Do I need to get all the details right?

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Do I need to get all the details right?

Postby BuckyBadger » Fri Dec 21, 2012 4:39 pm

Do I need to get all the details right, or is it enough to nail the basics?

I've been a Boglehead (officially) for about a year, although I was pretty close before, I just didn't know what it was called. I contributed to retirement accounts, I used target date funds, and I was in it for the long haul.

Now I have a lovely 3 fund portfolio, I don't have bonds in my taxable accounts, I max out all our tax deferred space, and I accumulateaccumulateaccumulate.

But I know I'm missing the details. Tax loss harvesting, I Bonds, TIPS, etc... -- I have no idea what these/this are/is.

Am I going to be okay doing the basics and ignoring the higher level stuff?
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Re: Do I need to get all the details right?

Postby umfundi » Fri Dec 21, 2012 4:57 pm

BuckyBadger wrote:Do I need to get all the details right, or is it enough to nail the basics?

I've been a Boglehead (officially) for about a year, although I was pretty close before, I just didn't know what it was called. I contributed to retirement accounts, I used target date funds, and I was in it for the long haul.

Now I have a lovely 3 fund portfolio, I don't have bonds in my taxable accounts, I max out all our tax deferred space, and I accumulateaccumulateaccumulate.

But I know I'm missing the details. Tax loss harvesting, I Bonds, TIPS, etc... -- I have no idea what these/this are/is.

Am I going to be okay doing the basics and ignoring the higher level stuff?


Yes.

Except, you did not mention rebalancing. That's important.

Keith
Déjà Vu is not a prediction
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Re: Do I need to get all the details right?

Postby ruralavalon » Fri Dec 21, 2012 4:58 pm

Getting a few things (asset allocation, low costs, broad diversification, tax efficient fund placement) right, and avoiding big mistakes, is enough in my opinion.

I'm not saying that details (tax loss harvesting, I Bonds, TIPS, etc.) don't matter at all, just that they pale in significance by comparison.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started
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Keep investing simple and stay-the-course

Postby Taylor Larimore » Fri Dec 21, 2012 5:04 pm

Bucky:

Am I going to be okay doing the basics and ignoring the higher level stuff?


You will probably do better than most of us. Keep investing simple and stay-the-course.

Best wishes and Happy Holiday!
Taylor
"Simplicity is the master key to financial success." -- Jack Bogle
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Re: Do I need to get all the details right?

Postby BuckyBadger » Fri Dec 21, 2012 5:05 pm

umfundi wrote:
BuckyBadger wrote:Do I need to get all the details right, or is it enough to nail the basics?

I've been a Boglehead (officially) for about a year, although I was pretty close before, I just didn't know what it was called. I contributed to retirement accounts, I used target date funds, and I was in it for the long haul.

Now I have a lovely 3 fund portfolio, I don't have bonds in my taxable accounts, I max out all our tax deferred space, and I accumulateaccumulateaccumulate.

But I know I'm missing the details. Tax loss harvesting, I Bonds, TIPS, etc... -- I have no idea what these/this are/is.

Am I going to be okay doing the basics and ignoring the higher level stuff?


Yes.

Except, you did not mention rebalancing. That's important.

Keith


I forgot to mention rebalancing! (I love that one because I get to look at my spreadsheets!) Luckily, with 4 tax advantaged funds into which I contribute I'm able to stay balanced pretty much as I go along by tweaking contributions every few months. It's my favorite investing task!

Thanks for the reassurance. I think with the deluge of recent "should I do _______ before the new year" posts I feel like I'm missing something. I plan on doing nothing before the new year except keep putting in my money and ignoring the market!
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Re: Do I need to get all the details right?

Postby linguini » Fri Dec 21, 2012 5:16 pm

You're fine as long as you stick the basic principles of picking an asset allocation based on a few mutual funds or ETFs representing broad stock and bond markets, rebalancing on a regular (though not necessarily frequent) schedule, using tax-deferred or tax-preferred accounts as they are presented, and putting most of your taxable bonds in the tax-deferred or tax-preferred accounts. I doubt many retirements were made or broken based on a failure to use tax loss harvesting or I bonds or TIPS funds. Mathematically, being frugal and consistently keeping a large portion of your money invested into a broad stock index are the two most important factors in funding your retirement. While the effect isn't negligible, tax efficiency strategies and non-stock assets will generally play a far smaller role in the amount of money you have in retirement. A lot of bogleheads are interested in micro-optimizations of their portfolios, which is perfectly fine but not completely necessary.
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Re: Do I need to get all the details right?

Postby umfundi » Fri Dec 21, 2012 5:17 pm

I think with the deluge of recent "should I do _______ before the new year" posts I feel like I'm missing something.

Yes, don't just do something. Sit there.

Happy New Year!

Keith
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Re: Do I need to get all the details right?

Postby nisiprius » Fri Dec 21, 2012 5:38 pm

BuckyBadger wrote:Do I need to get all the details right, or is it enough to nail the basics?
John C. Bogle, in The Twelve Pillars of Wisdom:, wrote: "Successful investing involves doing just a few things right and avoiding serious mistakes." In more detail:
Pillar 1. Investing Is Not Nearly as Difficult as It Looks.

The intelligent investor in mutual funds, using common sense and without extraordinary financial acumen, can perform with the pros. In a world where financial markets are highly efficient, there is absolutely no reason that careful and disciplined novices—those who know the rudiments but lack the experience—cannot hold their own or even surpass the long-term returns earned by professional investors as a group. Successful investing involves doing just a few things right and avoiding serious mistakes.

"Doing a few things right," as I stressed in my book, included focusing on broad-based mainstream equity funds with wide diversification; evaluating funds relative to peers with similar objectives; ignoring short-term performance in favor of performance over at least a decade; carefully considering the drag of high expense ratios and sales charges; paying careful attention to portfolio quality, in stock funds, bond funds, and money market funds alike; and focusing on an asset allocation that is consistent with your own risk tolerance.

"Serious mistakes," I indicated, included such errors as investing in funds with spectacular records ("no investor ever went broke by failing to invest in a hot new product"), as well as those persistently at the bottom of the deck; excessive reliance on narrowly-based funds (say, emerging market funds); and using mutual funds for short-term trading. As the stock market bubble inflated, some of these dos and don’ts didn’t seem especially necessary. Now, after the fall, their validity has been reaffirmed.

Pillar 2. When All Else Fails, Fall Back on Simplicity....
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.
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Re: Do I need to get all the details right?

Postby Joe S. » Fri Dec 21, 2012 5:39 pm

ruralavalon wrote:Getting a few things (asset allocation, low costs, broad diversification, tax efficient fund placement) right, and avoiding big mistakes, is enough in my opinion.
I'm not saying that details (tax loss harvesting, I Bonds, TIPS, etc.) don't matter at all, just that they pale in significance by comparison.

It's most important to get the basics right. Once you have time, you can get into the minutiae:
Tax Loss Harvesting
http://www.bogleheads.org/wiki/Tax_Loss_Harvesting
I bonds
http://www.bogleheads.org/wiki/I_Savings_Bonds
TIPS
http://www.bogleheads.org/wiki/Treasury ... d_Security
I bonds vs TIPS
http://www.bogleheads.org/wiki/I_Bonds_vs_TIPS
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Re: Do I need to get all the details right?

Postby Default User BR » Fri Dec 21, 2012 6:31 pm

Of those, TLH is the most important. As noted, read the Wiki and get familiar with the concepts. Understand that with a three-fund portfolio, you will have decisions to make.


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