a slow day for us.  We only visited three churches.  Just call us slackers.  We stayed in Trastevere for the most part and toured some local churches.

First was The Basilica of St Cecilia.  The church was founded in the third century A.D.  It had been said that the church was built over her home after she was martyred.  She and her husband are both buried in the church.

(A magnificent effigy near the apse of the church.  It was created in the 16th century.  The artist said that the body was found in this exact pose.)

There is access to an excavation below the church where an old house and several grain silos can be seen.  Surprisingly, the excavation also leads to a beautifully restored Byzantine era chapel, where the saint is actually buried.

(Byzantine era alter under the church.  The saint’s sarcophagus can be seen between the candle sticks).

The next church, Santa Maria of the Garden, was just a block away.  The church was found to commemorate a miracle in the late 15th century.  A sick farmer was healed after praying to a picture of the Virgin Mary in his garden.  This started a cult, which eventually lead to the construction of the church.

(The interior of the church is very ornate)

Next we walked over to Tiber Island.  This is small island in the middle of the Tiber River between Trastevere and the Aventine Hill.  In Roman times the entire island was covered in marble to make it look like a ship.  The Basilica of St Bartolomeo on the Island was built in the 10th century and replaced the Temple of Aesculapius, which had stood since the 3rd century.

We only walked 3.1 miles and climbed 7 flights of stairs.  Not bad for a slow day.

 

 

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Catacomb Day

On Wednesday we decided to visit one of the catacombs.  It turns out that there are a large number of catacombs scattered around the perimeter of the Rome.  In ancient times no burials were permitted in the City.

The Vatican administers the Catholic sites. There are also pagan and Jewish catacombs.  Most catacombs were only discovered in the past 100 years or so and have only recently have been available for tours.

Since the sites are over three miles away from our apartment we decided to venture out using Rome’s public transportation.  We took the bus – actually it was two busses.

Single use bus tickets are only good for 100 minutes.  A single bus ride can last as long as you want but if you need to transfer you must do it within the 100 minutes.  After you board the bus you’re expected to find one of the ticketing machines and have your ticket validated.  This is when the clock on the 100 minutes starts.  The driver has no involvement in this process.  Based on our experience the use of tickets seems completely voluntary.  In fact, the only people we saw validating their tickets were the tourists.  According to the bus’ website there are official ticket checkers who ride the busses to keep people honest.  If you get caught without a valid ticket there is a hefty fine.  I think the existence of ticket checkers is a myth.

Many of the catacombs are along the Appian Way – an ancient road that linked many parts of ancient Italy.  In Rome, parts of the Appian Way (via Appia Antica) are still in common use.  The road is somewhat narrow with walls on both sides.  There are no sidewalks.  Cars, busses, bikes and pedestrians all cooperate to share the road.  It can be a frightening experience.

After departing the bus we hiked over a mile to the Catacombs of St Sebastian, one of the Christian sites.  It was nothing like what we expected.  There were no exposed skulls.  It wasn’t damp and dirty.  It was well lit and easy to walk through.  All the remains that had been in areas open to the public have been reburied elsewhere within the catacombs as a matter of respect.  We saw lots of empty burial chambers and sarcophagi.  Most of the burials were dated from the 3rd and 4th century A.D.  No photography was permitted inside the catacombs.

St Sebastian was originally buried in these catacombs.  In the 4th century A.D. a basilica was built at that site and was dedicated to him.  It is now his final resting place.

(The Basilica of St Sebastian)

(Tomb of St Sebastian)

Our guide from the catacombs told us that farther down the road the Appian Way looks very much like it would have in ancient Rome so we decided to see for ourselves.  The portion we had walked on so far had been regular cobblestone.

Along the way we stumbled on to some interesting sites.  First up was the Villa Di Massenzio.  This was an ancient estate that included a house, a mausoleum and a circus.  The grounds are open to the public.  It’s mostly a ruin but you can really see what it must have been like.

(Buildings around the edge of the circus)

Just down the road we found the ruins of the Church of St Nicolas.  It dates from the late 13th century.

(St Nicolas Church – no Christmas presents were found)

(The Appian Way as it looked in ancient times)

The bus back to the City left us off near Piazza Venetia.  We decided that instead of waiting for the next bus we would explore the Capitoline Museum.  You have to understand that we had no idea when the next bus would come.  Yes, we had a schedule, but as someone said, “bus schedules in Rome are just a suggestion”.

By this time we were tired and the museum was MUCH bigger than we anticipated.  We persevered and saw the entire thing – both buildings!

(Sculpture by Michaelangelo)

After the museum we decided we didn’t have the patience to wait for the bus so we walked back to Trastevere.  We stopped at the market before finally heading home.  It had been a full day.

According to our iPhones we walked 8.6 miles and climbed 20 flights of stairs. We slept well that night.