Are Bogleheads "robots with Excel Spreadsheets?"

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livesoft
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Re: Are Bogleheads "robots with Excel Spreadsheets?"

Post by livesoft »

As I read the article, I had a different thought: I don't have a pension, but I have saved in my 401(k), 403(b) and in taxable accounts. The difference between a pension and my stash is that when I die, my heirs will get my stash. It is very unlikely that my stash will go to zero as I age. Indeed, it is probably enough to provide a permanent endowment for a limited number of my heirs if they use Boglehead principles to keep it going. Or my spouse and I can gift money each year to our kids with the stipulation that they build up their retirement basket and later in life use it for their kids.

So defined contribution plans have something that defined benefits plans do not: They can be passed on to one's heirs. This is generally not written about and I understand why since it appears that many folks do not build up their DC plan assets during their lifetimes. But for those that do build them up, they may have set the stage so that their heirs do not have to worry about retirement if they play their cards right.
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paper200
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Re: Are Bogleheads "robots with Excel Spreadsheets?"

Post by paper200 »


nisiprius wrote:
It drive me bananas that people toss off this sort of statement lightly, as if only a negligible percentage of septenarians have health problems... as if septenarians could state their year of birth on a résumé and ever get an interview... and as if there weren't an intergenerational conflict issue. The reason for the traditional retirement age of 65 wasn't to be nice to seniors, it was to get them the heck out of the workforce to make way for younger workers. It won't be pretty if Junior ever concludes that the people who have been taking the job he needs are not the illegal aliens, but the geezers.
+2

In certain sense, I sympathize with the article as some folks have no money sense. I have seen when you try to gently explain, when asked, to folks that each year if you attempt to save for your nth year in retirement:

(Savings/Income)*{(1+Return)^n}*Luck - that S/I less than 0.2 will not help. At least try S/I at 0.15 and hope L is greater than 1;

the message does not get across.

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IlliniDave
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Re: Are Bogleheads "robots with Excel Spreadsheets?"

Post by IlliniDave »

I think the intellectual prowess and machine-like precision required to prepare a little extra retirement income above SS is vastly overstated.
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Re: Are Bogleheads "robots with Excel Spreadsheets?"

Post by chipmonk »

letsgobobby wrote:"Retirement specialist Teresa Ghilarducci of the New School for Social Research in New York says the voluntary plans "work for a robot with an Excel spreadsheet," not for people trying to pay bills and care for children who aren't thinking decades ahead to retirement."
I have a few spreadsheets to keep track of my investments, and I'd be thrilled if I had a robot to update it and do rebalancing and tax-loss harvesting for me. That would leave me just the fun part: hanging out on Bogleheads and reading what all of these smart people have to say.

So, robots with spreadsheets? Why yes, good suggestion! :)
zvez
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Re: Are Bogleheads "robots with Excel Spreadsheets?"

Post by zvez »

I think they're capable but concerned too much with the next version of xbox, big screen tv etc. and actually spend more time on researching that than on any retirement plan.

I work with intelligent educated people yet many of them have no clue about how to plan for retirement, many of my friends in their fifties fear they'll never be able to retire now.

letsgobobby wrote:
HoosierJim wrote:
Although there are personal catastrophes and a need to help the helpless, most people have 40 years notice that they need to save for retirement. You don't need a spreadsheet to save 10% and adjust your lifestyle accordingly.
Without getting into the politics of 'personal responsibility,' I think the question is whether most individuals are capable of planning for something forty years in the future. I don't think we're well evolved to do that. Those who are unusually equipped from a psychological standpoint to do so are in the minority - probably most avid Bogleheads are in this camp. All the evidence is that forced savings works better than voluntary savings, for most people (again, Bogleheads are the exception). In fact, to most Americans, Bogleheads (with our 30-60% savings rates, claimed ability to tolerate large and prolonged tracking errors in hopes of eventual higher returns, advocacy for rebalancing at bear market bottoms, and love of spreadsheets) probably look very robotic.
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Re: Are Bogleheads "robots with Excel Spreadsheets?"

Post by Gort »

I'm not a robot. Oops, maybe I am!
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letsgobobby
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Re: Are Bogleheads "robots with Excel Spreadsheets?"

Post by letsgobobby »

IlliniDave wrote:I think the intellectual prowess and machine-like precision required to prepare a little extra retirement income above SS is vastly overstated.
the statistics say that *something* is in too short supply, and the question is what is the "something."

To me the author's allegation is not that intellectual prowess or machine-like precision is required, but rather some emotionless decision-making even under stressful situations (markets tanking, parents sick or dying, etc) that is unnatural/not well-evolved on average.

livesoft, but yours is only true for that select group which has substantial leftover money when they die. It's not true for most Americans who don't have a pension; it was almost never true before the days of SS and pensions both. Most are better off with a pension than a lump sum. Bogleheads are different from most, not least because they can calculate backward from a lump sum to determine a sustainable withdrawal rate (dang spreadsheets again).

It's all well and good to say, "I could do it so anyone can" but if 95% of the population is living off SS alone that doesn't bode well for either the consumer-driven economy or social stability (off limit topics to discuss).

If we are robots with spreadsheets, can our unique psychological attributes provide the framework for a broader educational (or somewhat sinisterly a conditioning) program for everyone else?

On that note, Taylor's 3 fund portfolio is an excellent start (simple, low cost investing with regular though infrequent rebalancing). What about the saving end of things?
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Re: Are Bogleheads "robots with Excel Spreadsheets?"

Post by Bmac »

Separate from any political debate about taxation, the idea of mandatory, universal individual retirement accounts for every employee along the lines of what is being done in Australia makes incredible sense. Imagine if from your first paycheck 10% was automatically put into a tax-deferred plan consisting of a very inexpensive target-based fund determined by your age that would be portable from one job to the next and could not be accessed until a certain defined retirement age except for well defined specific exceptions. Bogleheads might not like the lack of control, but I would imagine the vast majority of the population would be way better off in the long run. Not left with only $30,000 after 28 years of employment.
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Re: Are Bogleheads "robots with Excel Spreadsheets?"

Post by bhsince87 »

Bmac wrote:Separate from any political debate about taxation, the idea of mandatory, universal individual retirement accounts for every employee along the lines of what is being done in Australia makes incredible sense. Imagine if from your first paycheck 10% was automatically put into a tax-deferred plan consisting of a very inexpensive target-based fund determined by your age that would be portable from one job to the next and could not be accessed until a certain defined retirement age except for well defined specific exceptions. Bogleheads might not like the lack of control, but I would imagine the vast majority of the population would be way better off in the long run. Not left with only $30,000 after 28 years of employment.

Bmac, we already have this! And it's 12% not 10%. Granted, it's all invested in Treasuries, (at least in theory) but at least it's something.

The proposal to allow individuals to have some choice over where their Social Security funds are invested comes up from time to time, but I'm not sure I'm a fan of that.
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Phineas J. Whoopee
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Re: Are Bogleheads "robots with Excel Spreadsheets?"

Post by Phineas J. Whoopee »

bhsince87 wrote:...
Bmac, we already have this! And it's 12% not 10%. Granted, it's all invested in Treasuries
Excellent point.
bhsince87 wrote:, (at least in theory) but at least it's something.
...
Terrible point. It is all invested in nonmarketable Treasury securities backed by the full faith and credit of the United States and designed specifically for that purpose. Just like our nice savings bonds. They're nonmarketable. That's why they can be cashed when needed (by us individually in one case and the Social Security Administration in the other) without worrying about bond market fluctuations.

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tetractys
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Re: Are Bogleheads "robots with Excel Spreadsheets?"

Post by tetractys »

livesoft wrote:So defined contribution plans have something that defined benefits plans do not: They can be passed on to one's heirs.
True, DB plans are basically annuities that expire upon death of the annuitants. At least some of them are pretty good deals though, i.e. the one I have pays back all the funding in two or three years, and then it's gravy from then on out. Still, having a DC plan built up is a very good thing--and it doesn't take a robot to implement, just some luck in life, along with a little common sense, self discipline, and a nose to that grind stone. And if your a three or one funder like many here, no spread sheet needed.

But people should have the option of spending everything down and living on dirt if they choose; and as happens, often that is simply what fate entails, despite ones savings prowess.

Oh and YES!, long live SS (Protect it from bankster installed congress persons). -- Tet
Last edited by tetractys on Sun Dec 29, 2013 7:31 pm, edited 1 time in total.
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Re: Are Bogleheads "robots with Excel Spreadsheets?"

Post by Coyote22 »

Bmac wrote:Separate from any political debate about taxation, the idea of mandatory, universal individual retirement accounts for every employee along the lines of what is being done in Australia makes incredible sense. Imagine if from your first paycheck 10% was automatically put into a tax-deferred plan consisting of a very inexpensive target-based fund determined by your age that would be portable from one job to the next and could not be accessed until a certain defined retirement age except for well defined specific exceptions. Bogleheads might not like the lack of control, but I would imagine the vast majority of the population would be way better off in the long run. Not left with only $30,000 after 28 years of employment.
I agree but only if it goes into a separate account owned by the individual that the government does not manage and cannot touch. I believe the fund in Australia even invests in equities.
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Re: Are Bogleheads "robots with Excel Spreadsheets?"

Post by MossySF »

Computing ...

... robot with Excel bed sheet
IlliniDave
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Re: Are Bogleheads "robots with Excel Spreadsheets?"

Post by IlliniDave »

letsgobobby wrote:
IlliniDave wrote:I think the intellectual prowess and machine-like precision required to prepare a little extra retirement income above SS is vastly overstated.
the statistics say that *something* is in too short supply, and the question is what is the "something."
This may not be a popular in the new "everyone-gets-a-trophy" world, but I think what is in short supply is far too often simple self-control. Learning to say "No" to yourself, in other words. In this country you certainly have the right to eat your cake whenever your whims dictate, but exercising that right might come at the expense of having no cake for later. That's not the cake's fault.

So it's not a matter of IQ or superhuman perfection. All the wisdom required is age-old, there's no big secret to living below one's means. It does sometimes take courage, you might have to bear the humiliation of having the smallest plasma TV on the block.
Last edited by IlliniDave on Sun Dec 29, 2013 8:07 pm, edited 2 times in total.
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IlliniDave
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Re: Are Bogleheads "robots with Excel Spreadsheets?"

Post by IlliniDave »

Coyote22 wrote:
Bmac wrote:Separate from any political debate about taxation, the idea of mandatory, universal individual retirement accounts for every employee along the lines of what is being done in Australia makes incredible sense. Imagine if from your first paycheck 10% was automatically put into a tax-deferred plan consisting of a very inexpensive target-based fund determined by your age that would be portable from one job to the next and could not be accessed until a certain defined retirement age except for well defined specific exceptions. Bogleheads might not like the lack of control, but I would imagine the vast majority of the population would be way better off in the long run. Not left with only $30,000 after 28 years of employment.
I agree but only if it goes into a separate account owned by the individual that the government does not manage and cannot touch. I believe the fund in Australia even invests in equities.
I would probably bristle against that some, being forced to do something I'd do voluntarily, but it would certainly help a large number of people get to retirement in better shape. Begs the question of how to handle SS in that sort of scenario.

The caveats for me would be that the gov't couldn't touch the money and the investment choices must have reasonable breadth and very low fees. There would be reasonable flexibility for investors to chart a more or less aggressive course. I think by far the biggest behavioral problem is not investing enough rather than stuff like getting cold feet when markets get rocky.
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Re: Are Bogleheads "robots with Excel Spreadsheets?"

Post by Trurl Klapaucius »

Gort wrote:I'm not a robot. Oops, maybe I am!
Gort, with our names, of course we are robots.
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Re: Are Bogleheads "robots with Excel Spreadsheets?"

Post by Novine »

"The caveats for me would be that the gov't couldn't touch the money and the investment choices must have reasonable breadth and very low fees."

We do all realize that this would never come to pass, right? We can't even get Congress to pass legislation protecting 401k retirement plans. Instead, they're busy passing the dishonestly named "Retail Investor Protection Act" which ensures that the "financial advisor" entrusted with your retirement funds is allowed to continue to skim your retirement funds for the profit of themselves and the firms they represent and that they are not required to meet the "fiduciary standard of conduct"?
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Re: Are Bogleheads "robots with Excel Spreadsheets?"

Post by letsgobobby »

IlliniDave wrote:
letsgobobby wrote:
IlliniDave wrote:I think the intellectual prowess and machine-like precision required to prepare a little extra retirement income above SS is vastly overstated.
the statistics say that *something* is in too short supply, and the question is what is the "something."
This may not be a popular in the new "everyone-gets-a-trophy" world, but I think what is in short supply is far too often simple self-control. Learning to say "No" to yourself, in other words. In this country you certainly have the right to eat your cake whenever your whims dictate, but exercising that right might come at the expense of having no cake for later. That's not the cake's fault.

So it's not a matter of IQ or superhuman perfection. All the wisdom required is age-old, there's no big secret to living below one's means. It does sometimes take courage, you might have to bear the humiliation of having the smallest plasma TV on the block.
I believe you're missing the point, which is: How do we help those with less 'self-control' (scientifically a very questionable entity) gain more of it? It may not matter in some arenas, but widespread retirement insecurity, like widespread criminality, affects the guilty and innocent alike.
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Re: Are Bogleheads "robots with Excel Spreadsheets?"

Post by bhsince87 »

letsgobobby wrote: I believe you're missing the point, which is: How do we help those with less 'self-control' (scientifically a very questionable entity) gain more of it? It may not matter in some arenas, but widespread retirement insecurity, like widespread criminality, affects the guilty and innocent alike.
We're already taking 12% of their income, and investing it as we see fit. Plus another 3% for some minimal disability/health insurance.

How much more should we take for the potential betterment of those with "less self control"?
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Re: Are Bogleheads "robots with Excel Spreadsheets?"

Post by frugaltype »

bhsince87 wrote:
letsgobobby wrote: I believe you're missing the point, which is: How do we help those with less 'self-control' (scientifically a very questionable entity) gain more of it? It may not matter in some arenas, but widespread retirement insecurity, like widespread criminality, affects the guilty and innocent alike.
We're already taking 12% of their income, and investing it as we see fit. Plus another 3% for some minimal disability/health insurance.

How much more should we take for the potential betterment of those with "less self control"?
Well, the Scandinavian countries (correct me if I'm wrong here), take much more in taxes, but they have had a much better "safety net." At least that's my impression. It seems to have been sustainable with a homogeneous population, not so much now that they are being flooded with people with different values. Maybe my argument is self-defeating. I wonder how their previous population managed to perpetuate the values of that society.
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Re: Are Bogleheads "robots with Excel Spreadsheets?"

Post by ajcp »

letsgobobby wrote: I believe you're missing the point, which is: How do we help those with less 'self-control' (scientifically a very questionable entity) gain more of it? It may not matter in some arenas, but widespread retirement insecurity, like widespread criminality, affects the guilty and innocent alike.
And how do we do it in a way that doesn't harm the people who do have that self-control?
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Re: Are Bogleheads "robots with Excel Spreadsheets?"

Post by Bacchus01 »

I graduated with a degree in Finance and Investment Banking and am in a very senior position in a very large company. My wife and I both have MBAs.

And yet, up until a year ago, I really thought I had no clue how to manage my personal investments/finances. The rules we did follow, pretty successfully, included:
- Max out 401K contributions every year
- Live below our means
- Carry as little debt as possible
- Avoid financial planners whenever possible
- Track income and expenses and try to always make sure that the former is greater than the later

It was about this time last year that I finally said enough is enough and I'm going to educate myself. I was ready to open an active trading account and move some considerable cash into the market via individual stocks. I was ready to start doing all kinds of stock research and take off.

Then I happened across this site and read every article in the Wiki and as many posts as I could manage. I realized that nearly everything above I was doing was actually right! I did have some areas of concern, however, including holding a lot of individual stocks that were boom/bust and spreading our 401K contributions over about 15 different accounts with no real reason as to "why." Most of them were managed funds with higher fees and profiles that I really had never bothered to even understand. I just felt diversified.

I spent 3 full days during Christmas holiday reading everything here, getting advice, and writing and IPS with my wife.

Since then, I've done things like:
- Funded back-door Roth and even did after-tax 401K to Roth conversions. Our Roth balance went from $0 to almost $50K in one year.
- Funded 529s and took Wi tax benefits, including ones for my wife and I to maximize our tax deductions
- FINALLY understood the value of an HDHP/HSA plan, especially for people in our tax bracket
- Completely rebalanced our portfolio over the last years to where we are almost entirely in a 3-fund-like scenario (can't do 3 funds as money is in too many different places), moved out of individual stocks, and looking to manage future rebalancing to our IPS

All the ETF, Index, Bond, REIT, TIPS, etc. etc. language out there, and all of the many, many fund choices available can be daunting.

This is a long rant, but it's a long way of saying that there are really smart people out there who actually have a lot of money ( we had/have a 7-figure portfolio) with strong educations and financial background....and they still don't think they know what they are doing. There are too many people trying to educate the vast majority of people in the wrong direction and confusion abounds. And yet, I've learned more in the last year here than in any other forum on personal finances in any other format in my life. I think if people can do the first set of things I outlined above, they'll do pretty good. I think if they can take the next step to educate themselves, they'll do not just incrementally better, but exponentially better.
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Re: Are Bogleheads "robots with Excel Spreadsheets?"

Post by Harold »

Phineas J. Whoopee wrote:
bhsince87 wrote:...
Bmac, we already have this! And it's 12% not 10%. Granted, it's all invested in Treasuries
Excellent point.
bhsince87 wrote:, (at least in theory) but at least it's something.
...
Terrible point. It is all invested in nonmarketable Treasury securities backed by the full faith and credit of the United States and designed specifically for that purpose. Just like our nice savings bonds. They're nonmarketable. That's why they can be cashed when needed (by us individually in one case and the Social Security Administration in the other) without worrying about bond market fluctuations.

PJW
These are very very very bad points.

The only taxes that go into special issue treasuries are those in excess of benefits paid during the year. If taxes are insufficient to cover benefits, existing special issue treasuries are used to cover the shortfall.

This has no relation to Australian superannuation. People aren't contributing 12.4% of their pay that are being invested in treasuries for them, and the benefit they will ultimately receive has nothing to do with the 12.4% in taxes they paid (other than both being independent formulas based on salary). Yes, as market timer helpfully reminded me, because Social Security reduces retirement income needs there is some savings effect that can be accounted for (a logical approach might be to take the projected benefit already accrued and discount at prevailing risk-free rates). But this incorrect notion of 12% forced savings should not be perpetuated by this forum.

This is about the most respected investing forum on the internet, and really should be better than that.
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Re: Are Bogleheads "robots with Excel Spreadsheets?"

Post by stratton »

Wouldn't the term artificial person be better?

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Re: Are Bogleheads "robots with Excel Spreadsheets?"

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This thread has run its course and is locked (off-topic into several areas, including interspersed comments about robots). See: Forum Policy
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Moderators or site admins may lock a topic (set it so no more replies may be added) when a violation of posting policy has occurred. Occasionally, even if there are no overt violations of posting policy, a topic (or thread) will reach a point where the information content of the discussion has been essentially exhausted and further replies are much more likely to cause distress to the community than add anything of value.
We're now discussing taxation / employee contributions by US and other countries. There's no added value to continue, as prior experience indicates contentious disagreements will result.
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