A regular feature of The Motley Fool Rule Your Retirement newsletter service is our success stories -- profiles of people who have become financially independent. One of the most remarkable stories is about Billy and Akaisha Kaderli, who, at age 38, left their fast-track lives, moved to the Caribbean, and started traveling the world. We caught up with Billy and Akaisha in Phuket, Thailand, where they are spending a month body surfing.
"No Fear, Dude" is a common slogan amongst surfers worldwide. Boarders know they cannot approach the powerful sea with trepidation in their hearts and still be fluid enough to ride the waves to shore. It's a combination of trust, skill, experience, and internal confidence that propels them on to success.

This theme carries forward to our investment philosophy. For over twenty years we have been long equities -- basically 100% invested throughout, except for a short time during the last bear market. Since 1991 when we retired, our portfolio mantra has been "embrace the future, stay invested, and keep it simple."

Easy to say, hard to do
Being vice president of investments, branch manager for Dean Witter Reynolds, Billy was constantly shown research reports supporting the fact that many people -- we brokers called them Nervous Nellies -- would sell out of the market at its lows only to return after large gains had taken place. Even though Billy challenged much of the research he received, this fact remained intact.

When the market would fall and statements were mailed out the first of each month, Billy's phone would start ringing. "Get me out!" was often the response his clients had after reading their statements. If the calls were numerous, we used this as a contrary indicator and would suggest to clients that now is the time to be buying, not selling. And we took our own advice.

Because of this movement of funds in a typical reactionary emotional response, most people cannot beat the returns of the S&P 500 for any reasonable length of time. You have to be extremely lucky to be correct twice: once by selling at the market top, and then again by buying at its bottom. Even professional money managers have a difficult time doing this, and they spend eight hours or more a day trying.

Our philosophy is not to beat the market, only to come close to matching it. And because we are selling off shares at a capital gains rate, our portfolio has tax advantages over one that is balanced with bonds, where the interest is taxed as ordinary income.

Answering the critics 
We know that some people do not agree with this strategy, insisting that we need to hold bonds to balance our portfolio's ups and downs. Being 54, we are not yet eligible for Social Security, but I do look at that future income as our bond equivalent. Maybe we are being foolhardy to expect Social Security to be around in eight years, but again we take the attitude of "No Fear." We have made it through retirement almost two decades without this additional income, so if it's available when we are 62, that will be a bonus.

Another critique of our investment plan is that we were "lucky" to have the bull run of the '90s with the wind at our back propelling us ahead in our financial independence. If so, then we were "unlucky" to have ridden out both the crash of 1987 and the second worst bear market in our nation's history, 2000-2003. As mentioned above, we did sell 30% and moved it to cash in 2000, only to buy back too early to benefit much from that move. Remember I stated you have to be lucky twice? We were lucky only once.

What about international exposure? It is our opinion that the multinational corporations that make up the S&P 500 are plenty of international exposure for us. Plus, we do not have to concern ourselves with currency risks. It's great if a certain country's market moves up 10%, but if the currency goes against you 10% then it's all for naught, so we leave this up to the money managers of the multinationals and forget about it.

But what about diversification between small caps, growth, and value? This can be satisfied by owning a total market index like the Wilshire 5000. This way, you own them all. Money managers come and go like big-league all-stars. Therefore, we have no idea what an active managed fund will do in the future, but we do know with certainty that a market index will match the market. And there is a lot of historical data to support what those returns could be in the future.

When we started on this adventure seventeen years ago, the S&P 500 Index closed at 312.49, and it was the investment of choice at that time. Why do we stay invested in this manner? Because it works.

It's never too early or too late to begin planning for your own retirement. To begin your journey, try a risk-free trial to Rule Your Retirement.

In 1991, Billy and Akaisha Kaderli retired from the brokerage and restaurant businesses to a life of international travel. Visit their website at RetireEarlyLifestyle.com, and check out their new CD book, The Adventurer's Guide to Early Retirement.