Will Bogleheads become the richest families on Earth?

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normaldude
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Will Bogleheads become the richest families on Earth?

Post by normaldude »

Family #1 (boglehead): $10 million, 7% return for 250 years, resulting in $221 trillion dollars.

Family #2 (non-boglehead): $1 billion, 5% return for 250 years, resulting in $198 trillion dollars.

Even though family #2 currently has 100 times the net worth of family #1, the boglehead family becomes richer over the long run.

(Yes, I know there are taxes, estate taxes, etc, but they would affect both families similarly)

My point is that if boglehead theory is correct, then boglehead families should eventually become the kings of planet earth, and the richest people in the world.
livesoft
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Re: Will Bogleheads become the richest families on Earth?

Post by livesoft »

Probably not because Bogleheads will donate most of their blessings to charities in order to help those in need.
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normaldude
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Re: Will Bogleheads become the richest families on Earth?

Post by normaldude »

livesoft wrote:Probably not because Bogleheads will donate most of their blessings to charities in order to help those in need.
Other wealthy families also donate to charity.

And since Bogleheads are inherently cheap misers, they might actually end up hoarding more wealth.

Is there any evidence that Bogleheads are more charitable than average Americans?
Mill
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Re: Will Bogleheads become the richest families on Earth?

Post by Mill »

No.

Long run does not imply 250 years. Plus, you cant prove that the Boglehead way beats the non-Boglehead way by 2% annually as shown in these 2 scenerios.
Harold
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Re: Will Bogleheads become the richest families on Earth?

Post by Harold »

normaldude wrote:My point is that if boglehead theory is correct, then boglehead families should eventually become the kings of planet earth, and the richest people in the world.
Your premise is incorrect.

The people who are widely considered by the general public to be the best investors are those who take significant risks that pay off. (And conversely people who are widely considered by the general public to be poor investors are those who take significant risks that punish them.)

There will always be people/families who take outsized risks and profit from them (often without full awareness of the risks they were taking). Of course anyone who follows John Bogle's principles at any given risk levels will be paying lower expenses, hence getting better returns -- but at the risk extremes there will probably be fewer such people than those simply rolling the dice big time and incurring some hefty fees along the way. (Not all of the high rollers need to win, let along perpetuate their luck through the generations -- most won't, but all that's needed is for some to.)
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normaldude
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Re: Will Bogleheads become the richest families on Earth?

Post by normaldude »

Mill wrote:No.

Long run does not imply 250 years. Plus, you cant prove that the Boglehead way beats the non-Boglehead way by 2% annually as shown in these 2 scenerios.
I just used the 7% vs 5% numbers, because those were the numbers used by John Bogle in the recent PBS Frontline episode.

But whatever you believe the numbers to be, if the boglehead approach produces superior returns, then if you extrapolated & compounded that difference over 200-300 years, the effect would be enormous.
YttriumNitrate
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Re: Will Bogleheads become the richest families on Earth?

Post by YttriumNitrate »

No, Bogleheads preach diversification, and diversification generally prevents the accumulation of crazy amounts of wealth. For instance, if Bill Gates was a Boglehead, he would have sold massive amounts of Microsoft stock early on in order to balance out his portfolio as the value of the stock rose.
Mill
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Re: Will Bogleheads become the richest families on Earth?

Post by Mill »

YttriumNitrate wrote:No, Bogleheads preach diversification, and diversification generally prevents the accumulation of crazy amounts of wealth. For instance, if Bill Gates was a Boglehead, he would have sold massive amounts of Microsoft stock early on in order to balance out his portfolio as the value of the stock rose.
That's true. Somewhere along the line, a Boglehead would lower equity exposure to the point that 2% growth over the non-BH would no longer be attainable.
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HomerJ
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Re: Will Bogleheads become the richest families on Earth?

Post by HomerJ »

Most Bogleheads aren't aiming to get rich, but to retire early and enjoy life without worrying about money.

So, getting 2% more than the average bear just means the Boglehead stops accumulating at 55 instead of 65 or 75. So we don't necessarily end up richer than other people.

Plus, like others have said, once you have "enough", most Bogleheads will dial back equity exposure and just play it safe.

Of course, I don't speak for any Bogleheads but me, but that's my impression when reading these boards...
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Re: Will Bogleheads become the richest families on Earth?

Post by Johm221122 »

HomerJ wrote:Most Bogleheads aren't aiming to get rich, but to retire early and enjoy life without worrying about money.

So, getting 2% more than the average bear just means the Boglehead stops accumulating at 55 instead of 65 or 75. So we don't necessarily end up richer than other people.

Plus, like others have said, once you have "enough", most Bogleheads will dial back equity exposure and just play it safe.

Of course, I don't speak for any Bogleheads but me, but that's my impression when reading these boards...
I don't want to work, retiring 12 or so years early will definitely cut in to my net worth but add to my happiness :sharebeer
Not that I would be super rich anyway
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Re: Will Bogleheads become the richest families on Earth?

Post by 555 »

Bogleheads aren't richer. They're enougher.
seamonkey
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Re: Will Bogleheads become the richest families on Earth?

Post by seamonkey »

It's also not about being rich, but rather avoiding mistakes that have a high probability of leaving you poor.

Besides, in 250 years, we'll all have chips in our head. Wealth will be a complete mirage.
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VictoriaF
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Re: Will Bogleheads become the richest families on Earth?

Post by VictoriaF »

When I first read the heading I thought the OP was estimating the combined wealth of the Bogleheads. That would be something like:

33,000 members x $1m average worth = $33 B

The top ten richest people currently include:
$73 B - Carlos Slim Helu & family
$67 B - Bill Gates
$57 B - Amancio Ortega
$53.5 B - Warren Buffett
$43 B - Larry Ellison
$34 B - Charles Koch
$34 B - David Koch
$31 B - Li Ka-shing
$30 B - Liliane Bettencourt & family
$29 B - Bernard Arnault & family

The Bogleheads fit between #7 and #8.

Victoria
Last edited by VictoriaF on Fri Dec 27, 2013 9:53 am, edited 2 times in total.
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columbia
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Re: Will Bogleheads become the richest families on Earth?

Post by columbia »

I'm just hoping to retire at a reasobable age and not run out of money.
furwut
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Re: Will Bogleheads become the richest families on Earth?

Post by furwut »

VictoriaF wrote:When I first read the heading I thought the OP was estimating the combined wealth of the Bogleheads. That would be something like:

33,000 members x $1m average worth = $33B

Victoria
I think $1m is high. I'll go with $500K so $16.5B. Collectively we still haven't matched Warren.
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Re: Will Bogleheads become the richest families on Earth?

Post by KyleAAA »

The chances of a family fortune being managed by consecutive generations of bogleheads for 250 years is pretty much 0. Even huge family fortunes tend to dissipate over 3 or 4 generations.
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TheTimeLord
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Re: Will Bogleheads become the richest families on Earth?

Post by TheTimeLord »

normaldude wrote:Family #1 (boglehead): $10 million, 7% return for 250 years, resulting in $221 trillion dollars.

Family #2 (non-boglehead): $1 billion, 5% return for 250 years, resulting in $198 trillion dollars.

Even though family #2 currently has 100 times the net worth of family #1, the boglehead family becomes richer over the long run.

(Yes, I know there are taxes, estate taxes, etc, but they would affect both families similarly)

My point is that if boglehead theory is correct, then boglehead families should eventually become the kings of planet earth, and the richest people in the world.
No because they will decide they have won the game and move to 100% Bond portfolios.
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VictoriaF
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Re: Will Bogleheads become the richest families on Earth?

Post by VictoriaF »

furwut wrote:
VictoriaF wrote:When I first read the heading I thought the OP was estimating the combined wealth of the Bogleheads. That would be something like:

33,000 members x $1m average worth = $33B

Victoria
I think $1m is high. I'll go with $500K so $16.5B. Collectively we still haven't matched Warren.
May be. On the hand, if Warren or Bill or Amancio were Bogleheads we would be the richest family.

Victoria
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Re: Will Bogleheads become the richest families on Earth?

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