Index Investing Primer (Request for feedback)

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Topic Author
Seananigans
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Index Investing Primer (Request for feedback)

Post by Seananigans » Wed Feb 12, 2020 6:29 pm

Hi everyone!

Over the past year, I have been lucky enough to discover the indexing approach to investing. As I was learning about it (from a number of books, as well as from a lot of people here on this site), I realized that there are a number of people---family and friends---in my life that could benefit from learning about it. So, to that end, I started taking some notes---and these notes eventually ended up as a small, informal guide on how to get started with it.

My intention in writing it was to have something (in addition to book recommendations) to share with friends or family that seem interested in learning about index investing. I am continually impressed by the level of knowledge, experience, and kindness on these forums, and so I was wondering if anyone would be able to look it over and offer any feedback? It is about 10 pages long, so I understand if this is a big ask. Any and all kinds of feedback are appreciated; I have thick skin!

Thank you for reading this post, and in advance if you are able to look it over and offer feedback. If not, no worries. Hope you all have a fantastic night!

Sincerely,
Sean

Index Investing Primer:
https://drive.google.com/file/d/1T45uFg ... p=drivesdk

Portfolio Tracking Spreadsheet:
https://docs.google.com/file/d/1FFJo4Hv ... pe=msexcel
Last edited by Seananigans on Sat Feb 15, 2020 8:51 pm, edited 2 times in total.

pkcrafter
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Re: Index Investing Primer (Request for feedback)

Post by pkcrafter » Wed Feb 12, 2020 8:36 pm

Nicely done, Sean.

Paul
When times are good, investors tend to forget about risk and focus on opportunity. When times are bad, investors tend to forget about opportunity and focus on risk.

Explorer
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Re: Index Investing Primer (Request for feedback)

Post by Explorer » Wed Feb 12, 2020 8:40 pm

Very good. One thing to consider is to add "International Bonds".. it is up to you.

CRG
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Re: Index Investing Primer (Request for feedback)

Post by CRG » Wed Feb 12, 2020 9:22 pm

Nicely done. Would appreciate a link to the spreadsheet that was mentioned toward the end. Thanks!

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Taylor Larimore
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Re: Index Investing Primer (Request for feedback)

Post by Taylor Larimore » Wed Feb 12, 2020 9:26 pm

Sean:

Your "Investing Primer" is beautifully written and first rate in every sense. I am pleased to see that you recommend my favorite Three-Fund Portfolio.

Your readers will prosper thanks to you.

Best wishes.
Taylor
Jack Bogle's Words of Wisdom: "There may be better investment strategies than owning just three broad-based index funds but the number of strategies that are worse is infinite."
"Simplicity is the master key to financial success." -- Jack Bogle

Topic Author
Seananigans
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Re: Index Investing Primer (Request for feedback)

Post by Seananigans » Wed Feb 12, 2020 11:16 pm

pkcrafter wrote:
Wed Feb 12, 2020 8:36 pm
Nicely done, Sean.

Paul
Thank you so much, Paul! I'm glad you liked it. I sincerely appreciate you taking the time to read it, and letting me know what you thought!

All the best,
Sean

Topic Author
Seananigans
Posts: 33
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Re: Index Investing Primer (Request for feedback)

Post by Seananigans » Wed Feb 12, 2020 11:19 pm

Explorer wrote:
Wed Feb 12, 2020 8:40 pm
Very good. One thing to consider is to add "International Bonds".. it is up to you.
Thank you very much for taking the time to read it! I definitely agree---international bonds would be a good area to cover as well. I will be honest: I'm still learning about how they fit within a portfolio, but once I feel like I have a good handle on them, I'm going to add a section pertaining to them. I really appreciate the great advice!

Thanks again. All the best,
Sean

Topic Author
Seananigans
Posts: 33
Joined: Tue Apr 16, 2019 11:57 pm

Re: Index Investing Primer (Request for feedback)

Post by Seananigans » Wed Feb 12, 2020 11:25 pm

CRG wrote:
Wed Feb 12, 2020 9:22 pm
Nicely done. Would appreciate a link to the spreadsheet that was mentioned toward the end. Thanks!
I really appreciate you taking the time to read it, and I'm glad you found it helpful! And of course! I'm happy to share a link to the spreadsheet I created as well. Admittedly, it's a bit basic (still learning the Excel side of things), but it's helped me track our portfolio, and hopefully you'll find it useful as well!

Here's the link:
https://docs.google.com/file/d/1FFJo4Hv ... pe=msexcel

Please let me know if you have any trouble accessing it, or importing it into Excel. I can always email it to you as an attachment as well if needed.

Thanks again. All the best!
Sean

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Seananigans
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Re: Index Investing Primer (Request for feedback)

Post by Seananigans » Wed Feb 12, 2020 11:44 pm

Taylor Larimore wrote:
Wed Feb 12, 2020 9:26 pm
Sean:

Your "Investing Primer" is beautifully written and first rate in every sense. I am pleased to see that you recommend my favorite Three-Fund Portfolio.

Your readers will prosper thanks to you.

Best wishes.
Taylor
Jack Bogle's Words of Wisdom: "There may be better investment strategies than owning just three broad-based index funds but the number of strategies that are worse is infinite."
Taylor,

To say that your response meant a lot to me would be an understatement. Coming from an author and leader that I have an immense amount of respect for, your words made perhaps my entire year. I'm glad that you enjoyed reading my little guide, and it is my hope that readers of it will indeed (as you say) prosper from reading it---much as I have prospered from reading your work. You, along with John Bogle, have made a tremendous impact on my financial future (and my family's along with it), and though I'm sure it's not the first (nor the last) time you have heard this, I hope you know that you have forever changed lives for the better through your work.

Your "Three-Fund Portfolio" is a favorite of mine as well! In fact, it is (along with Mr. Bogle's "The Little Book of Common Sense Investing") one of the first books I have pointed people to who are interested in learning more about index investing.

There are times that a simple "thank you" feels inadequate. This is one such time, but I say it anyway. Thank you.

All the best.
Sean

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siamond
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Re: Index Investing Primer (Request for feedback)

Post by siamond » Thu Feb 13, 2020 12:01 am

Nice work... You're an excellent writer. Makes me wonder how to use this work in a larger context...

retired@50
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Re: Index Investing Primer (Request for feedback)

Post by retired@50 » Thu Feb 13, 2020 12:28 am

Overall, I could see this being helpful to any beginner or novice investor, which was all of us at one point or another.

Something you may want to work on a bit.
Page 5, you mention ETF commissions, but don't mention the bid/ask spread. With so many investment houses offering commission-free trading, the only remaining related cost is the bid/ask spread. One way or another you should let people know that they may be buying an ETF above or below NAV, where the mutual fund always trades at NAV.

Regards,
Boggle - a game from Parker Brothers. Bogle - investor, founder of Vanguard.

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Taylor Larimore
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Re: Index Investing Primer (Request for feedback)

Post by Taylor Larimore » Thu Feb 13, 2020 9:45 am

Seananigans wrote:
Wed Feb 12, 2020 11:19 pm
Explorer wrote:
Wed Feb 12, 2020 8:40 pm
Very good. One thing to consider is to add "International Bonds".. it is up to you.
Thank you very much for taking the time to read it! I definitely agree---international bonds would be a good area to cover as well. I will be honest: I'm still learning about how they fit within a portfolio, but once I feel like I have a good handle on them, I'm going to add a section pertaining to them. I really appreciate the great advice!

Thanks again. All the best,
Sean
Sean:

Thank you very much for your kind reply, above.

Regarding international bonds: My feeling is that stocks are best used for higher returns (and more risk of loss), and that ANY safe fixed-income security (cash, CDs, short and intermediate-term good-quality bonds) are best to provide safety in a portfolio.

My personal choice is Vanguard Total Bond Market Index Fund which has never had an annual loss greater than -2.66% in 1994 (it gained +16% in 1995). For this reason, I believe it is unnecessary to own foreign bonds.

Strive for simplicity.

Best wishes
Taylor
Jack Bogle's Words of Wisdom: "Simplicity is the master key to financial success. -- We ignore the real diamonds of simplicity, seeking instead the illusory rhinestones of complexity."
"Simplicity is the master key to financial success." -- Jack Bogle

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Wiggums
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Re: Index Investing Primer (Request for feedback)

Post by Wiggums » Thu Feb 13, 2020 10:23 am

Seananigans wrote:
Wed Feb 12, 2020 6:29 pm
Hi everyone!

Over the past year, I have been lucky enough to discover the indexing approach to investing. As I was learning about it (from a number of books, as well as from a lot of people here on this site), I realized that there are a number of people---family and friends---in my life that could benefit from learning about it. So, to that end, I started taking some notes---and these notes eventually ended up as a small, informal guide on how to get started with it.

My intention in writing it was to have something (in addition to book recommendations) to share with friends or family that seem interested in learning about index investing. I am continually impressed by the level of knowledge, experience, and kindness on these forums, and so I was wondering if anyone would be able to look it over and offer any feedback? It is about 10 pages long, so I understand if this is a big ask. Any and all kinds of feedback are appreciated; I have thick skin!

Thank you for reading this post, and in advance if you are able to look it over and offer feedback. If not, no worries. Hope you all have a fantastic night!

Sincerely,
Sean

I created a web link to it here:

https://drive.google.com/file/d/1jwZBfr ... p=drivesdk
I love the format. It was easy to read and very informative. I hold the three fund portfolio, so naturally, I think it’s a great recommendation and I love the simplicity. I wish I had learned more about taxes sooner.

When I first stated investing, I couldn’t find many people to answer my questions. Thanks to the BH forum, I feel like people get very good suggestions, that are based on personal experience. The BH forum price is just the icing on the cake.

I retired 2 years ago and I continue to invest. We know that markets go up and down. Sometimes significantly down. It’s very important that people have an asset allocation that is right for them. It’s a much bigger decision than selecting fund A or fund B. I was fortunate to be employed continuously 32 years. Time in the market and your savings rate are the keys to success. An emergency fund or liquidity outside of the market is super important to survive the few (hopefully) bad times.

Good luck to you.

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Re: Index Investing Primer (Request for feedback)

Post by abuss368 » Thu Feb 13, 2020 12:25 pm

Seananigans wrote:
Wed Feb 12, 2020 6:29 pm
Hi everyone!

Over the past year, I have been lucky enough to discover the indexing approach to investing. As I was learning about it (from a number of books, as well as from a lot of people here on this site), I realized that there are a number of people---family and friends---in my life that could benefit from learning about it. So, to that end, I started taking some notes---and these notes eventually ended up as a small, informal guide on how to get started with it.

My intention in writing it was to have something (in addition to book recommendations) to share with friends or family that seem interested in learning about index investing. I am continually impressed by the level of knowledge, experience, and kindness on these forums, and so I was wondering if anyone would be able to look it over and offer any feedback? It is about 10 pages long, so I understand if this is a big ask. Any and all kinds of feedback are appreciated; I have thick skin!

Thank you for reading this post, and in advance if you are able to look it over and offer feedback. If not, no worries. Hope you all have a fantastic night!

Sincerely,
Sean

I created a web link to it here:

https://drive.google.com/file/d/1jwZBfr ... p=drivesdk
Welcome to the forum!

Well written and your readers will enjoy.
John C. Bogle - Two Fund Portfolio: Total Stock & Total Bond. "Simplicity is the master key to financial success." || Buy Total Stock until it hurts. Then find a way to buy even more!

Topic Author
Seananigans
Posts: 33
Joined: Tue Apr 16, 2019 11:57 pm

Re: Index Investing Primer (Request for feedback)

Post by Seananigans » Thu Feb 13, 2020 1:35 pm

siamond wrote:
Thu Feb 13, 2020 12:01 am
Nice work... You're an excellent writer. Makes me wonder how to use this work in a larger context...
Wow, thank you so much! I really appreciate the feedback, and I'm glad you liked it! And as to what uses it will have (or forms it will take) in the future, I'm just hopeful that it will help as many people as possible. I wrote it mainly to pass out to those in my life that are interested in learning about index investing, but if it's helpful for a wider audience, I'll be happy to see it help more than just my small circle.

Thanks again for your kind words. All the best!

Sean

Topic Author
Seananigans
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Re: Index Investing Primer (Request for feedback)

Post by Seananigans » Thu Feb 13, 2020 1:47 pm

retired@50 wrote:
Thu Feb 13, 2020 12:28 am
Overall, I could see this being helpful to any beginner or novice investor, which was all of us at one point or another.

Something you may want to work on a bit.
Page 5, you mention ETF commissions, but don't mention the bid/ask spread. With so many investment houses offering commission-free trading, the only remaining related cost is the bid/ask spread. One way or another you should let people know that they may be buying an ETF above or below NAV, where the mutual fund always trades at NAV.

Regards,
That is exactly why I wrote it, actually! I feel like when I started out last year, I knew pretty much zero about investing, but thanks in large part to the books I've read---as well as this amazing community---have begun to get my feet on the ground a bit. I have only scratched the surface, I'm sure, but I felt like this could be one small way I could help others in my life get started down this amazing road (much as others have helped me). At any rate, I tried to write it in a way that assumed zero knowledge, as a place to begin, and hopefully those who read it will go on to check out other resources (such as some of the books I recommended, or this community).

I really appreciate the advice about adding more to the ETF section regarding the bid/ask spread; that is an excellent recommendation, and I will work that in for sure. Given the popularity of ETFs, I knew I wanted to have a section explaining what they are, their differences from mutual funds, whether they work in an indexing approach, and the possible drawbacks, so this works perfectly.

Thanks for taking the time to read it, and for giving me your feedback. It is greatly appreciated!

All the best,
Sean

Topic Author
Seananigans
Posts: 33
Joined: Tue Apr 16, 2019 11:57 pm

Re: Index Investing Primer (Request for feedback)

Post by Seananigans » Thu Feb 13, 2020 2:05 pm

Taylor Larimore wrote:
Thu Feb 13, 2020 9:45 am
Seananigans wrote:
Wed Feb 12, 2020 11:19 pm
Explorer wrote:
Wed Feb 12, 2020 8:40 pm
Very good. One thing to consider is to add "International Bonds".. it is up to you.
Thank you very much for taking the time to read it! I definitely agree---international bonds would be a good area to cover as well. I will be honest: I'm still learning about how they fit within a portfolio, but once I feel like I have a good handle on them, I'm going to add a section pertaining to them. I really appreciate the great advice!

Thanks again. All the best,
Sean
Sean:

Thank you very much for your kind reply, above.

Regarding international bonds: My feeling is that stocks are best used for higher returns (and more risk of loss), and that ANY safe fixed-income security (cash, CDs, short and intermediate-term good-quality bonds) are best to provide safety in a portfolio.

My personal choice is Vanguard Total Bond Market Index Fund which has never had an annual loss greater than -2.66% in 1994 (it gained +16% in 1995). For this reason, I believe it is unnecessary to own foreign bonds.

Strive for simplicity.

Best wishes
Taylor
Jack Bogle's Words of Wisdom: "Simplicity is the master key to financial success. -- We ignore the real diamonds of simplicity, seeking instead the illusory rhinestones of complexity."
Taylor,

The thanks is all mine! I really had just wanted to take a few moments to put across how much your reply meant to me, and in particular, that you took the time out to read my little guide and offer your feedback. I sincerely appreciate it.

I also appreciate you taking the time to give me your opinion on international bonds! This is definitely one area I don't feel like I know very well. Though my current asset allocation includes 30% bonds, these are all U.S. bonds, and I confess I hadn't given much consideration to international bonds. I am glad to hear that you recommend Vanguard's Total Bond Market Index Fund, as our (my wife and I's) bonds allocation entirely rests in it (VBTLX, or, in my wife's retirement account, VBTIX). I understand, and agree with, your assessment that going with a safe, broad-market U.S. bond index fund---especially one with such a track record such as Vanguard's fund---make foreign bonds unnecessary. Simplicity it is, then.

Thank you again. All the best.

Sean

Topic Author
Seananigans
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Re: Index Investing Primer (Request for feedback)

Post by Seananigans » Thu Feb 13, 2020 2:18 pm

Wiggums wrote:
Thu Feb 13, 2020 10:23 am
Seananigans wrote:
Wed Feb 12, 2020 6:29 pm
Hi everyone!

Over the past year, I have been lucky enough to discover the indexing approach to investing. As I was learning about it (from a number of books, as well as from a lot of people here on this site), I realized that there are a number of people---family and friends---in my life that could benefit from learning about it. So, to that end, I started taking some notes---and these notes eventually ended up as a small, informal guide on how to get started with it.

My intention in writing it was to have something (in addition to book recommendations) to share with friends or family that seem interested in learning about index investing. I am continually impressed by the level of knowledge, experience, and kindness on these forums, and so I was wondering if anyone would be able to look it over and offer any feedback? It is about 10 pages long, so I understand if this is a big ask. Any and all kinds of feedback are appreciated; I have thick skin!

Thank you for reading this post, and in advance if you are able to look it over and offer feedback. If not, no worries. Hope you all have a fantastic night!

Sincerely,
Sean

I created a web link to it here:

https://drive.google.com/file/d/1jwZBfr ... p=drivesdk
I love the format. It was easy to read and very informative. I hold the three fund portfolio, so naturally, I think it’s a great recommendation and I love the simplicity. I wish I had learned more about taxes sooner.

When I first stated investing, I couldn’t find many people to answer my questions. Thanks to the BH forum, I feel like people get very good suggestions, that are based on personal experience. The BH forum price is just the icing on the cake.

I retired 2 years ago and I continue to invest. We know that markets go up and down. Sometimes significantly down. It’s very important that people have an asset allocation that is right for them. It’s a much bigger decision than selecting fund A or fund B. I was fortunate to be employed continuously 32 years. Time in the market and your savings rate are the keys to success. An emergency fund or liquidity outside of the market is super important to survive the few (hopefully) bad times.

Good luck to you.
Thank you very much---I really appreciate that! I'm glad you liked the format. I was trying to keep it structured in a way that someone who has little (or no) experience with investing would still find approachable. I myself last year was in this exact place, and I tried to ask myself while I was writing what I would have found helpful when I was first starting out. My hope is that people find a good starting point in it, and then go on to do further research (such as some of the books I recommended, or this amazing community). I share your enthusiasm for the BH forum; there are truly amazing, knowledgeable, and kind people here in numbers I wouldn't have imagined! I look forward to learning more here in the years and decades to come.

I am glad your retirement has been such a great experience so far! I completely agree with your point that asset allocation is easily one of the most important things that investors decide on. I have yet to see any significant storms in the market since I started paying attention, but I'm hopeful that the wisdom I've leaned on others for has helped me create a plan that will weather whatever storms will come.

Thank you again for taking the time out to read my little guide, and for leaving your thoughts. I wish you all the best as well!

Sean

Topic Author
Seananigans
Posts: 33
Joined: Tue Apr 16, 2019 11:57 pm

Re: Index Investing Primer (Request for feedback)

Post by Seananigans » Thu Feb 13, 2020 2:21 pm

abuss368 wrote:
Thu Feb 13, 2020 12:25 pm
Seananigans wrote:
Wed Feb 12, 2020 6:29 pm
Hi everyone!

Over the past year, I have been lucky enough to discover the indexing approach to investing. As I was learning about it (from a number of books, as well as from a lot of people here on this site), I realized that there are a number of people---family and friends---in my life that could benefit from learning about it. So, to that end, I started taking some notes---and these notes eventually ended up as a small, informal guide on how to get started with it.

My intention in writing it was to have something (in addition to book recommendations) to share with friends or family that seem interested in learning about index investing. I am continually impressed by the level of knowledge, experience, and kindness on these forums, and so I was wondering if anyone would be able to look it over and offer any feedback? It is about 10 pages long, so I understand if this is a big ask. Any and all kinds of feedback are appreciated; I have thick skin!

Thank you for reading this post, and in advance if you are able to look it over and offer feedback. If not, no worries. Hope you all have a fantastic night!

Sincerely,
Sean

I created a web link to it here:

https://drive.google.com/file/d/1jwZBfr ... p=drivesdk
Welcome to the forum!

Well written and your readers will enjoy.
Thank you very much! I sincerely appreciate you taking the time out to read my little guide, and leave your thoughts---as well as for the welcome to this amazing community! I'm glad you thought it was well-written, and I just hope it will help others, as I myself have found help.

All the best.
Sean

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siamond
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Re: Index Investing Primer (Request for feedback)

Post by siamond » Thu Feb 13, 2020 3:09 pm

OP, I'd suggest to reconsider the section about International exposure. When you said "it’s generally agreed on that somewhere around 20% is ideal for international stocks", I am afraid a couple of luminaries (I'll mention no name!) may have influenced you a little bit too much... :wink:

Fact is a large group of people would staunchly speak in favor of US-only exposure. Another large group of people would staunchly speak in favor of market-cap exposure (which is currently kind of half/half between US and the rest of the world, but changed a good deal over time). Many others might seek a middle road as you suggested. But it's NOT about averages here, the three types of views actually reflect very different philosophies. Plus some might argue that depending on the investor's age (youngster vs. retiree), one view might be more sensible than the other. Etc. It is a long argument, of course, and the last thing I want to do is to trigger yet another int'l vs. domestic debate, but I would suggest that you amend your (otherwise excellent) write-up to be more open to the various views on the topic. It would be good for your readers to actually view it as an open question where they need to think a bit harder on where THEY stand, as the 'right' answer tends to be personal.

Topic Author
Seananigans
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Re: Index Investing Primer (Request for feedback)

Post by Seananigans » Thu Feb 13, 2020 3:28 pm

siamond wrote:
Thu Feb 13, 2020 3:09 pm
OP, I'd suggest to reconsider the section about International exposure. When you said "it’s generally agreed on that somewhere around 20% is ideal for international stocks", I am afraid a couple of luminaries (I'll mention no name!) may have influenced you a little bit too much... :wink:

Fact is a large group of people would staunchly speak in favor of US-only exposure. Another large group of people would staunchly speak in favor of market-cap exposure (which is currently kind of half/half between US and the rest of the world, but changed a good deal over time). Many others might seek a middle road as you suggested. But it's NOT about averages here, the three types of views actually reflect very different philosophies. Plus some might argue that depending on the investor's age (youngster vs. retiree), one view might be more sensible than the other. Etc. It is a long argument, of course, and the last thing I want to do is to trigger yet another int'l vs. domestic debate, but I would suggest that you amend your (otherwise excellent) write-up to be more open to the various views on the topic. It would be good for your readers to actually view it as an open question where they need to think a bit harder on where THEY stand, as the 'right' answer tends to be personal.
No, I think that's entirely fair. I recently wrote the following back to a friend who had asked me what I thought about international equities. You may recognize a bit of it from the guide:

"Well, it largely comes down to personal preference. Whether or not to invest internationally has been a subject of debate for a long time. Some leading advice suggests allocating some of your equities portion into international stocks for additional diversification, and due to the fact that international equities are not overvalued at the moment. International equities generally carry a possibility for a higher return, but also a higher risk (e.g. currency risk, political instability, and so on). But there is also an argument that if you are invested in U.S. stocks, especially large-cap (large companies), most of these companies have a global presence, and you are therefore invested somewhat internationally as well already.

Personally, I've come down on the side that advises committing part of your equities allocation to international stocks, and I've gone with 20% of my stocks allocation devoted to this. Note that this is a percentage of my equities portion, not my entire allocation. (This means that my asset allocation is 56% in U.S. stocks, 14% in international stocks, and 30% in bonds.) But like I said, you will have to weigh out the decision for yourself.

If you do decide to invest internationally, in my personal opinion, somewhere in the range of 10-30% of your stocks allocation is a good range to shoot for. International index funds are generally a fantastic, low-cost way to get international exposure. One thing to note, however: try to pick an international fund that does not include U.S. stocks (they are sometimes denoted as "ex-U.S."); this is mainly because you will already be invested in U.S. stocks, and this minimizes overlap."

As far as the section in the guide, I did try to put across that it is a point of debate with the community, and give some cursory arguments either way. I do understand your view that this aspect may not be emphasized enough. I appreciate and respect your feedback, though; I'll try to rework it so that the "personal preference" part comes through a little stronger.

Thanks again for taking the time to give your feedback. I sincerely appreciate it!

Sean

seymore92
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Re: Index Investing Primer (Request for feedback)

Post by seymore92 » Thu Feb 13, 2020 7:35 pm

Seananigans wrote:
Wed Feb 12, 2020 6:29 pm
Hi everyone!

Over the past year, I have been lucky enough to discover the indexing approach to investing. As I was learning about it (from a number of books, as well as from a lot of people here on this site), I realized that there are a number of people---family and friends---in my life that could benefit from learning about it. So, to that end, I started taking some notes---and these notes eventually ended up as a small, informal guide on how to get started with it.

My intention in writing it was to have something (in addition to book recommendations) to share with friends or family that seem interested in learning about index investing. I am continually impressed by the level of knowledge, experience, and kindness on these forums, and so I was wondering if anyone would be able to look it over and offer any feedback? It is about 10 pages long, so I understand if this is a big ask. Any and all kinds of feedback are appreciated; I have thick skin!

Thank you for reading this post, and in advance if you are able to look it over and offer feedback. If not, no worries. Hope you all have a fantastic night!

Sincerely,
Sean

I created a web link to it here:

https://drive.google.com/file/d/1jwZBfr ... p=drivesdk
No particular feedback other to say that I enjoyed reading it a lot. I think the more hands it lands in the better.

I didn't see if the spreadsheet you referenced is posted also somewhere?

I was impressed to see your first posts on bogleheads.org from around April last year and all the self-progress you've made in that time. Keep sharing the wealth :beer

snailderby
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Re: Index Investing Primer (Request for feedback)

Post by snailderby » Thu Feb 13, 2020 7:55 pm

Nice work, Sean! Thanks for sharing.

Topic Author
Seananigans
Posts: 33
Joined: Tue Apr 16, 2019 11:57 pm

Re: Index Investing Primer (Request for feedback)

Post by Seananigans » Fri Feb 14, 2020 11:12 am

seymore92 wrote:
Thu Feb 13, 2020 7:35 pm
Seananigans wrote:
Wed Feb 12, 2020 6:29 pm
Hi everyone!

Over the past year, I have been lucky enough to discover the indexing approach to investing. As I was learning about it (from a number of books, as well as from a lot of people here on this site), I realized that there are a number of people---family and friends---in my life that could benefit from learning about it. So, to that end, I started taking some notes---and these notes eventually ended up as a small, informal guide on how to get started with it.

My intention in writing it was to have something (in addition to book recommendations) to share with friends or family that seem interested in learning about index investing. I am continually impressed by the level of knowledge, experience, and kindness on these forums, and so I was wondering if anyone would be able to look it over and offer any feedback? It is about 10 pages long, so I understand if this is a big ask. Any and all kinds of feedback are appreciated; I have thick skin!

Thank you for reading this post, and in advance if you are able to look it over and offer feedback. If not, no worries. Hope you all have a fantastic night!

Sincerely,
Sean

I created a web link to it here:

https://drive.google.com/file/d/1jwZBfr ... p=drivesdk
No particular feedback other to say that I enjoyed reading it a lot. I think the more hands it lands in the better.

I didn't see if the spreadsheet you referenced is posted also somewhere?

I was impressed to see your first posts on bogleheads.org from around April last year and all the self-progress you've made in that time. Keep sharing the wealth :beer
Thank you so much---I really appreciate the kind words! I definitely feel like I've learned a lot over the past year, but I also feel like I've barely scratched the surface, haha. This is probably one of those areas (like most in life) where you never truly master it...but you can sure try. At any rate, I'm looking forward to continuing to learn. This site and the amazing people here have been a huge part of that, and I am beyond thankful to have BH as a resource.

As for the guide, I'm definitely going to do what I can to let as many people in my life know about indexing, as it's made such a huge difference in my family's financial future. I really appreciate you taking the time out to read it, and let me know what you thought! I apologize, I should have included a link to the spreadsheet in the initial post. It's admittedly pretty basic, but it's been helpful in tracking my family's portfolio, and hopefully it can help get someone started down that road. Here's the link if you're interested:

https://docs.google.com/file/d/1FFJo4Hv ... pe=msexcel

Thanks again. I wish you all the best.

Sean

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Seananigans
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Re: Index Investing Primer (Request for feedback)

Post by Seananigans » Fri Feb 14, 2020 11:13 am

snailderby wrote:
Thu Feb 13, 2020 7:55 pm
Nice work, Sean! Thanks for sharing.
Well, thank you very much!! That means more to me than you know. I'm truly glad you enjoyed it, and I really appreciate you taking the time out to both check it out and let me know what you thought!

All the best,
Sean

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Taylor Larimore
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Re: Index Investing Primer (Request for feedback)

Post by Taylor Larimore » Fri Feb 14, 2020 2:34 pm

Sean wrote: Thank you so much---I really appreciate the kind words! I definitely feel like I've learned a lot over the past year, but I also feel like I've barely scratched the surface, haha. This is probably one of those areas (like most in life) where you never truly master it...but you can sure try. At any rate, I'm looking forward to continuing to learn. This site and the amazing people here have been a huge part of that, and I am beyond thankful to have BH as a resource.
Sorry, Sean, I must disagree with you. I have learned that investing is not difficult. It is the investment industry that tries to make it look difficult so they can sell us more services and more funds. Take Small-Cap Value as an example. The industry has heavily promoted Small-Cap Value funds based on past performance (which the government warns against). So what happened? According to Morningstar, Small-Cap Value funds are now the worst performing of all fund categories.

I spent much of my life trying to figure-out how to beat the market. I never did. Read this:

He Has Read Over 250 Investing Books. He Recommends These Three Funds.

Best wishes.
Taylor
Jack Bogle's Words of Wisdom: "It is fair to say that when ever-counterproductive investor emotions are played on by ever-counterproductive fund industry promotions, little good is apt to result."
"Simplicity is the master key to financial success." -- Jack Bogle

Target2019
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Re: Index Investing Primer (Request for feedback)

Post by Target2019 » Fri Feb 14, 2020 3:45 pm

Seananigans wrote:
Wed Feb 12, 2020 6:29 pm
Thank you for reading this post, and in advance if you are able to look it over and offer feedback. If not, no worries. Hope you all have a fantastic night!
Sean,
Writing is obviously a strength of yours. Keep up the good work. If you re-read your work at the end of each year, it will be interesting how it works for you. IOW, you may have evolving views on some aspects.

It takes courage to write or speak up, and suffer the slings and arrows of some. Just keep at it, and you'll find increasing levels of investing success. I would say that investing is difficult for a young person entering the business world, and filtering the noise. Each employer offers a different set of investments, and most of us have gotten used to making best selections given the potential array of funds.

Always revisit and test your assumptions. That is what I found worked best over a long career of specialized writing.

The only suggestion I can think of, is to add a list of references. Maybe footnote a few "facts" so that the reader can verify certain items if they care to...

Thanks for sharing your work freely.

Topic Author
Seananigans
Posts: 33
Joined: Tue Apr 16, 2019 11:57 pm

Re: Index Investing Primer (Request for feedback)

Post by Seananigans » Fri Feb 14, 2020 6:39 pm

Taylor Larimore wrote:
Fri Feb 14, 2020 2:34 pm
Sean wrote: Thank you so much---I really appreciate the kind words! I definitely feel like I've learned a lot over the past year, but I also feel like I've barely scratched the surface, haha. This is probably one of those areas (like most in life) where you never truly master it...but you can sure try. At any rate, I'm looking forward to continuing to learn. This site and the amazing people here have been a huge part of that, and I am beyond thankful to have BH as a resource.
Sorry, Sean, I must disagree with you. I have learned that investing is not difficult. It is the investment industry that tries to make it look difficult so they can sell us more services and more funds. Take Small-Cap Value as an example. The industry has heavily promoted Small-Cap Value funds based on past performance (which the government warns against). So what happened? According to Morningstar, Small-Cap Value funds are now the worst performing of all fund categories.

I spent much of my life trying to figure-out how to beat the market. I never did. Read this:

He Has Read Over 250 Investing Books. He Recommends These Three Funds.

Best wishes.
Taylor
Jack Bogle's Words of Wisdom: "It is fair to say that when ever-counterproductive investor emotions are played on by ever-counterproductive fund industry promotions, little good is apt to result."
Taylor,

I completely agree with you with respect to investing. The simplicity of the indexing approach was honestly one of the biggest things that drew me to it initially. I felt at first overwhelmed when looking at the breadth of investing advice out there, and having it pared down to a few solid principles was such a breath of fresh air. I've been reading my way through JL Collins' "The Simple Path to Wealth" lately, and just landed on this quote the other night: "Here’s an important truth. Complex investments exist only to profit those who create and sell them. Further, not only are they more costly to the investor, they are less effective." This is, of course, a sentiment that I've heard repeated over and over in your work, in Mr. Bogle's work, and so on---and it's one that I will continue hold as foremost in my mind when I think about investing.

I suppose I should have been a bit clearer in my earlier statement. On the one hand, it speaks more of my approach to most things than the content matter at hand; I try not to think that I've ever truly "mastered" something, as to me, it closes a door in the mind that there is more to learn. But you are right: with respect to investing, there is the real danger of over-complicating things.

Along with learning about investing, I've also been trying to develop more of an overall financial plan for my family: for example, converting from a 30- to a 15-year mortgage; learning about life insurance, and upping our (term) policy to the recommended 10-12x income; getting wills completed; researching and opening 529s for our young children; considering setting up a trust, and so on. For me, the past year has been a huge opportunity to become somewhat more knowledgeable in an area that had in the past always been peripheral, and largely ignored: money. It is in this full picture that I feel like I've barely scratched the surface. But, again, I do want to say thank you: your "Bogleheads' Guide to Investing" has been, and will continue to be, one of the first resources I turn to in learning more in all these areas.

Thank you again for the reminder about the importance of simplicity. Your words have in large part shaped my family's financial path forward, and you will never know how grateful I am for them.

All the best,
Sean

P.S. Thank you for the link! I'm going to go read it now. Hope you have a good night!

Topic Author
Seananigans
Posts: 33
Joined: Tue Apr 16, 2019 11:57 pm

Re: Index Investing Primer (Request for feedback)

Post by Seananigans » Fri Feb 14, 2020 7:44 pm

Target2019 wrote:
Fri Feb 14, 2020 3:45 pm
Seananigans wrote:
Wed Feb 12, 2020 6:29 pm
Thank you for reading this post, and in advance if you are able to look it over and offer feedback. If not, no worries. Hope you all have a fantastic night!
Sean,
Writing is obviously a strength of yours. Keep up the good work. If you re-read your work at the end of each year, it will be interesting how it works for you. IOW, you may have evolving views on some aspects.

It takes courage to write or speak up, and suffer the slings and arrows of some. Just keep at it, and you'll find increasing levels of investing success. I would say that investing is difficult for a young person entering the business world, and filtering the noise. Each employer offers a different set of investments, and most of us have gotten used to making best selections given the potential array of funds.

Always revisit and test your assumptions. That is what I found worked best over a long career of specialized writing.

The only suggestion I can think of, is to add a list of references. Maybe footnote a few "facts" so that the reader can verify certain items if they care to...

Thanks for sharing your work freely.
It has been my pleasure. I have honestly been floored that so many people have found it useful on here! I can only hope that those starting out that chance upon it (and perhaps felt as lost as I did last year) will have enough of an interest sparked in them to look deeper into Mr. Bogle's and Mr. Larimore's work. To me, their writings have been truly transformative, and I'm just hoping to point more people in their direction. I completely agree that starting out can be daunting; looking down the barrel of my wife and I's total of five retirement accounts, all with their different fund choices, was a tad overwhelming, haha. I was grateful to find out it could be vastly simpler than I realized.

I love your idea about reviewing my notes and writing at the end of each year! There was a reply further up that mentioned some of my posts from last year (when I first joined BH), and at the suggestion, I went back and looked. I was amused at some of the questions I was asking back then! I also appreciate the words of encouragement regarding my writing. If those slings and arrows should come, I'll be ready to duck! I can imagine it's well worth the persistence.

Thank you for the idea of adding a list of references and/or footnotes. I think it's a fantastic idea. The concept of attribution was one I was honestly worried about; I wanted to make it clear from the outset that these ideas were not my own, and that my little guide was rather an attempt to synthesize a lot of the information I'd found in the past year for those in my world it could help. Standing atop the shoulders of giants, as it were. I like formalizing it, and adding references, however, and am going to add that.

Truly, thank you again. I wish you all the best!

Sean

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arcticpineapplecorp.
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Re: Index Investing Primer (Request for feedback)

Post by arcticpineapplecorp. » Fri Feb 14, 2020 10:02 pm

very nicely done. easy to understand and visually appealing presentation. hope others find it of value.
"May you live as long as you want and never want as long as you live" -- Irish Blessing | "Invest we must" -- Jack Bogle

Sairam
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Re: Index Investing Primer (Request for feedback)

Post by Sairam » Fri Feb 14, 2020 10:36 pm

Thank you very much for sharing your work.
It was a good summary and very well written.
Was able to use your excel spreadsheet to help with my AA.

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Re: Index Investing Primer (Request for feedback)

Post by Dottie57 » Fri Feb 14, 2020 11:05 pm

Hi OP,

Great document! Concise and well written.

One point that is bothering me. “Higher than average returns”. I don’t know what average returns are and how I would know what to compare to. And to tell the truth I am not looking for higher than average returns as a goal.

I invest in total u.s. stock market index because I am willing to accept the market returns. I believe owning this index will give me “good enough” returns to achieve financial goals. I believe I will receive “good enough” returns because I believe in the upward trajectory of the market as a whole. If the belief is incorrect, I will not do well.

This may of course be my lonely idea of why to use indexing / passive investing.

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Seananigans
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Re: Index Investing Primer (Request for feedback)

Post by Seananigans » Sat Feb 15, 2020 12:23 am

Dottie57 wrote:
Fri Feb 14, 2020 11:05 pm
Hi OP,

Great document! Concise and well written.

One point that is bothering me. “Higher than average returns”. I don’t know what average returns are and how I would know what to compare to. And to tell the truth I am not looking for higher than average returns as a goal.

I invest in total u.s. stock market index because I am willing to accept the market returns. I believe owning this index will give me “good enough” returns to achieve financial goals. I believe I will receive “good enough” returns because I believe in the upward trajectory of the market as a whole. If the belief is incorrect, I will not do well.

This may of course be my lonely idea of why to use indexing / passive investing.
Hi!

Thank you so much for your kind words, and I appreciate the question. Average rate of return, in this context, refers to the average return earned by actively managed mutual funds as an asset category. Index funds have been shown to outperform the average rate of return of actively managed funds---and this gap becomes exponentially more apparent the longer the time window is extended. As the return earned by index funds lands near (not entirely meeting) the return of the respective index, this essentially means that the average actively managed fund trails the benchmark significantly. This is mainly due to the significant costs associated with actively managed funds.

When the basis of the comparison is the market (or market index), you are indeed right: index funds will never exceed the rate of return earned by the respective index. (If done correctly, they will also never significantly trail the respective index either.) In fact, index funds will never even fully match the rate of return earned by the index, because there will always be some measure of cost factored in (however minimal).

Thanks again for taking the time to read my little guide. I sincerely appreciate it.

All the best,
Sean
Last edited by Seananigans on Sat Feb 15, 2020 12:33 am, edited 1 time in total.

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Seananigans
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Re: Index Investing Primer (Request for feedback)

Post by Seananigans » Sat Feb 15, 2020 12:27 am

arcticpineapplecorp. wrote:
Fri Feb 14, 2020 10:02 pm
very nicely done. easy to understand and visually appealing presentation. hope others find it of value.
Thank you very much!!! I sincerely appreciate you taking the time out to read my little guide, and to let me know what you thought! I hope to help as many people as possible with it, and am glad to know that people are finding it useful!

All the best,
Sean

Topic Author
Seananigans
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Re: Index Investing Primer (Request for feedback)

Post by Seananigans » Sat Feb 15, 2020 12:36 am

Sairam wrote:
Fri Feb 14, 2020 10:36 pm
Thank you very much for sharing your work.
It was a good summary and very well written.
Was able to use your excel spreadsheet to help with my AA.
Thank you so much!! I really appreciate you taking the time to read it, as well as let me know what you thought! I'm also glad that the spreadsheet has helped you in tracking your AA! My wife and I have five retirement accounts in total, and I know I would be lost without some way to track things. Haha.

Thanks again, and I wish you all the best!

Sean

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Seananigans
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Re: Index Investing Primer (Request for feedback)

Post by Seananigans » Sat Feb 15, 2020 9:02 pm

I just wanted to post a quick note to say THANK YOU for all of the incredible feedback I've gotten on my little guide over the past few days. Your thought-provoking suggestions and kindness have meant more to me than you can know.

I've taken a lot of the feedback and reworked the guide, and wanted to point to the revision in case anyone wants it going forward. The link on my original post now points to the revision, and I also included a link to the portfolio tracking spreadsheet I mention in it.

You all inspire me, and I am grateful beyond words to be part of this community. Thank you.

Sean

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