Why do Bogleheads/BiggerPocketers think there is only one way?

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sharp1aarohead
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Why do Bogleheads/BiggerPocketers think there is only one way?

Post by sharp1aarohead »

I've been reading this forum for nearly a year, though this is my first post. I'm very much in line with the Boglehead philosophies, but I also think that the insistence that there is one way to go about building wealth is a bit crazy. It was in fact this website that turned me on to Bigger Pockets. After 6 months lurking there, it's interesting the perspective I have from both groups...

Bogleheads are:
conservative, educated, have modest goals, an even temperament and are generally wealthy (often generational). they are doctors, lawyers, business owners, professionals...basically people who could earn a modest 3-5 percent for the rest of their lives and amass wealth because they already have some

BiggerPocketers are:
aggressive, leveraged, want to spend money to make money, have aggressive goals (an example is many people's profile says something like: I'm just getting started, hope to purchase my first property this month, and have 100 properties in 10 years; or - looking to retire and live off of passive income by 30), and looking for a quick buck (often looking for investors, mentors, no-money down, or hoping to wholesale homes)

My question is why can't these two groups coexist? Where are the bogleheads who are putting 10, 20, 30 percent of their income into bonds/ETFs but using the rest on something more risky to build wealth? Why are bogleheads so averse to spending money to make money? Why are BPers so insistent that they have to become "real estate mougals" immediately rather than have modest, scalable goals?

I think I've found the middle ground and am curious what others think. My philosophy is that Boglehead investing is just that...INVESTING for the future. I view my real estate transactions are not really an investment...I view them as a second job or a side-hustle. Real estate takes more work, has generated me more money and also obviously carries more risk. It also gives me more money to put into my Vanguard account. To me, each is of equal importance, and I try to allocate equal amounts of money to both. Anybody else profess to be a boglehead with a penchant for some risk? Any other opinions?
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Re: Why do Bogleheads/BiggerPocketers think there is only one way?

Post by mhalley »

Perhaps it is because more of the bogleheads scale older than the ones on the other forum. You might find that the majority of the boglheads tried some of these get rich quick schemes and got creamed. Like the saying goes, bulls make money, bears make money, but pigs get slaughtered. Also, part of the boglehead philosophy is never bear too much or too little risk, and trying to own 100 properties in 10 years implies taking a HUGE amount of risk. Get rich quick schemes have always been around, whether it is tulips, ponzi schemes, foreclosure properties, multi level marketing etc.
So what is the middle ground? You have decided that putting half your net worth in a Boglehead portfolio, and the rest in investment property will work for you, but is that the best way to go? Should you instead do a third or two thirds? That is something everyone has to decide. Come back in 10 years and let us know how you did.
Many people have become very wealthy by investing in real estate. Good luck to you in doing the same.
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Re: Why do Bogleheads/BiggerPocketers think there is only one way?

Post by lack_ey »

You find a lot of real estate investors here, frequently fairly leveraged, just generally not with the majority of assets.

For those with the time and skills, owning and managing actual real estate provides better diversification from the stock markets than owning REITs and maybe more return (or rather, your own extra labor gets monetized), though the former involves idiosyncratic risk (even if spread across many properties, they are likely not across the whole country) and is probably more correlated with personal home value and local job prospects.

You also find some in the minority actively looking for leverage (beyond financing a primary home).
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Re: Why do Bogleheads/BiggerPocketers think there is only one way?

Post by mickeyd »

My question is why can't these two groups coexist?
They do coexist.

My question is~ Why try to pick a fight on your initial post?

BTW, welcome to the group.
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Re: Why do Bogleheads/BiggerPocketers think there is only one way?

Post by prudent »

I have to limit my investing to what I know. I don't know anything about RE and am not willing to learn the hard way. Had a couple friends suffer badly with real estate and they are smarter than me. So I keep to the things I know. I think of a friend who makes a living buying and selling in an area of collectibles. No actual job, that's all he does and makes 6 figures a year working only as much as he feels like. He's willing to teach me but I know it takes a combination of skills I don't have and cannot develop. I am certain it is the same way with RE - I'm simply not a good match for what it takes to be successful.
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Re: Why do Bogleheads/BiggerPocketers think there is only one way?

Post by schuyler74 »

As with most preferences, I expect a lot of it is personality type. From evidence found in prior posts, this board has a disproportionate amount of "C" (from the DiSC profile). I expect people who are less risk-averse tend to be "D" or "i" types.

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Re: Why do Bogleheads/BiggerPocketers think there is only one way?

Post by normaldude »

sharp1aarohead wrote:Why do Bogleheads/BiggerPocketers think there is only one way?
Each community engages in groupthink, and attacks dissenting opinions.

- On the bogleheads message board, if I mention physical gold, bogleheads will disparage it as "worthless".

- On the kitco message board, if I mention stocks, bonds, fiat currency bank deposits, the goldbugs will disparage them as "worthless".

It's like going on a Yankees message board, and cheering for the Red Sox. You'll be shouted down.
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Re: Why do Bogleheads/BiggerPocketers think there is only one way?

Post by livesoft »

Let me ask the OP:

Which is more work: Real Estate or passively investing money?

I know what the answer is for me. I had a great job that I really enjoyed, so I didn't need more work. I made more money than I spent, so I had to find something to do with the money that would not involve more work for me. One can find passive investments that are risky, so it may not be about avoiding risk.
Last edited by livesoft on Sun Jun 21, 2015 4:01 pm, edited 1 time in total.
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Re: Why do Bogleheads/BiggerPocketers think there is only one way?

Post by Carefreeap »

Because some of us lived with parents who were "aggressive and leveraged" and it didn't end well. My parents were basically real estate speculators. My stand out memory as a senior in High School is not going to the prom but making a 5 hour round trip with a cashier's check to keep the family home from being foreclosed on.

Rinse and repeat and my parents filed BK and divorced at age 60.

Ten years later my mother died with an estate that was upside down by $400k. Dad is living on SS, owns nothing and is on Medicaid and receiving food stamps.

I had an ulcer by the time I was 18. It was a VERY stressful way to live. Although I've certainly made plenty of mistakes I've chosen not to live the way my parents did.

We do have four rental properties but they are not highly leveraged. I think the highest is now about 55% LTV. They are a part time job and provide enough excitement to entertain my friends with my tenant stories. :annoyed
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Re: Why do Bogleheads/BiggerPocketers think there is only one way?

Post by normaldude »

I will say this about real estate: In my lifetime, I've seen plenty of cases where it completely ruined people's lives, including murder & suicide. Sometimes, it's an environmental issue and legal dispute that lasts 20+ years, and endless lawyer fees. Other times, it's because of debt, upside down mortgages, foreclosure, and people getting wiped out.

On the other hand, I have never seen anyone's life get ruined with a boglehead long-term approach with index funds. At worst, people panic, break from boglehead long-term philosophy, sell at the end of 2008, and miss the massive bull market of 2009-2015. But when people truly stick to the boglehead long-term approach with index funds, I have literally seen zero problems.
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Re: Why do Bogleheads/BiggerPocketers think there is only one way?

Post by Toons »

I am a Boglehead,I own low cost index funds. :happy
I am not a Boglehead,I own Front load managed funds. :happy
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Re: Why do Bogleheads/BiggerPocketers think there is only one way?

Post by normaldude »

Carefreeap wrote:We do have four rental properties but they are not highly leveraged. I think the highest is now about 55% LTV. They are a part time job and provide enough excitement to entertain my friends with my tenant stories.
With my investments, I'm not interested in tenant drama & excitement.

[Situation and links above the "family friendly" threshold removed by admin LadyGeek]

At least with Vanguard index funds, I don't have to deal with frozen cats.
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Re: Why do Bogleheads/BiggerPocketers think there is only one way?

Post by JoMoney »

There are a variety of opinions, styles, and strategies on this board. I have no idea how anyone believes that there is some consensus with the investment approaches people on this board use. We wouldn't have nearly as many arguments if there was such a consensus.
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Re: Why do Bogleheads/BiggerPocketers think there is only one way?

Post by LadyGeek »

This thread is now in the the Investing - Theory, News & General forum (general investing).

sharp1aarohead, welcome!
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Re: Why do Bogleheads/BiggerPocketers think there is only one way?

Post by bottlecap »

Because your premise is incorrect. Bogleheads are about investing. You yourself say that you don't consider your real estate as an investment, but as a side-hustle. You could very well decide that real estate is your business and be a Boglehead when it comes to investing. There is no paradox or contradiction.

It's that these things often do not intersect. One thing to think about is who frequents this forum. They are people with 8 to 6 jobs who have money to invest because they live relatively frugally. They want to get involved in real estate its because they have heard from parents that it is the only sure thing. On the other hand, most people who do real estate for a living probably do not have much spare money to invest: it all goes into buying real estate.

Bogleheads do often caution that real estate can be a risky investment and they are right. The fact is that it can be risky, is hard work and requires a lot of cash or a lot of leverage. For most people, it is better to work hard at what they know - their day job - and invest the rest according to the Boglehead philosophy.

My parents invested in real estate over one of the best thirty year periods you could do so in modern history. They retired quite well off. In their minds, they did very well. But if they had invested in the S&P 500, they would have 4 times what they retired with and I would be a trust fund baby. None of this includes the thousands of hours they spent on the properties and the thousands and thousands of dollars they spent every year in real estate taxes.

So you could be in the business of real estate and do well, and be a Boglehead. It's just that most people that come for investing advice have already not chosen that path.

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Re: Why do Bogleheads/BiggerPocketers think there is only one way?

Post by normaldude »

normaldude wrote:
Carefreeap wrote:We do have four rental properties but they are not highly leveraged. I think the highest is now about 55% LTV. They are a part time job and provide enough excitement to entertain my friends with my tenant stories.
With my investments, I'm not interested in tenant drama & excitement.

[Situation and links above the "family friendly" threshold removed by admin LadyGeek]

At least with Vanguard index funds, I don't have to deal with frozen cats.
Ok, so I can't link to pictures of frozen cats.

Can I mention mainstream news articles? Like how this landlord rented a house to a doctor, who stopped paying rent, so the landlord tried to evict the tenant, who then murdered the landlord.

- http://www.people.com/people/article/0, ... 98,00.html

- http://denver.cbslocal.com/2014/06/20/f ... rder-case/

On the other hand, if I try to close my Vanguard account, I doubt that Vanguard would send a hitman to kill me.

My point is, with my personal investments, I want minimal drama & hassle, and maximum liquidity & mobility.
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Re: Why do Bogleheads/BiggerPocketers think there is only one way?

Post by Carefreeap »

normaldude wrote:
Carefreeap wrote:We do have four rental properties but they are not highly leveraged. I think the highest is now about 55% LTV. They are a part time job and provide enough excitement to entertain my friends with my tenant stories.
With my investments, I'm not interested in tenant drama & excitement.

[Situation and links above the "family friendly" threshold removed by admin LadyGeek]

At least with Vanguard index funds, I don't have to deal with frozen cats.
You must be boring at parties! :wink:
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Re: Why do Bogleheads/BiggerPocketers think there is only one way?

Post by normaldude »

Carefreeap wrote:
normaldude wrote:
Carefreeap wrote:We do have four rental properties but they are not highly leveraged. I think the highest is now about 55% LTV. They are a part time job and provide enough excitement to entertain my friends with my tenant stories.
With my investments, I'm not interested in tenant drama & excitement.

[Situation and links above the "family friendly" threshold removed by admin LadyGeek]

At least with Vanguard index funds, I don't have to deal with frozen cats.
You must be boring at parties! :wink:
Simplifying personal investments gives a person more time to do other things, like travel the world, build tech businesses, meet with world leaders, or base jump off mountains in a wingsuit.
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Re: Why do Bogleheads/BiggerPocketers think there is only one way?

Post by sschullo »

Yeah, I have been there and done that with speculation. Heck, my portfolio gained 60% in 1999 and lost 70% the next two years. I know all about what you are talking about and its thanks, but no thanks. I have done a little renting a vacation home and renting a part of our house when we were young to help pay the mortgage. Owning and renting probably is fine, except for problems with people not paying rent and kicking them out legally, its a lot of work! But that's in the past and I have no regrets. Now I am just retired and want my 5-9% a year return with an occasional loss from time to time. I am so fortunate that I do not have to pay for advice: it's TOOO EXPENSIVE!

What is wrong with beating the inflation rate and keeping costs low as modest goals of investing? Nothing wrong with earning the market averages, in fact that's pretty darn good return compared to Dalbar's annual study of what the average investor returns: http://www.forbes.com/sites/advisor/201 ... is-so-low/
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Re: Why do Bogleheads/BiggerPocketers think there is only one way?

Post by spectec »

I like index funds because they never need a new roof and they don't spring leaks or have sewer backups the night before I leave on vacation.
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Re: Why do Bogleheads/BiggerPocketers think there is only one way?

Post by InvestorNewb »

The real beneficiaries of real estate are the children who inherit the properties that their parents bought many decades ago -- once they are completely paid off. For every real estate mogul that you hear about, there are probably countless others who are under water. It all depends on when and where you bought your property and if the timing was right. Remember that people are more likely to brag about their successes than they are to share stories of failure.

I am too busy with other endeavors to buy and manage real estate. I have zero interest in fixing a broken toilet, painting or anything related to maintenance and upkeep. I would rather pump everything I have into index funds and collect quarterly dividends, with the potential of doubling my money every decade or so.
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Re: Why do Bogleheads/BiggerPocketers think there is only one way?

Post by Jack FFR1846 »

My dad always had several multi family rental houses growing up. From the time I started working at 16, I was always loaning him money. Never seemed like a way to get rich to me.
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Re: Why do Bogleheads/BiggerPocketers think there is only one way?

Post by vitaflo »

There are lots of ways to make money. You could also start a business and grow it, or speculate in a number of markets (including Real Estate), or just be a full time employee somewhere. All of these of course require work, and Boglehead philosophies work with all of them.

The reason people here like it is because it doesn't require a lot of time. Can you make as much as someone wheeling and dealing Real Estate? Probably not, but you're probably not going to lose your shirt in it like many people have in RE. It's a risk/reward proposition.

Everyone has their own level of risk aversion. Nothing wrong with that. People here just tend to be more "slow and steady wins the race" type people. Again, nothing wrong with that either. If everyone was the same, the world would be a pretty boring place.
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Re: Why do Bogleheads/BiggerPocketers think there is only one way?

Post by nisiprius »

sharp1aarohead, (Shrug) John C. Bogle did write some books, and there is a web page laying out the Bogleheads' investment philosophy. The forum isn't about every possible way to make money. It's certainly not about "looking for a quick buck," as you say you are. You yourself say that "I view my real estate transactions [as] not really an investment...I view them as a second job or a side-hustle."

John C. Bogle founded a mutual fund company. This forum is, in fact, focussed on investing in securities by using mutual funds. It's focussed on options people have in their 401(k) plans and can buy from a brokerage or mutual fund company with a click of a mouse.

Making a quick buck in a second job or a side-hustle is, as you say, completely different. Different risk profiles, different skill sets. And... from a forum point of view... different topics. Would a model aircraft builder accuse model railroaders of "thinking there is only one way?" Would you bring a model railroad setup to a national meeting of the Model Aircraft Association and get upset when you couldn't compete against indoor model airplanes?

There are some people here who invest in local real estate. If you have a specific question, try asking it and see if there are enough to give you some usable or interesting answers.
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Re: Why do Bogleheads/BiggerPocketers think there is only one way?

Post by Fallible »

sharp1aarohead wrote:I've been reading this forum for nearly a year, though this is my first post. I'm very much in line with the Boglehead philosophies, but I also think that the insistence that there is one way to go about building wealth is a bit crazy. It was in fact this website that turned me on to Bigger Pockets. After 6 months lurking there, it's interesting the perspective I have from both groups...

Bogleheads are:
conservative, educated, have modest goals, an even temperament and are generally wealthy (often generational). they are doctors, lawyers, business owners, professionals.
..basically people who could earn a modest 3-5 percent for the rest of their lives and amass wealth because they already have some.
...
My question is why can't these two groups coexist? Where are the bogleheads who are putting 10, 20, 30 percent of their income into bonds/ETFs but using the rest on something more risky to build wealth? Why are bogleheads so averse to spending money to make money? Why are BPers so insistent that they have to become "real estate mougals" immediately rather than have modest, scalable goals?
...
I think if you had fully understood what you read on this forum, you would not have these questions. Have you also read the wiki or any of the Boglehead books or blogs by Bogleheads?

Also, there is no statistically significant survey of the Bogleheads, whose members number around 43,000. Your descriptions are mainly of those who post frequently on the forum and who also have identified themselves as members of various professions, only some of which you've mentioned.
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Re: Why do Bogleheads/BiggerPocketers think there is only one way?

Post by MossySF »

Why waste your time with leveraged real estates?

Just download a copy for Apple's Swift programming kit, create the next Uber/WhatsApp/Alibaba and make billions. There are plenty of "how to start your own internet guides" on the internet to teach you how to do this is in 7 easy steps.
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Re: Why do Bogleheads/BiggerPocketers think there is only one way?

Post by White Coat Investor »

Fallible wrote:
sharp1aarohead wrote: Boglehttps://www.bogleheads.org/forum/index.phpheads are:
conservative, educated, have modest goals, an even temperament and are generally wealthy (often generational). they are doctors, lawyers, business owners, professionals.
..basically people who could earn a modest 3-5 percent for the rest of their lives and amass wealth because they already have some.
I think if you had fully understood what you read on this forum, you would not have these questions. Have you also read the wiki or any of the Boglehead books or blogs by Bogleheads?

Also, there is no statistically significant survey of the Bogleheads, whose members number around 43,000. Your descriptions are mainly of those who post frequently on the forum and who also have identified themselves as members of various professions, only some of which you've mentioned.
Sure, you can argue the polls [that used to be] done on here are all dramatically flawed, and there is a broad, diverse group of people who consider themselves Bogleheads, but I don't think his generalizations of those who frequent this site are all that far off. Lots of high income earners here, most would be more than content with less than $5M portfolios, pretty educated bunch, and (financially, not politically) conservative when compared to any other financial forum I've spent any time on. This is the only place I see people talking about the risks of IBonds and TIPS with serious concern. Elsewhere people think leveraging up on a 5 stock portfolio is fine as long as you don't over do it.

I would, however, caution against the belief that "doctors, lawyers, business owners, and other high income professionals" have already amassed wealth. Income is not wealth, and many of these folks start their careers quite late with massive debt burdens. You might be surprised just how "unwealthy" most docs are.

I also am surprised at how many "real estate folks/Big Pocketers" fail to also use retirement accounts, stocks, and bonds. I've really nailed a few down about why they do this and it seems to come down to two things- # 1 A huge distrust of "Wall Street" and # 2 A belief that they can get better returns investing their money into their business (i.e. real estate)
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Re: Why do Bogleheads/BiggerPocketers think there is only one way?

Post by sharp1aarohead »

Hello,

Thanks for all of the responses...much appreciated! It seems a couple of people found my post to be inflammatory - my apologies, it wasn't meant to be! My questions are just musings I think about frequently and wanted a sounding board for. I have read the Wiki pages, as well as publications from Bogle and others, so I don't think that it's that I have a poor understanding of what Bogleheads do or are...I guess it's more of a philosophical pondering I have about how people (and good point to the poster who said it's the VOCAL people) have such staunchly opposing viewpoints on two things that I believe can be very good investments and in fact go hand in hand. But then again I have never unclogged a toilet or performed any maintenance on a RE investment to date...I suppose if I was doing those things, I would want to stay clear of real estate too! :-) Thanks again for all of the input!
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Re: Why do Bogleheads/BiggerPocketers think there is only one way?

Post by Noobvestor »

There do tend to be different personality types pursuing these different kinds of endeavors, but I don't see a necessary disconnect - I made my money taking small business risks, then turned around and put it into indexed mutual funds. The real estate folks I know, though, do tend to be of a different personality, wanting to push leverage to the limit then double down on their bets and buy more real estate.
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Re: Why do Bogleheads/BiggerPocketers think there is only one way?

Post by nisiprius »

sharp1aarohead, I just can't tell for sure, but I think you should try the experiment of posting a real question that you actually have about the kind of real estate investing you do. Yes, the most vocal, prolific posters here are focussed on one central idea (and spirited discussions of small variations thereof), but whenever someone asks a question like, say, the best way to buy physical gold, the replies tend to be a mixture of people saying "don't do it," and people who've done it offering actual helpful suggestions.

I never heard of a "BiggerPocketer" until you posted the thread and I suspect many others have not, either. I suspect there may well be real estate investors/speculators who follow the forum, who glanced at the subject line and didn't read the thread because it didn't seem relevant.

P.S. If you are making a parlayed series of leveraged bets, then you definitely want to find out something about the Kelly criterion and how it possibly applies or possibly does not apply to your investing. If this isn't a familiar topic, try starting a thread with a subject line like "Does the Kelly criterion have a use in leveraged RE investing?" If you've never heard of it and don't know what it is, you can be perfectly frank and say so in the initial post.
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Re: Why do Bogleheads/BiggerPocketers think there is only one way?

Post by IowaFarmBoy »

I think the OP's assessment that they are different is right. One is an investment philosophy, one is really more running a business-either full-time or side.

I've been some of both. In my 20's I was much more of the deep pocket type person. I had started a construction business and owned a number of rental properties. The rentals were a great fit with construction in that I had flexibility and contacts to deal with the maintenance and issues. I was highly leveraged and doing great until I wasn't any more. Woke up one morning and the housing market in Texas was down 30%. Nothing selling. 17 of 18 banks in our county failed. Bankrupt at 35. I think you get the picture.

I re-tooled and now work in IT. I make a good salary but not the doctor income mentioned in the original post. I anticipate having a comfortable retirement due to a good second career and Boglehead investment principles. I still think rentals could be a good investment but I just don't want a part time job caring for them. At best, they barely cash flow during the early years and I just don't want that risk. Life is much more sane than it was back then and I think I'm a lot better husband. And the phone doesn't ring every ten minutes at night any more......

So I have tried the business route. Don't underestimate the risks there and the price you will pay. I've since landed in a spot where we can meet our goals in a much safer, saner path.
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Re: Why do Bogleheads/BiggerPocketers think there is only one way?

Post by sambb »

There are several ways to make money
Real estate, alternative investments, etc are all possible

As long as you know what you are doing. That's all that matters.

I made a ton of money in apple stock, when the first iphone came out, i bought in, and saw on CNBC how blackberry carrying financial analysts were clearly wrong on the company. I am so glad I didnt listen to the BH philosphy as I saw an incredible opportunity.

Same with any other method to make money. We have no idea if you see an opportunity in real estate. If you see a great opportunity and have done the risk:reward assessment, and it is favorable vs. index investing, then go for it.

The key is to do your due diligence, and ensure that the alternative investment compares favorably against investing in an index fund etc. If the risk:reward ratio favors any business you want to be in, then go for it.

I couldnt invest in real estate because I am not skilled in learning or evaluating the risk:reward ratio in comparison to stock index funds. Therefore, I'm in vanguard funds. You might have those skills, and if so, then use them.
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Re: Why do Bogleheads/BiggerPocketers think there is only one way?

Post by cheese_breath »

sharp1aarohead wrote:... Anybody else profess to be a boglehead with a penchant for some risk? ...
I think that's called 'play money' around here. Money you can afford to lose if it doesn't work out. More risk has the potential for greater gains, but it also has the potential for greater losses. I think many of us want to make sure we are on the path to a stable financial future before venturing into high risk areas with any excess funds.
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Re: Why do Bogleheads/BiggerPocketers think there is only one way?

Post by midareff »

mhalley wrote:Perhaps it is because more of the bogleheads scale older than the ones on the other forum. You might find that the majority of the boglheads tried some of these get rich quick schemes and got creamed. Like the saying goes, bulls make money, bears make money, but pigs get slaughtered. Also, part of the boglehead philosophy is never bear too much or too little risk, and trying to own 100 properties in 10 years implies taking a HUGE amount of risk. Get rich quick schemes have always been around, whether it is tulips, ponzi schemes, foreclosure properties, multi level marketing etc. So what is the middle ground? You have decided that utting half your net worth in a boglehead t portfolio, and the rest in investment property will work for you, but is that the best way to go? Should you instead do a third or Two thirds? That is something everyone has to decide. Come back and 10 years and let us know how you did.
Many people have become very wealthy by investing in real estate. Good luck to you in doing the same.
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Dandy
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Re: Why do Bogleheads/BiggerPocketers think there is only one way?

Post by Dandy »

What type of aggressive products are you expecting Bigger Pockets to invest in? Penny stocks? oil wells? use of leverage? individual stocks? What makes you think you (or anyone) will have the expertise/luck to know when to get in and out of these/or other aggressive investments? In my mind the only way to consistently beat the market is insider trading - and then you might be doing your retirement in a retirement community swapping stories with cell mates. :happy

I'm fairly conservative, saved a decent % of my income, topped out at about 55% equities just before retirement. I am lucky - have more than enough to last through retirement with a nice, gently rising stand of living. So I've exceed my goals without excessive risk.

There is plenty of room for Bogleheads to be aggressive by the percentage of equities they own and the type of equities they own.

I think the difference with the two groups is one thinks that they can use their daring and smarts to get greater returns and the other thinks you really can't over the long run. Hard to be a lot of both.
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Re: Why do Bogleheads/BiggerPocketers think there is only one way?

Post by Levett »

I am 100% with MickeyD--e.g., "They do coexist.

My question is~ Why try to pick a fight on your initial post
?"

Not only do they coexist; some of "them" are my friends!

And we don't fight.

It is what it is. And we are who we are.

Lev
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Re: Why do Bogleheads/BiggerPocketers think there is only one way?

Post by 2tall4economy »

one thing you missed that both have in common: LBYM

I'm 50/50 between real estate and equities. I minimize risk. I'm nearly middle aged. I lean more toward the boglehead philosophy vs the biggerpockets one.

I find older RE investors have toned down the risk, but they're the ones that have made it. Otherwise I agree with your thoughts. Personally I buy a class A home or two, rent them out as luxury rentals, and pay them off aggressively with my salary (2-4 years), rinse and repeat. most biggerpockets members can't afford to do that and they have to leverage.

Fundamentally the real estate game is about leverage; they talk all day about their cash-on-cash returns, which is fundamentally flawed. You would have to compare margin investing returns to their returns, but they always compare to unleveraged investing. They do have a point however, in that margin investing puts the risk on you, while real estate loans puts at least some of the risk on the bank.

My returns on real estate tend to be better by about 2% vs the stock market when you adjust both for inflation and assume that real estate doesn't appreciate beyond inflation. The advantage of the stock market and the reason I'm there too is for diversifiation, but more importantly, you can pay taxes when you need the income vs real estate where you pay the taxes every month regardless of what you use the money for, so real estate is there to fill the lower brackets and the stock come into play for the big ticket items (I enjoy the big luxuries in life).

Ignorant people are guaranteed to fail regardless of their approach.
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Re: Why do Bogleheads/BiggerPocketers think there is only one way?

Post by BTDT »

midareff wrote:
mhalley wrote:Perhaps it is because more of the bogleheads scale older than the ones on the other forum. You might find that the majority of the boglheads tried some of these get rich quick schemes and got creamed. Like the saying goes, bulls make money, bears make money, but pigs get slaughtered. Also, part of the boglehead philosophy is never bear too much or too little risk, and trying to own 100 properties in 10 years implies taking a HUGE amount of risk. Get rich quick schemes have always been around, whether it is tulips, ponzi schemes, foreclosure properties, multi level marketing etc. So what is the middle ground? You have decided that utting half your net worth in a boglehead t portfolio, and the rest in investment property will work for you, but is that the best way to go? Should you instead do a third or Two thirds? That is something everyone has to decide. Come back and 10 years and let us know how you did.
Many people have become very wealthy by investing in real estate. Good luck to you in doing the same.
Mike
been there, done that, learned not to do it again.
+1

My forum name of BTDT pretty well sums up my past financial experience. I think my only saving grace was listening to my dad's emphasis on LBYM, and a DW that can spend the day shopping and buy nothing. I finally stumbled across the Fire and BH forums, learned the advantages of low cost index fund investing, made my pilgrimage to Malvern, and thanks to Jack and Taylor, and many others, am now happily retired with a very 'nice' income. To each their own :sharebeer
If past history was all that is needed to play the game of money, the richest people would be librarians.
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timboktoo
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Re: Why do Bogleheads/BiggerPocketers think there is only one way?

Post by timboktoo »

Being a Boglehead fits me better than anything else, so that's what I choose to be. There are many roads to Dublin.

- Tim
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Re: Why do Bogleheads/BiggerPocketers think there is only one way?

Post by renue74 »

You can be both....I am.

The biggerpockets folks you see who want to leverage and have 100 properties in 10 years are not the norm. Practicing common sense and understanding how rental property works....biggerpockets does a great job at. I use their XLS files all the time to analyze property and potential ROI.

Don't let the biggerpockets "fash cash" posting folks get to you. Real Estate is just a small piece of the investment pie...in my mind.

I own 3 properties and also did a owner finance deal on an office condo last year for "passive income." Those 4 real estate "deals" net about 20% cash on cash ROI a year....and I take any profit and invest it into my Vanguard Roth and taxable accounts.

The 2 communities are not very similar...correct, but if you have the time and propensity for real estate, you have to invest wisely. Don't listen to those 100 property yahoo's.
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Re: Why do Bogleheads/BiggerPocketers think there is only one way?

Post by mptfan »

sharp1aarohead wrote:I've been reading this forum for nearly a year, though this is my first post. I'm very much in line with the Boglehead philosophies, but I also think that the insistence that there is one way to go about building wealth is a bit crazy.
Speaking for myself, I do not insist that there is only one way to go about building wealth, and I don't think most Bogleheads think that, so I think this conclusion is flawed.
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Re: Why do Bogleheads/BiggerPocketers think there is only one way?

Post by itstoomuch »

I am the most financially aggressive person among the siblings. I have "bad" annuities, Indexes, advisor MF, and trading accounts.
I really don't care what or how other people manage their money, BH or otherwise. I am here to see and analyze what and how other people use and manage their methodologies, BH or otherwise. I may learn a something. 8-)
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Re: Why do Bogleheads/BiggerPocketers think there is only one way?

Post by Martin »

itstoomuch wrote:I am the most financially aggressive person among the siblings. I have "bad" annuities, Indexes, advisor MF, and trading accounts.
I really don't care what or how other people manage their money, BH or otherwise. I am here to see and analyze what and how other people use and manage their methodologies, BH or otherwise. I may learn a something. 8-)
I'm also in this camp. I have learned an incredible amount from this site that will literally change my future. I also am committing the cardinal sin of market timing, specifically momentum. I can tell you there are more alternative investors here than you might think.

One thing I would like to see change.... When an alternative idea is presented on this site there is the inevitable responses of " market timing doesn't work" "Active funds are bads" "Warren and John said" "if it was real the benefit would be gone." Past performance doesn't equal future" Etc etc. These type of comments don't move a discussion anywhere and is likely what caused the OP to post his comment. But these comments are also easy to ignore, take what works and ignore the rest.
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Re: Why do Bogleheads/BiggerPocketers think there is only one way?

Post by FelixTheCat »

The BiggerPocketers group reminds me of any person I met selling MLM products. I wish them the best of luck with their way of investing.
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Re: Why do Bogleheads/BiggerPocketers think there is only one way?

Post by Fallible »

EmergDoc wrote:
Fallible wrote:
sharp1aarohead wrote: Boglehttps://www.bogleheads.org/forum/index.phpheads are:
conservative, educated, have modest goals, an even temperament and are generally wealthy (often generational). they are doctors, lawyers, business owners, professionals.
..basically people who could earn a modest 3-5 percent for the rest of their lives and amass wealth because they already have some.
I think if you had fully understood what you read on this forum, you would not have these questions. Have you also read the wiki or any of the Boglehead books or blogs by Bogleheads?

Also, there is no statistically significant survey of the Bogleheads, whose members number around 43,000. Your descriptions are mainly of those who post frequently on the forum and who also have identified themselves as members of various professions, only some of which you've mentioned.
Sure, you can argue the polls [that used to be] done on here are all dramatically flawed, and there is a broad, diverse group of people who consider themselves Bogleheads, but I don't think his generalizations of those who frequent this site are all that far off. Lots of high income earners here, most would be more than content with less than $5M portfolios, pretty educated bunch, and (financially, not politically) conservative when compared to any other financial forum I've spent any time on. This is the only place I see people talking about the risks of IBonds and TIPS with serious concern. Elsewhere people think leveraging up on a 5 stock portfolio is fine as long as you don't over do it.

I would, however, caution against the belief that "doctors, lawyers, business owners, and other high income professionals" have already amassed wealth. Income is not wealth, and many of these folks start their careers quite late with massive debt burdens. You might be surprised just how "unwealthy" most docs are. ...
Yes, the OP's assessment of forum posters - at least the more frequent ones he has read who have identified their professions and, correctly, their wealth - probably is not that far off. But there are no certain stats on it, so it's still somewhere between a hunch and an assumption and I wouldn't want to go too far out in drawing conclusions.
"Yes, investing is simple. But it is not easy, for it requires discipline, patience, steadfastness, and that most uncommon of all gifts, common sense." ~Jack Bogle
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Re: Why do Bogleheads/BiggerPocketers think there is only one way?

Post by heyyou »

I'm simply not a good match for what it takes to be successful.
Me too.

I'm here by default. Being greedy in the early 1980s, I failed at speculative RE in a limited partnership, and failed at personal owned RE, followed by my employer starting a 401k with index funds where I was in the right place, at the right time. Passive investing suits me, so others should do whatever suits them, including finding out what doesn't work.

I am a retired blue collar worker, without a four year college degree (failed Chem E major), but with a small, no-COLA pension, and a two comma portfolio from LBMM with plenty of market luck, no divorce, and no kids.
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mojave
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Re: Why do Bogleheads/BiggerPocketers think there is only one way?

Post by mojave »

They are two different philosophies. I am a Boglehead and my husband is a Biggerpocketer and we manage to coexist. By nature I am more conservative and cautious. He is a big dreamer and has significant remodeling in his background, as well as some real estate. There are a few very successful RE investors in his family - while I feel like there is always opportunity, I think he fails to realize that RE investing today is much, much different than it was 10 years ago when it was in its heyday - at least in our area.

That being said, though I am a Boglehead and the one that manages our finances, real estate still is part of our portfolio. We own land that will either be built on or sold some day down the road. We are also in the midst of buying a home in a great neighborhood for a great price, it needs some updates done that he can easily do himself at materials cost. We have a number in mind that we think the house will go for when we are done with it. I required it to be a home that we would be happy to be in long term if the RE market went down again.

That being said, being a successful Biggerpocketer in my opinion requires more knowledge than a Boglehead. Most people that go the route of RE investing don't know what they are doing and think they can make a lot of money really easily by slapping on a new coat of beige paint and beige carpet. You need to know your market, the functionality of a home and what buyers want (or, don't want), and know how to balance your budget with appealing changes and updates. And on top of that, you need to do it at cost or as close to cost as possible.
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Re: Why do Bogleheads/BiggerPocketers think there is only one way?

Post by TareNeko »

sharp1aarohead wrote: Real estate takes more work, has generated me more money and also obviously carries more risk.
If I can be skeptical for a moment:

1. How did you calculate the return of your RE investment?
2. What benchmark did you use (s&p 500, REITs, etc) to compare your return to?
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Re: Why do Bogleheads/BiggerPocketers think there is only one way?

Post by BW1985 »

A good friend of mine is a BP'er and I'm the BH. We both have college degrees, both are successful (so far) but took completely different paths. I moved out of state to maximize my earning potential in corporate America, he stayed near family and started purchasing inexpensive real estate to flip and rent. I earn a much larger salary and max my retirement accounts while he cashed out his old 401k, works a simpler job and spends most of his time managing his properties for cash flow. I really admire his drive and BP's passion, I just don't think it's for me.
mojave wrote: That being said, being a successful Biggerpocketer in my opinion requires more knowledge than a Boglehead.
No question. And a certain amount of street smarts as well.
Last edited by BW1985 on Mon Jun 22, 2015 1:57 pm, edited 2 times in total.
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Re: Why do Bogleheads/BiggerPocketers think there is only one way?

Post by Northern Flicker »

I think most people get into trouble with directly held real estate from being greedy, overextended, and over-leveraged.

I think real estate that is unleveraged or moderately leveraged can be useful in a retirement portfolio as it adds stability and better inflation protection to an income stream otherwise driven by stocks and bonds only.

Managing a few properties also can be a good part-time retirement job. It is not a very welcome activity for someone in a salaried position that is exempt from being paid for overtime work.

Worrying about renting to a doctor who stops paying rent and murders the landlord when the eviction process has started because of such a news story is like not going outside because you read about someone who got run over by a bus.
Last edited by Northern Flicker on Mon Feb 17, 2020 11:10 pm, edited 1 time in total.
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