Bogleheads.org

TD2626

Low fees are good, and churning is bad. The rational thing to do is to buy and hold in a low-fee, broadly diversified fund. Maybe if Vanguard imposed a small fee - not a 200 to 500 basis point fee, but a 50 - 150 basis point fee - for buying and/or selling, it would discourage short term trading. I ...

TD2626

steve321, do you have any more specific questions on this topic? It looks like things are getting repetitive, and all sides of the issue have been discussed. prudent, I have a question on the risks you mentioned in you previous post; basically if it's so risky why are people who have gotten very ri...

TD2626

It's worth noting that author (Adam Grossman) of the article the OP cited says in his last paragraph "I still believe that the best path for investors is to stick to low-cost index funds and to steer clear of stock-picking." This isn't something that should be a main focus for long term investors. H...

TD2626

Also - you can look at potential future known possible large expenses. These are things that would suddenly require large amounts of money but that are at least somewhat predictable. For example, if your car is 15 years old and you know if it has a significant mechanical problem costing for more tha...

TD2626

I handle it somewhat differently. My preferred asset allocation is 5% in cash, 60% in bonds, and 35% in stocks. My cash allocation is my emergency fund. It’s invested in a money market fund, and it’s enough for me to live on for several years. It isn’t paying very much, but I like knowing that it’s...

TD2626

A very interesting article and a very clear, well written review of the main points of indexing. Thanks for sharing the link. It boils down a lot of information into bite sized chunks and would be helpful to share with anyone who is unfamiliar with indexing. It is especially good that this article l...

TD2626

Since the tax brackets are indexed to inflation, the amount in the highest bracket will not change if you get a raise equal to CPI. The lower bound for that bracket will go up as the tax brackets themselves are changed, and the higher bound will go up with the raise.

TD2626

Voting by individuals via mutual funds would be pure entertainment. We on this board can't agree on the proper temperature for ale. I'd just love to see a mutual fund allowing individuals vote on a contentious corporate issue! And, with Total Stock and Total International, I'd get to vote 10,000 ti...

TD2626

My gosh. We have gone from stock picking to index picking to haystack picking. When will this ever end? Indexers tend to follow the advice of Bogle: “Don't look for the needle in the haystack. Just buy the haystack!”. However, some indexers try to pick haystacks that have the most needles, or try t...

TD2626

All of them Good answer. Individual investors tend to not have the time to put full-time research into stocks and carefully pour over annual reports of companies - so they'd presumably lag behind the returns of professional investment managers. However, there is even debate over whether professiona...

TD2626

I believe the "haystack" for stocks is the global equities market, something like Vanguard Total World. In my opinion, this should be the starting point for an equity portfolio design. I think there is only one haystack, one earth. However, that doesn't mean a small and intentional tilt towards US s...

TD2626

It would be nice if individual investors in mutual funds could vote the shares that they indirectly own through mutual funds. Obviously, this would require a different structure of mutual fund, and a lot of work on the part of investors. Indeed, no individual investor would be able to vote every sha...

TD2626

There are tons of arbitrary distinctions, such as what letter the company name starts with or what state the company is headquarted in (is the HQ in Atlanta or Albany?) that shouldn't change one's investment strategy in my opinion. What about zodiac sign of the CEO? Look for Aries? Completely meani...

TD2626

There are tons of arbitrary distinctions, such as what letter the company name starts with or what state the company is headquarted in (is the HQ in Atlanta or Albany?) that shouldn't change one's investment strategy in my opinion.

TD2626

The decision to sell is comes when the cost of repair approaches the value of the vehicle. I understand the sentiment, but I'm not sure I'd agree. Knowing the complete history and condition of one's existing vehicle makes it worth considerably more than a random, unknown, similar vehicle, IMO. What...

TD2626

Just like at the track or casino? I should have expressly included the common denominator that separates both savings and investments from things like wagers: ownership of an asset. OK, so at the other end of the spectrum is there a common denominator that separates investments from speculation in ...

TD2626

Do nothing. To begin with, how does the value of the US national debt figure, as a number, into your spreadsheets, your calculations, your asset allocation? It doesn't. So if it's "larger than stated," it doesn't change any numbers. One place, in theory, that one would put this figure directly into...

TD2626

Maybe doing a combination of some of the re-balancing approaches discussed here: https://www.bogleheads.org/wiki/Rebalancing could work. For example, doing it at a minimum annually; and also using regular contributions/withdrawals to move closer to the desired allocation, and also rebalancing if the...

TD2626

Also - think about purchases that are less than $20 but that are wastefully expensive if you're on a tight budget. For example, a $19.99 entree at a fine restaurant, when one could buy dinner off the dollar menu for $0.99 --- this is a $19 dollar savings. Further, if one gets a expensive coffee for ...

TD2626

What the OP meant to say was that both he and his spouse report to each other before spending $20 on anything. The rules are the same for both of them. I think that's kind of ridiculous but whatever works for them and is fair to both is fine. The OP didn't exactly say this. If the OP meant to say t...

TD2626

If your horizon is short (several years) maybe "saving" is a more appropriate term than "investing". Since a horizon that short calls for low-risk investments (like US Treasury Bills or FDIC savings accounts) you probably don't need do diversify as much. Basically, because riskier investments (stock...

TD2626

Many here keep referring to the mutual ownership structure of Vanguard as being one of the main reasons to pick Vanguard, since they do not suffer from the principal-agent problem that non-mutual organizations (virtually all other major money managers) do suffer from. They do not have to "serve two...

TD2626

At first glance it would seem like diversification is more important the longer the time horizon. Conventionally, if one's time horizon is short (a few years), one can have a FDIC-insured cash account or a short-term, high credit quality bond fund. If the time horizon is medium (several years to 10 ...

TD2626

But that is not the deal I am looking for when I enter into deals with corporations, entrusting them with my capital. This somehow feels like betrayal. How is it betrayal, exactly? You can choose not to invest your capital in those companies, no? I agree that it's not "betrayal" exactly -- one know...

TD2626

Many here keep referring to the mutual ownership structure of Vanguard as being one of the main reasons to pick Vanguard, since they do not suffer from the principal-agent problem that non-mutual organizations (virtually all other major money managers) do suffer from. They do not have to "serve two...

TD2626

Foreign companies also have a large percentage of sales to the US. (Lots of people buy gas from Shell or BP or cars from Toyota, Samsung is a major electronics company, etc). This basically means that US company's returns are dependent on the economies of other nations (so that, for example, someone...

TD2626

Most of the benefit of "Diversification" comes from the returns on the assets being uncorrelated. If they tend to go in the same direction, you're not getting that. This is ultimately a matter of correlation and correlation coefficients. US and International stocks have a positive, and relatively h...

TD2626

For example, say that I happen to like a high probability of a small downside and a low probability of a big upside--positive skew, "lottery ticket." Then, if what I think I've read is correct, I ought to like small growth stocks. On the other hand, if I want a high probability of a slow and steady...

TD2626

It's also a point of vanity to say "We at brokerage ABC hold "X" amount in assets" insinuating that the more they hold the better they must be. They are happy to let a BH have a high 6 or 7 figure account with index funds because it boosts their tagline. Fidelity's S&P 500 fund has more in assets u...

TD2626

DRIPs I believe were more important historically, when index funds didn't exist. DRIPs still exist and in theory a portfolio of a couple dozen in all different industries, bought and hold for decades, might work but it would be very clunky. Decades ago it was a traditional way to invest cheaply... b...

TD2626

I don't think this could ever happen - not 100%. However, it is easy to envision a world where the overwhelming majority of individual investors buy and hold index funds for the overwhelming majority of their portfolios, with some people having small amounts in relatively low cost active funds and w...

TD2626

It's the classic case of incurring higher risk for the expectation of higher reward, in a highly efficient market. This is a great quote. The decision is based on if whether the (possible) higher return is worth the higher risk. Why is the higher return desired or needed? Is the higher risk worth i...

TD2626

It's probably what happens if you do excessive backtesting and go with it. Sometimes the outputs of backtests are a quirk of history and not all that likely to work well in the future. It reminds me of this https://www.bogleheads.org/forum/viewtopic.php?t=5410 Excessively unconventional and highly r...

TD2626

One thing that index funds, particularly at Vanguard (due to their index/etf structure) do is generally have lower capital gain distributions compared to active funds that trade a lot. Indeed, active funds can sometimes have truly enormous capital gain distributions.

TD2626

I wonder if "exactly 16" is more common than "about 16" -- maybe one could look at posts on this board to find that out! I think wealth management is a dying industry, sort of like horse buggy whip makers in the 1920's. I think John Bogle in one of his books even recommends that young people choosin...

TD2626

Each individual lot is a TLH opportunity. Sorry, what do you mean by "each individual lot"? If you use the specific identification method for tracking cost basis and calculating capital gains and losses, each individual purchase of a stock, ETF, or mutual fund creates a "lot" with its own cost basi...

TD2626

It's the classic case of incurring higher risk for the expectation of higher reward, in a highly efficient market. This is a great quote. The decision is based on if whether the (possible) higher return is worth the higher risk. Why is the higher return desired or needed? Is the higher risk worth i...

TD2626

This is impressive! (More or less impossible for many, though, especially those who don't have the information they need to do this in or compiled before the end of the year, though.)

TD2626

A hypothetical non-dividend fund would potentially not be diversified enough. It may have a growth tilt, as well - though value is not synonymous with high dividend yeild. Remember single company stocks are considered very risky, also. Maybe do calculations to see if the tax savings from a low divid...

TD2626

Why would someone want to invest in these sorts of things? In my opinion people seem to wrongly think "its an opportunity limited to few, so it must be good". Um, instead it's often overly risky and non-transparent - and total market index funds may be used even for large portfolios. Nevada has tens...

TD2626

"Stay the course" is not the same as "Buy and hold." Corrections and bear markets can often be an opportunity to rebalance, sell an unwanted fund, tax-loss harvest or move to another company. These seem like good points. One question: By "sell an unwanted fund" would you be referring to a situation...

TD2626

A big concern is the fact that many etfs are small and/or concentrate on tiny sectors of the market. Also, they allow short term speculation. Responsible buy and hold investors tend to dislike narrow sector bets and short term trading. I guess in a sense etfs could be unsafe in the wrong hands (e.g....

TD2626

Right. Don't buy country-specific products just because they're offered and "cheap." This is a non sequitur vis-à-vis Total International Stock Market or Total World, though. Good point - these are not the kinds of buy and hold funds that would likely be held by Bogleheads, in my opinion. Why would...

TD2626

If you don't need to touch your investment portfolio for the next 30 years the experts recommend a small amount of Treasuries with that high equity allocation because of the negative correlation of Treasuries with stocks in times of stress. It has nothing at all to do with selling your investments ...

TD2626

The nice thing is that this can be in theory partially quantified - one could calculate exactly how much in excess fees are being paid, and compound this effect out for many years. I believe a lot of the issue with fees comes from compounding - e.g. the fact that you'd hope to earn money on the mone...

TD2626

It's interesting the performance of Russell 2000 Value relative to other things given SCVs popularity. One must remember that investing for a lifetime-length goal is often a 40-70 year endeavor so single years likely don't matter much --- but SCV supporters shouldn't expect too much (if anything) an...

TD2626

^^^ Sorry, I wasn't clear. PSCU is my B&M financial home. I keep a month of living expenses (<$2K) in savings... just because. --Today my <$2K is earning 0.10%. --The teller said she could convert the account ("no extra effort on my part"). --I move in new money ( through actually, which I do every...

TD2626

BH Reverse tier savings My little CU is trying this no-fee no-minimum-balance savings account idea. Only restriction, it must be new money: 0-2K: 3.25% APY 2-5K: 1.5% APY 5-10K: 0.75% APY 10-50K: 0.4% APY >50K: 0.3% APY vs. their current personal share (savings) account: 0.10% APY. While I’m a conv...

TD2626

Perhaps the board could have a crypto currency sub-forum. ;) Not sure if this was meant tongue-in-cheek, but if this helps people who don't want to think about crypto-currencies avoid popping into threads to mutter "ponzi" or "tulip" repeatedly, rather than contributing to the topic at hand, that w...

TD2626

Thanks for the links and post. It's good to see that short-term yields are rising in both taxable and tax exempt funds. That being said, rising rates on savings accounts probably aren't as important as many think. If a hypothetical investor has $90,000 in stocks and $10,000 in cash, and gets (in a h...

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