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Re: How to achieve a balance between "saving" and "living"?!

*comments like they don't see why one would get more enjoyment out of spending $X at 25 than 65...seriously? First, nobody made that comment. Second, seriously it is not obviously true that one will get more happiness from the same amount of money at 25 than at 65. Physical health is only one compo...
by avalpert
Sun Sep 21, 2014 7:59 pm
 
Forum: Personal Consumer Issues
Topic: How to achieve a balance between "saving" and "living"?!
Replies: 47
Views: 4187

Re: Do I Really Need a Million Bucks?

The average boglehead does not make 6 figures According to the Net Worth Survey done on this site (and recognizing potential selection bias) the average boglehead does make 6 figures and does have 7 figure net worth. Can you please post the link to that thread? In any case, people who chose to resp...
by avalpert
Sat Sep 20, 2014 7:46 pm
 
Forum: Personal Consumer Issues
Topic: Do I Really Need a Million Bucks?
Replies: 50
Views: 3400

Re: Do I Really Need a Million Bucks?

Toons wrote:these days million dollars is peanuts, unless you make very little... but I think average boglehead makes six figures...

Then I am not nor ever was an average Boglehead :happy

Nope, and I'm not nor ever will be average height - that's life.
by avalpert
Sat Sep 20, 2014 6:38 pm
 
Forum: Personal Consumer Issues
Topic: Do I Really Need a Million Bucks?
Replies: 50
Views: 3400

Re: Do I Really Need a Million Bucks?

The average boglehead does not make 6 figures According to the Net Worth Survey done on this site (and recognizing potential selection bias) the average boglehead does make 6 figures and does have 7 figure net worth. That doesn't mean that those who earn less and live off less don't benefit equally...
by avalpert
Sat Sep 20, 2014 6:37 pm
 
Forum: Personal Consumer Issues
Topic: Do I Really Need a Million Bucks?
Replies: 50
Views: 3400

Re: How to achieve a balance between "saving" and "living"?!

At your age your income is likely to rise faster than the return from your investments. As such, for "optimal happiness" it would make sense to spend more money now and save more money later when your income is higher. At his age he may also get more utility from less spending than he wil...
by avalpert
Sat Sep 20, 2014 6:13 pm
 
Forum: Personal Consumer Issues
Topic: How to achieve a balance between "saving" and "living"?!
Replies: 47
Views: 4187

Re: Active management and expected return

I'm having trouble with the following notion: Actively managed funds are the only way to meaningfully beat the market (and conversely lag the market of course, if we exclude human emotion for this thought experiment), but on average they don't and can't. So this to me begs the question(s): 1) Do ac...
by avalpert
Sat Sep 20, 2014 5:45 pm
 
Forum: Investing - Theory, News & General
Topic: Active management and expected return
Replies: 5
Views: 336

Re: Active management and expected return

I'm having trouble with the following notion: Actively managed funds are the only way to meaningfully beat the market (and conversely lag the market of course, if we exclude human emotion for this thought experiment), but on average they don't and can't. So this to me begs the question(s): 1) Do ac...
by avalpert
Sat Sep 20, 2014 5:44 pm
 
Forum: Investing - Theory, News & General
Topic: Active management and expected return
Replies: 5
Views: 336

Re: cost of raising a child by age group

just had our first child a month ago :D so wanted to get an idea of whats to come financially. obviously raising a child is very expensive but I was looking to see which age group is generally the most expensive and which is the least (if there is such a thing). so based on your experience, how wou...
by avalpert
Fri Sep 19, 2014 9:51 am
 
Forum: Personal Consumer Issues
Topic: cost of raising a child by age group
Replies: 27
Views: 1914

Re: How to create a new 401k Plan

You can check out the wiki: http://www.bogleheads.org/wiki/Setting_up_a_401(k)_plan I agree, if they aren't going to go the safe harbor route it may be more of a pain than a benefit. For what it is worth, we ended up choosing Employee Fiduciary for our ~50 person firm due to costs, fund availability...
by avalpert
Fri Sep 19, 2014 9:22 am
 
Forum: Investing - Theory, News & General
Topic: How to create a new 401k Plan
Replies: 4
Views: 460

Re: 401K experts : safe harbor and mega-back door roth

Yes, after-tax contributions would be subject to an Average Contribution Percentage test though it doesn't mean it would necessarily fail nor does it invalidate the safe-harbor provisions with regard to the pre-tax contributions.
by avalpert
Thu Sep 18, 2014 9:29 pm
 
Forum: Personal Finance (Not Investing)
Topic: 401K experts : safe harbor and mega-back door roth
Replies: 4
Views: 421

Re: Retiree Next Door

We have been retired a few years and we have more now than when we first retired. It's certainly not because of any investment skill on my part. In fact every investment instinct or decision I have ever made has been wrong. Probably not because of skill but definitely because of timing - if you ret...
by avalpert
Thu Sep 18, 2014 4:42 pm
 
Forum: Personal Finance (Not Investing)
Topic: Retiree Next Door
Replies: 26
Views: 4321

Re: FutureAdvisor suggested asset allocation

I wouldn't take their specific prescriptions to seriously. I tried out their product for a laugh and their recommendations for me, someone who has a tilted portfolio complicated by it being spread over distinct accounts with different options and tax implications, where a hodgepodge of sideways move...
by avalpert
Thu Sep 18, 2014 4:28 pm
 
Forum: Investing - Help with Personal Investments
Topic: FutureAdvisor suggested asset allocation
Replies: 8
Views: 846

Re: Any success stories of ppl who never made >$50,000?

I think that's because we value financial planning to such a high degree that we know that for one to have the best chance of financial success usually means a STEM or advanced degree in one form or another. A lot here look highly upon prudent planning from a young age such as choice of major. So f...
by avalpert
Thu Sep 18, 2014 11:28 am
 
Forum: Personal Finance (Not Investing)
Topic: Any success stories of ppl who never made >$50,000?
Replies: 149
Views: 9843

Re: Any success stories of ppl who never made >$50,000?

This is a tough crowd to hang with if you are merely "middle class" which is too bad because the principles are the same. I have noticed several lower income first time posters that don't seem to come back after their first post. You mean working class? Middle class is a wide range of inc...
by avalpert
Thu Sep 18, 2014 10:49 am
 
Forum: Personal Finance (Not Investing)
Topic: Any success stories of ppl who never made >$50,000?
Replies: 149
Views: 9843

Re: Financial Psychology - Mind Over Money

So I tend to think the emphasis on Kahneman/Ariely may be interesting from an academic standpoint, but without any specific examples in the investing domain, Anchoring bias - not selling when you have a loss happens all the time, even among professionals, regardless of its financial merit. Overconf...
by avalpert
Tue Sep 16, 2014 10:21 pm
 
Forum: Investing - Theory, News & General
Topic: Financial Psychology - Mind Over Money
Replies: 77
Views: 3532

Re: Financial Psychology - Mind Over Money

A couple of things related to 401(k) plans probably came out of behavioral finance stuff: 1. Automatic opt-in so that employees were automatically enrolled. 2. Default choice of 401(k) plans is now a target retirement type fund instead of the money market fund. In the past the MM fund was so that o...
by avalpert
Tue Sep 16, 2014 9:40 pm
 
Forum: Investing - Theory, News & General
Topic: Financial Psychology - Mind Over Money
Replies: 77
Views: 3532

Re: Financial Psychology - Mind Over Money

So I tend to think the emphasis on Kahneman/Ariely may be interesting from an academic standpoint, but without any specific examples in the investing domain, Anchoring bias - not selling when you have a loss happens all the time, even among professionals, regardless of its financial merit. Overconf...
by avalpert
Tue Sep 16, 2014 9:31 pm
 
Forum: Investing - Theory, News & General
Topic: Financial Psychology - Mind Over Money
Replies: 77
Views: 3532

Re: Financial Psychology - Mind Over Money

Kahneman, Ariely, and other prominent BE researchers freely admit that the knowledge of cognitive biases has not protected them from making every mistake in the book. I always thought that their editors forced them to put that in their books. No, there have been some real interesting experiments th...
by avalpert
Tue Sep 16, 2014 9:21 pm
 
Forum: Investing - Theory, News & General
Topic: Financial Psychology - Mind Over Money
Replies: 77
Views: 3532

Re: Financial Psychology - Mind Over Money

Kahneman, Ariely, and other prominent BE researchers freely admit that the knowledge of cognitive biases has not protected them from making every mistake in the book. I always thought that their editors forced them to put that in their books. No, there have been some real interesting experiments th...
by avalpert
Tue Sep 16, 2014 5:46 pm
 
Forum: Investing - Theory, News & General
Topic: Financial Psychology - Mind Over Money
Replies: 77
Views: 3532

Re: Financial Psychology - Mind Over Money

But isn't that the whole point of cognitive biases - you need an external force to overcome them. The force needed to combat behavioral biases can be internally derived. Successful people reflect on their mistakes and make changes. That's invernally motivated change. It isn't anythng different in i...
by avalpert
Tue Sep 16, 2014 5:45 pm
 
Forum: Investing - Theory, News & General
Topic: Financial Psychology - Mind Over Money
Replies: 77
Views: 3532

Re: Why do so many think their home is a foolproof investmen

But alas those decisions are co-mingled all the time in real life housing decisions. I agree, they are distinct in principal if not in practice. Fine, so the next time there is a thread comparing index funds to active funds, let's make sure we use a disproportionate mix of large growth funds in tha...
by avalpert
Tue Sep 16, 2014 5:41 pm
 
Forum: Investing - Theory, News & General
Topic: Why do so many think their home is a foolproof investment?
Replies: 125
Views: 6399

Re: Why do so many think their home is a foolproof investmen

What really blows my mind is the inanity of the repeated posts on this topic. Forget about whether a house can be considered an investment. Any further thoughts I could possibly provide here would be the equivalent of shooting a toy water pistol at a forest fire. I think the far more interesting qu...
by avalpert
Tue Sep 16, 2014 5:25 pm
 
Forum: Investing - Theory, News & General
Topic: Why do so many think their home is a foolproof investment?
Replies: 125
Views: 6399

Re: Why do so many think their home is a foolproof investmen

What really blows my mind is the inanity of the repeated posts on this topic. Forget about whether a house can be considered an investment. Any further thoughts I could possibly provide here would be the equivalent of shooting a toy water pistol at a forest fire. I think the far more interesting qu...
by avalpert
Tue Sep 16, 2014 5:05 pm
 
Forum: Investing - Theory, News & General
Topic: Why do so many think their home is a foolproof investment?
Replies: 125
Views: 6399

Re: Financial Psychology - Mind Over Money

Kahneman, Ariely, and other prominent BE researchers freely admit that the knowledge of cognitive biases has not protected them from making every mistake in the book. I always thought that their editors forced them to put that in their books. No, there have been some real interesting experiments th...
by avalpert
Tue Sep 16, 2014 4:55 pm
 
Forum: Investing - Theory, News & General
Topic: Financial Psychology - Mind Over Money
Replies: 77
Views: 3532

Re: Financial Psychology - Mind Over Money

On the other hand, the straight index-fund-only Boglehead approach has always seemed "coercive" to me. Like the only way the investor can get comfortable holding straight equity index funds during a downturn is to have somebody whispering in their ear to "Stay the course". That'...
by avalpert
Tue Sep 16, 2014 4:53 pm
 
Forum: Investing - Theory, News & General
Topic: Financial Psychology - Mind Over Money
Replies: 77
Views: 3532

Re: Why do so many think their home is a foolproof investmen

What really blows my mind is the inanity of the repeated posts on this topic. Forget about whether a house can be considered an investment. Any further thoughts I could possibly provide here would be the equivalent of shooting a toy water pistol at a forest fire. I think the far more interesting qu...
by avalpert
Tue Sep 16, 2014 4:34 pm
 
Forum: Investing - Theory, News & General
Topic: Why do so many think their home is a foolproof investment?
Replies: 125
Views: 6399

Re: Any success stories of ppl who never made >$50,000?

This is a tough crowd to hang with if you are merely "middle class" which is too bad because the principles are the same. I have noticed several lower income first time posters that don't seem to come back after their first post. You mean working class? Middle class is a wide range of inc...
by avalpert
Tue Sep 16, 2014 3:32 pm
 
Forum: Personal Finance (Not Investing)
Topic: Any success stories of ppl who never made >$50,000?
Replies: 149
Views: 9843

Re: Financial Psychology - Mind Over Money

... Loss aversion (whose existence has been questioned by some recent studies) is not fear of a market crash but the asymmetrical value between losses and gains of equal value - passive indexing would do nothing to help with loss aversion per se. Handing over management of your money to someone els...
by avalpert
Tue Sep 16, 2014 2:42 pm
 
Forum: Investing - Theory, News & General
Topic: Financial Psychology - Mind Over Money
Replies: 77
Views: 3532

Re: Financial Psychology - Mind Over Money

For example anchoring and hindsight bias are not related at all and true examples of anchoring are very informative into investor behavior - for example anchoring on the price you bought a house for when deciding whether it makes sense to sell it, or anchoring on MSRP when evaluating if the current...
by avalpert
Tue Sep 16, 2014 2:38 pm
 
Forum: Investing - Theory, News & General
Topic: Financial Psychology - Mind Over Money
Replies: 77
Views: 3532

Re: Financial Psychology - Mind Over Money

... Loss aversion (whose existence has been questioned by some recent studies) is not fear of a market crash but the asymmetrical value between losses and gains of equal value - passive indexing would do nothing to help with loss aversion per se. Handing over management of your money to someone els...
by avalpert
Tue Sep 16, 2014 2:17 pm
 
Forum: Investing - Theory, News & General
Topic: Financial Psychology - Mind Over Money
Replies: 77
Views: 3532

Re: Financial Psychology - Mind Over Money

Cognitive biases are indeed extremely important to understanding how people behave and why - and they are not easily overcome even by knowledge of them. That said, what you have produced here has a lot of mistakes in it that suggest you may need to spend more time studying the subject. For example a...
by avalpert
Tue Sep 16, 2014 1:12 pm
 
Forum: Investing - Theory, News & General
Topic: Financial Psychology - Mind Over Money
Replies: 77
Views: 3532

Re: Why do so many think their home is a foolproof investmen

In high cost of living areas such as New York - people just don't have much choice, they will need to buy a home that takes all of their money - they need to convince themselves its a good investment. That's ridiculous, the New York City area is quite large with plenty of affordable communities - t...
by avalpert
Tue Sep 16, 2014 11:32 am
 
Forum: Investing - Theory, News & General
Topic: Why do so many think their home is a foolproof investment?
Replies: 125
Views: 6399

Re: Most cost effective means of protecting physical assets

bnes wrote:0. Put up an alarm sign (some claim this is more effective than the actual alarm).

This is what I do. It is difficult to impossible to make your house burglarproof but that isn't really the goal - you just have to make it slightly more difficult/risky than the neighbors house.
by avalpert
Tue Sep 16, 2014 10:44 am
 
Forum: Personal Consumer Issues
Topic: Most cost effective means of protecting physical assets
Replies: 50
Views: 3955

Re: How much you need to save as multiple of salary

Folks, most Bogleheads rate B+ to A+ on understanding of personal finance . Out THERE, in what is often laughingly called the real world, its closer to D- or F. To give an example If you understand imputed rent on an owner occupied house You get an "A" If you think you "earned" ...
by avalpert
Tue Sep 16, 2014 10:28 am
 
Forum: Investing - Theory, News & General
Topic: How much you need to save as multiple of salary
Replies: 51
Views: 6255

Re: Active v Index Fund Performance

Did he mention what the return was net of the front end load?
by avalpert
Mon Sep 15, 2014 5:11 pm
 
Forum: Investing - Theory, News & General
Topic: Active v Index Fund Performance
Replies: 5
Views: 401

Re: Individual Stocks

We own about 15 different stocks. Most are blue chip dividend earners, but we also own a little of some smaller, speculative companies. In total, they are all about 12% of my portfolio. Of the blue chips, most were bought quite a number of years ago, before I had an IRA, so they are in my taxable a...
by avalpert
Mon Sep 15, 2014 5:04 pm
 
Forum: Investing - Theory, News & General
Topic: Individual Stocks
Replies: 35
Views: 2630

Re: move, rent or buy a second home?

thanks for the reply. they just started the new school, so in the future, more of their weekends would take place closer to school. going home now is not a problem, but may be increasingly a problem in the future. renting is slightly cheaper than buying a new home or buying a new condo. overall the...
by avalpert
Mon Sep 15, 2014 4:29 pm
 
Forum: Personal Finance (Not Investing)
Topic: move, rent or buy a second home?
Replies: 7
Views: 478

Re: Why do so many think their home is a foolproof investmen

One of the problems with bogleheads is that you guys define successful investment solely in dollars and cents. As I am getting older I'm coming to the realization that it is way more than that. An economist is someone who know the cost of everything and the value of nothing. Or so someone once said...
by avalpert
Mon Sep 15, 2014 9:32 am
 
Forum: Investing - Theory, News & General
Topic: Why do so many think their home is a foolproof investment?
Replies: 125
Views: 6399

Re: Why do so many think their home is a foolproof investmen

That's the best idea I've seen yet to justify overspending - do you work for a bank? Sorry, just because the purchase cost of the Ferrari is a small multiple of the leasing costs doesn't make it a good value when all you need is a Chevy. Just because buying this 4 bedroom, 3500 sq ft house is a sma...
by avalpert
Sun Sep 14, 2014 9:25 pm
 
Forum: Investing - Theory, News & General
Topic: Why do so many think their home is a foolproof investment?
Replies: 125
Views: 6399

Re: Why do so many think their home is a foolproof investmen

Is the only reasonable comparison for the financial prudence of buying a Ferrari the cost of leasing it? If you're comparing renting or buying a car then only like cars should be compared whether they're Chevys or Ferraris. That's the best idea I've seen yet to justify overspending - do you work fo...
by avalpert
Sun Sep 14, 2014 5:38 pm
 
Forum: Investing - Theory, News & General
Topic: Why do so many think their home is a foolproof investment?
Replies: 125
Views: 6399

Re: Why do so many think their home is a foolproof investmen

The comments about propaganda surprise me. I'm no believer in homes as a great investment, but, depending on your age, there is experience that might suggest the contrary. From about the early to mid-70s, there was a roughly 30 year period during which the annual appreciation in many homes was more...
by avalpert
Sun Sep 14, 2014 5:35 pm
 
Forum: Investing - Theory, News & General
Topic: Why do so many think their home is a foolproof investment?
Replies: 125
Views: 6399

Re: Why do so many think their home is a foolproof investmen

sdsailing wrote:Another question would be: why are bogleheads so negative on real estate as a group?

Given the number of people here who have dedicated allocations to REITs I don't see how the premise of your question holds any water at all.
by avalpert
Sun Sep 14, 2014 5:30 pm
 
Forum: Investing - Theory, News & General
Topic: Why do so many think their home is a foolproof investment?
Replies: 125
Views: 6399

Re: Why do so many think their home is a foolproof investmen

The home I currently own and live in has a market rental value of approximately $2000/month. My PITI + HOA dues currently amount to about $1100/month. Although I am not arguing about the classification of it being an investment, seems like a no brainer for me to own vs rent. You aren't accounting f...
by avalpert
Sun Sep 14, 2014 12:31 pm
 
Forum: Investing - Theory, News & General
Topic: Why do so many think their home is a foolproof investment?
Replies: 125
Views: 6399

Re: Why do so many think their home is a foolproof investmen

Homeowners tend to compare apples to apples. They live in a house they have bought and compare it to the cost of renting an identical house. In reality, most renters live in lesser places than what they would own, and their overall housing cost, including the building owner's overhead, is about the...
by avalpert
Sun Sep 14, 2014 12:29 pm
 
Forum: Investing - Theory, News & General
Topic: Why do so many think their home is a foolproof investment?
Replies: 125
Views: 6399

Re: Buffett: Modern investment theory is horse-pucky

Ironically enough, the academic studies I referred you too in our recent discussion on CEFs that you dismissed out of hand were all about the behavior of a subset of market participants and how it impacts pricing - I guess you can bring a horse to water and all... avalpert, What you were discussing...
by avalpert
Sun Sep 14, 2014 12:25 pm
 
Forum: Investing - Theory, News & General
Topic: Buffett: Modern investment theory is horse-pucky
Replies: 119
Views: 9526

Re: Emergency fund question

Personally, I haven't found the difference between the interest on my online checking accounts and short term CDs to be enough to go yield chasing over for the relatively small amount of money we are taking about.
by avalpert
Sun Sep 14, 2014 9:48 am
 
Forum: Investing - Help with Personal Investments
Topic: Emergency fund question
Replies: 6
Views: 644

Re: Buffett: Modern investment theory is horse-pucky

The thing is that we need a good framework or a model by which we can better understand the markets. That is that we build models that are based upon beliefs that are true most of the time. Otherwise we just say it is all bunk or horse-pucky or a rigged game and never invest. We all operate on pres...
by avalpert
Sun Sep 14, 2014 8:41 am
 
Forum: Investing - Theory, News & General
Topic: Buffett: Modern investment theory is horse-pucky
Replies: 119
Views: 9526

Re: Newbie: Is my 10 year plan going to work?

5 percent real for equities is a pipe dream, total return is projected to be mid single digits over the next 7 to 10 years. Bonds return3-4 percent. If equities give you 3.5 percent (60 percent of 6 percent) and 2 percent for bonds that gives you 5.5 percent before inflation. I would say try it and...
by avalpert
Fri Sep 12, 2014 10:49 pm
 
Forum: Investing - Help with Personal Investments
Topic: Newbie: Is my 10 year plan going to work?
Replies: 35
Views: 3281

Re: Buffett: Modern investment theory is horse-pucky

This is literally untrue. If you wanted to buy $20 trillion worth of "the market" you would literally be unable to do so at today's valuations. Hence the magic of derivatives. Who cares if the global economy is too small, lets leverage it! Notional value of all derivatives in Dec 2013 $71...
by avalpert
Fri Sep 12, 2014 10:41 pm
 
Forum: Investing - Theory, News & General
Topic: Buffett: Modern investment theory is horse-pucky
Replies: 119
Views: 9526

Re: Clean, quiet, safe and cheap. Is there such a travel pla

How about the highland plateau of Colombia. 50-70 daily. I read somewhere that there is a lot of kidnapping in Columbia. Is that not true? It's a lot better than it was a decade ago - as with most of these type of security issues it is a localized risk that can be avoided if you choose where you go...
by avalpert
Fri Sep 12, 2014 10:36 pm
 
Forum: Personal Consumer Issues
Topic: Clean, quiet, safe and cheap. Is there such a travel place?
Replies: 75
Views: 5721
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