“When in Doubt, Castle”


What Kurt Vonnegut Taught me about Chess, Swedish Cars and Financial Planning

Kurt Vonnegut is best known for his 1960s novels, Player Piano, Cat’s Cradle and Slaughterhouse-five. The later of which he admitted was written specifically so he could cash in on the movie rights and retire to fabulous wealth and fame. The film adaptation of Slaughterhouse-five was released in 1972 to critical acclaim but was a box office flop, which just shows, making art is rarely an easy path to financial security. Vonnegut would continue to struggle as a writer for another 40+ years, gaining a measure of fame but never achieving the kind of fortune he dreamt of in the late sixties.

Vonnegut’s last published work before his death in 2007, was a memoir of sorts called A Man Without a Country. I recently finished reading it and I can say it reads more like a one man play, or a 200 page monologue than a traditional book. It’s basically a riff on everyone from Jesus Christ, to George W. Bush and everything from reality TV, fossil fuels and a new communication medium called The Internet. I tend to write in a similar style, so I loved it but if your politics leans a bit to the right, be warned, Kurt Vonnegut was a liberal humanist, with a capital ‘L’ and some of his insights into the human psyche will make you uncomfortable.

Vonnegut opens one of the chapters of A Man Without a Country with the phrase above and then goes on to tell a story about his brief time in the early 1980s as a car salesman. This was 10 years after the film catastrophe of Slaughterhouse-five and while still very much an artist, he took a job selling SAABs before they gained their yuppie-chic appeal. You gotta pay the bills, right? Back then a SAAB was little more than Swedish made Volkswagen Beetle. The way he tells it, in the 70s and early 80s a SAAB was what happened when an aeronautics engineer decided to build a car on the weekend for kicks. Which is pretty much the truth. Then sometime around 1984 a yuppie stockbroker bought one and drove it down 5th avenue, suddenly they were parked in every second driveway from Connecticut to Long Island. But Vonnegut washed out of the car business before he could cash in.

Anyway, back to the quote. I played a little chess in high school. While I never really kept track my lifetime record it is probably something like 2 and 25, mainly because I got bored easily and after about 10 minutes would stop paying attention. Accounting for my short attention span, my record is probably more like 2, 20 and 3, where 20 of the losses are just the result of apathy. My signature move though, was to castle. I did it just about every time.

For the uninitiated, castling is the only move in chess where you get to move two pieces at once. Provided, you’ve never moved them before, you take your king and move it two spaces toward either rook, then you take the rook and move it one space to the opposite side of the king. Thus, putting the king in a more easily defensible position in the corner of the board and the rook in a more aggressive position in the middle of the board. I would then build a little fortress around my king using pons and the rook and wait for my opponent to attack. When I got bored, usually about 2 minutes later, I would move the rook out into an attack position, leaving my king defenseless and eventually lose the game.

Most chess experts will tell you that castling, when done correctly, is both a defensive and offensive move. It protects the king while freeing the rook to be available as an attacking piece when the time comes. My problem was that I rarely waited long enough for the opportune moment to attack and wasted my advantage.

So, what does this have to do with Financial Planning? Well, some financial planners have a castling move of their own. Something that can be viewed both as a defensive and offensive move. All you need is a bit of foresight and patience. It is called Cash Value Life Insurance.

Cash Value Life Insurance provides a guaranteed death benefit and secures your defensive position protecting your loved ones from financial hardship should you die too soon. It also builds up a cash asset over time that can provide an additional offensive tool for income later in life. Most people view their life insurance as a purely defensive tool but by castling with cash value you can use it to provide valuable support for your purely offensive wealth building activities without sacrificing any of its defensive properties.

Like my little fortress on the chess board, the longer you hold the life insurance policy in its defensive position the more cash value it can accumulate. If you hold it all the way to death it has the potential to grow to Elephant Gun proportions, completely offset all income tax on your estate and create a significant legacy. The return on investment on a life insurance policy held for this purpose is often in the triple digits, it can literally cost just pennies to generate thousands. The key, like in chess, is to resist the temptation to cash in too early and hold it in its defensive position for as long as possible.

So, there you have it. Kurt Vonnegut reminded me of a key component of financial planning while talking about chess, a poorly performing movie, and the selling of Swedish cars. If you are curious about how these things can relate to your financial plan lets have a chat. But if you prefer we can just riff about Swedish cars and movies, that could be fun too.

 

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