'Play Money' - why 5%?
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'Play Money' - why 5%?
I've read several threads that have discussed 'play money' - ie speculating with a small portion of the portfolio. I don't want to use this thread to discuss whether or not that is a good idea, but to ask if anyone has information on where the frequently used 5% figure comes from. I know that it is traced back to Jack Bogle himself, but I haven't been able to find any specific justification for 5% (as opposed to 1%, or 10%, or 50% for that matter).
This is striking to me, given how closely studied and analyzed all of the other aspects of investments are by the posters on this forum. Is anyone aware of any studies out there about 'play money', and its effects on overall returns? And can anyone point me to the rational basis underlying the 5% rule of thumb?
This is striking to me, given how closely studied and analyzed all of the other aspects of investments are by the posters on this forum. Is anyone aware of any studies out there about 'play money', and its effects on overall returns? And can anyone point me to the rational basis underlying the 5% rule of thumb?
Re: 'Play Money' - why 5%?
I would suggest that 5% is just a "rule of thumb". It is large enough to not be trivial, but small enough to not have a major impact on your portfolio if things go terribly wrong.
Jeff
Jeff
Re: 'Play Money' - why 5%?
I have 0% play money. I think 5% or whatever is just a way to let people off the hook.
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Re: 'Play Money' - why 5%?
I agree, and the whole concept of 'play money' is strange and un-Bogleheadesque to me... That said, I'd love to find out if there is any justification for the 5% idea, or if it was just a WAG made by Bogle.livesoft wrote:I have 0% play money. I think 5% or whatever is just a way to let people off the hook.
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Re: 'Play Money' - why 5%?
I get that, but why specifically 5%?jsl11 wrote:I would suggest that 5% is just a "rule of thumb". It is large enough to not be trivial, but small enough to not have a major impact on your portfolio if things go terribly wrong.
Jeff
Why not 4%? 6%? 10%?
This is maddeningly imprecise, in a forum that tends to look on loose thinking with scepticism.
Re: 'Play Money' - why 5%?
OK, use 5.367%happyisland wrote:I get that, but why specifically 5%?jsl11 wrote:I would suggest that 5% is just a "rule of thumb". It is large enough to not be trivial, but small enough to not have a major impact on your portfolio if things go terribly wrong.
Jeff
Why not 4%? 6%? 10%?
This is maddeningly imprecise, in a forum that tends to look on loose thinking with scepticism.
I always wanted to be a procrastinator.
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Re: 'Play Money' - why 5%?
Sure, as long as you tell me why!Sidney wrote:OK, use 5.367%happyisland wrote:I get that, but why specifically 5%?jsl11 wrote:I would suggest that 5% is just a "rule of thumb". It is large enough to not be trivial, but small enough to not have a major impact on your portfolio if things go terribly wrong.
Jeff
Why not 4%? 6%? 10%?
This is maddeningly imprecise, in a forum that tends to look on loose thinking with scepticism.
Re: 'Play Money' - why 5%?
How would 50% play money make sense while saying "- ie speculating with a small portion of the portfolio" ?happyisland wrote:I've read several threads that have discussed 'play money' - ie speculating with a small portion of the portfolio. I don't want to use this thread to discuss whether or not that is a good idea, but to ask if anyone has information on where the frequently used 5% figure comes from. I know that it is traced back to Jack Bogle himself, but I haven't been able to find any specific justification for 5% (as opposed to 1%, or 10%, or 50% for that matter).
That said, these rules of thumb are repeated, and repeated, until becoming popularized; and 5% is not materially different than 4% or 6% - so there is nothing special about 5%.
I found this from Jack Bogle
....I'd say if you have a gambling instinct (and most people do) at least start off in an index fund period and for five years don't do anything else. And then look around. See what's happened in the five years. See how it felt when the market dropped 50%. See how it felt when it came back. And those five-year periods are going to be very different from one investor to another because they're all over time. Then when you get there, 5% in the funny-money account...
Last edited by YDNAL on Sun Sep 28, 2014 3:09 pm, edited 1 time in total.
Landy |
Be yourself, everyone else is already taken -- Oscar Wilde
Re: 'Play Money' - why 5%?
There really is no reason, it is just the figure that many people arbitrarily agree upon, like age in bonds or age-10 in bonds. It happens to be the area where many people are comfortable, the only way to understand it would be to understand the complex interplay between our culture and the human brain in economics. Other cultures such as Japan might not consider any amount of play money acceptable. Obviously many non-bogle investors think that going 100% into a crazy scheme (or more, some borrow money) is reasonable.
For my part, I say you would have more fun using that 5% to try and find new sources of income. Buy water in bulk and sell it at a local sports game. Or invest in a vending machine. If you really don't need the 5%, spend it on vacation or good food.
For my part, I say you would have more fun using that 5% to try and find new sources of income. Buy water in bulk and sell it at a local sports game. Or invest in a vending machine. If you really don't need the 5%, spend it on vacation or good food.
70% Global Stocks / 30% Bonds
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Re: 'Play Money' - why 5%?
Given that people obsess over whittling down their expense ratios to nothing, it is just strange to me that everyone is fine with saying "go ahead and speculate with a randomly chosen percentage of your portfolio".YDNAL wrote:How would 50% play money make sense while saying "- ie speculating with a small portion of the portfolio" ?happyisland wrote:I've read several threads that have discussed 'play money' - ie speculating with a small portion of the portfolio. I don't want to use this thread to discuss whether or not that is a good idea, but to ask if anyone has information on where the frequently used 5% figure comes from. I know that it is traced back to Jack Bogle himself, but I haven't been able to find any specific justification for 5% (as opposed to 1%, or 10%, or 50% for that matter).
That said, these rules of thumb are repeated, and repeated, until becoming popularized; and 5% is not materially different than 4% or 6% - so there is nothing special about 5%.
Re: 'Play Money' - why 5%?
And no more or less precise.YDNAL wrote:5% is not materially different than 4% or 6% - so there is nothing special about 5%.
I think 5% is probably just a convenient number for people to think about. The mind anchors on 1, 5, 10 and 20, 25 (when was the last time you used a $4 bill?)
10% feels like it is too much to call "play", 1% -- why bother.
Disclosure, I don't have any "play" money.
I always wanted to be a procrastinator.
Re: 'Play Money' - why 5%?
I believe that you are incorrectly implying that it is actively encouraged for others "to go ahead and speculate...." Whomever wants to speculate, it should insignificant as if it blows-up, it doesn't also blow-up the entire savings plan.happyisland wrote:Given that people obsess over whittling down their expense ratios to nothing, it is just strange to me that everyone is fine with saying "go ahead and speculate with a randomly chosen percentage of your portfolio".YDNAL wrote:How would 50% play money make sense while saying "- ie speculating with a small portion of the portfolio" ?happyisland wrote:I've read several threads that have discussed 'play money' - ie speculating with a small portion of the portfolio. I don't want to use this thread to discuss whether or not that is a good idea, but to ask if anyone has information on where the frequently used 5% figure comes from. I know that it is traced back to Jack Bogle himself, but I haven't been able to find any specific justification for 5% (as opposed to 1%, or 10%, or 50% for that matter).
That said, these rules of thumb are repeated, and repeated, until becoming popularized; and 5% is not materially different than 4% or 6% - so there is nothing special about 5%.
Landy |
Be yourself, everyone else is already taken -- Oscar Wilde
Re: 'Play Money' - why 5%?
I posted this in another thread: Subject: How I beat Indexing... in 1 hour
LadyGeek wrote:Hi Happy! It comes from John Bogle himself, see the wiki: Variations on Bogleheads® investing
Wiki footnote wrote:John Bogle says that investors with an itch for speculating can allocate 5% of a portfolio to a "funny money" account.
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Re: 'Play Money' - why 5%?
I started this thread since I didn't want to hijack that one with my own tangent. Thanks for tracking me down over here. I'm still trying (and failing) to find a reason for the 5% rule of thumb. It appears there might not be one...LadyGeek wrote:I posted this in another thread: Subject: How I beat Indexing... in 1 hour
LadyGeek wrote:Hi Happy! It comes from John Bogle himself, see the wiki: Variations on Bogleheads® investing
Wiki footnote wrote:John Bogle says that investors with an itch for speculating can allocate 5% of a portfolio to a "funny money" account.
Re: 'Play Money' - why 5%?
Since we are pointing to Jack Bogle's take of "funny money," did you read the link I provided?happyisland wrote:I started this thread since I didn't want to hijack that one with my own tangent. Thanks for tracking me down over here. I'm still trying (and failing) to find a reason for the 5% rule of thumb. It appears there might not be one...
Landy |
Be yourself, everyone else is already taken -- Oscar Wilde
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Re: 'Play Money' - why 5%?
Thanks - yes, I did. I understand that the 5% is not meant as an encouragement to inefficient speculation, but rather as a method to wean someone off of a gambling habit. Some of my confusion might come from the tone in some of the threads on this forum, where people proudly discuss their 5% play money allocations as if they are being truly rational investors, since they are following the letter of the Boglehead law.YDNAL wrote: Since we are pointing to Jack Bogle's take of "funny money," did you read the link I provided?
Re: 'Play Money' - why 5%?
Not everyone is fine with it, many here feel that anything more than 0% is nonsensical, and there is no reason for the 5%, it's simply a randomly chosen number and looking for some deeper meaning isn't going to yield anything.happyisland wrote:...it is just strange to me that everyone is fine with saying "go ahead and speculate with a randomly chosen percentage of your portfolio".
Re: 'Play Money' - why 5%?
The real answer is because the human has 5 fingers on each hand. That is the reason we use the base-10 number system instead of binary, hexadecimal, base-12, roman numerals, or some other alternative. The property of adding a "0" when you multiply by 10, etc are just properties of this particular numbering system we choose to use. And the reason we choose it is because we have 10 fingers to count on.
I'm just a fan of the person I got my user name from
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Re: 'Play Money' - why 5%?
This is my answer then - the 5% is just Bogle's guess as to what might satisfy a gambler's (self-destructive) instinct. I wonder if his 'play money' advice has been helpful on the whole, or if recommending a cold-turkey approach would have been more helpful overall. I guess the answer to this one would have to come from psychologists who study gambling behavior.John3754 wrote:Not everyone is fine with it, many here feel that anything more than 0% is nonsensical, and there is no reason for the 5%, it's simply a randomly chosen number and looking for some deeper meaning isn't going to yield anything.happyisland wrote:...it is just strange to me that everyone is fine with saying "go ahead and speculate with a randomly chosen percentage of your portfolio".
On these forums, the advice seems to have the unintended consequence of occasionally being used by speculators as a justification of gambling. Something like "Bogle said it's ok to speculate, so my speculation is rational".
Re: 'Play Money' - why 5%?
I assume it's because you'd probably not feel any major life impact if you lost 5% of your money. Obviously it's not a precise number - just a guideline.
Re: 'Play Money' - why 5%?
When it comes to asset allocation almost everything is imprecise. Rounding to the nearest 5% simplifies the arithmetic and avoids creating the false impression that we can fine-tune allocations with any accuracy. In contrast, we can measure expense ratios down to the last basis point (although I do think some people obsess too much about small differences there).
I don't invest any play money. I go and spend it on something I expect to enjoy
I don't invest any play money. I go and spend it on something I expect to enjoy
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Re: 'Play Money' - why 5%?
I don't think there's any rationale for it, except that if you are investing in stocks as conservatively as possible, you are already expecting to see 1% fluctuations day to day--the standard deviation of daily S&P 500 returns is 1%. And you should expect experience numerous short-term drops of much more than 5%. So if you truly have a serious way of limiting your "play money" losses to 5%, it can be argued that it's a small additional risk compared to the risks you are taking on by simply investing in the stock market.
I think that's absolutely all there is to it. A percentage number that almost everyone agrees is small compared to more or less normal market movements.
You didn't want to hear this, but I think it is important to note that people who say things like
The quotes are from Allan Roth. I'm getting an error message from the site right now, but the source of the quotations is http://www.etf.com/sections/index-inves ... folio.html
I think that's absolutely all there is to it. A percentage number that almost everyone agrees is small compared to more or less normal market movements.
You didn't want to hear this, but I think it is important to note that people who say things like
never seem to spell out what you do if in fact you lose all of that 5%. I don't believe they truly think it will happen, so they don't make plans for it. The reason that this is important is that the defense of the practice is that you have limited your losses to 5%. But unless you've spelled out what you do if you lose that 5%, you haven't limited your losses. The sentence I quoted is from a person who also saidif there is an inner gambler in you, go for it, but do it with preset rules that will minimize your losses. Typically, the gambling portion allocated should be no more than 5 percent of your portfolio
In a person who "can't resist acting on the thrill-seeking urge," I don't think a 5% loss will suddenly kill that urge or give them the ability to resist. I think it is far more likely that they will wait a while for the pain to subside and begin again with a fresh 5%--or, worse yet, find that the pain is so bad that they will double and redouble their bets in order to recoup.beneath my dull exterior beats the heart of a gambler who just can’t resist acting on the thrill-seeking urge.
The quotes are from Allan Roth. I'm getting an error message from the site right now, but the source of the quotations is http://www.etf.com/sections/index-inves ... folio.html
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.
Re: 'Play Money' - why 5%?
Wanting a terrifically precise reason for the terricially precise amount of exactly 5% for play money makes me think you must rebalance every day to stay at exactly 60/40 stock/bond.
Am I close? Do you rebalance every day? Of course not.
There is a reasonable amount of information that shows 5% one way or another in one's portfolio doesn't really have much impact. See Bernstein for more details.
Its just meant to be a small / modest / tiny / insignificant amount of money. A dollop. A smidge. A rounding error. Its something.
Am I close? Do you rebalance every day? Of course not.
There is a reasonable amount of information that shows 5% one way or another in one's portfolio doesn't really have much impact. See Bernstein for more details.
Its just meant to be a small / modest / tiny / insignificant amount of money. A dollop. A smidge. A rounding error. Its something.
Re: 'Play Money' - why 5%?
The concept is, alas, lost to historians. Ancient Egyptians used the 5% rule when burying artifacts (as in "if it's lost and forgotten, never mind."). Romans used it when designing aqueducts (5% loss of water, no biggee). Military historians chalk it up to "allowable losses". You get the drift. 5% is expendable.
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Re: 'Play Money' - why 5%?
I get it, but there's an interesting tension in Boglehead thinking between trying to squeeze out the last hundredths of a percent of ER, while simultaneously green-lighting yourself to burn up to 5% of your holdings.
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Re: 'Play Money' - why 5%?
We like to divide things into 5s and 10s because our first computers were 5 fingers on two hands.john94549 wrote:The concept is, alas, lost to historians. Ancient Egyptians used the 5% rule when burying artifacts (as in "if it's lost and forgotten, never mind."). Romans used it when designing aqueducts (5% loss of water, no biggee). Military historians chalk it up to "allowable losses". You get the drift. 5% is expendable.
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Re: 'Play Money' - why 5%?
There doesn't have to be a reason for everything.
Re: 'Play Money' - why 5%?
I have a question about the term "gambling" itself, as it is used in this thread: Are we talking about the highly speculative idea of going to Graham & Doddsville here? Or about max levered daytrading of commodities for 5 hours a day? I mean, what a BH calls gambling is probably not what non-BHs call gambling.happyisland wrote:[...] to burn up to 5% of your holdings.
Last edited by jaab on Sun Sep 28, 2014 6:21 pm, edited 1 time in total.
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Re: 'Play Money' - why 5%?
Well how much do you spend on your hobbies? That is something that varies considerably by person.happyisland wrote:I get it, but there's an interesting tension in Boglehead thinking between trying to squeeze out the last hundredths of a percent of ER, while simultaneously green-lighting yourself to burn up to 5% of your holdings.
To me, it seems like a hobby. People derive enjoyment, or intellectual satisfaction from looking at investments, the markets and picking out something they think will do well. Then you can see in real time how it did and for what reasons.
Some people actually do well with their play money. Some do not of course. Whatever the cost ends up being I think should be considered a hobby expense.
I mean if was into biotech for fun, I'd end up reading about all the related developments to the field. Same if it were energy or bitcoins or whatever.
Anyway, I am overweighted in emerging markets. Maybe that is my play money.
As for 5%, it seems too high to be a useful rule. 5% of my portfolio in something really risky would not be playing.
I don't see many Bogleheads saying don't ever spend your money. I see Bogleheads mostly saying be frugal and wise, and use your money carefully for a comfortable fulfilling life. So, I don't see play money as being inconsistent. Bogleheads sometimes get a nice car or bigger house or take a cruise or invest play money. If they are doing those things without having their financials in order, I'd be concerned.
Re: 'Play Money' - why 5%?
You are basing your argument on a broad generalization that is simply false.happyisland wrote:I get it, but there's an interesting tension in Boglehead thinking between trying to squeeze out the last hundredths of a percent of ER, while simultaneously green-lighting yourself to burn up to 5% of your holdings.
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Re: 'Play Money' - why 5%?
I'd be interested to hear what some of Wise Old Sages around here would say, but my personal opinion is that anything that is not invested according to boglehead principles is on the gambling spectrum. To me, gambling is risking money on deals that are sub-optimal, usually out of some combination of behavioral pitfalls. Even in the relatively harmless case where people slightly underperform index funds with a 'play money' move I would categorize the losses due to underperformance as gambling losses.jaab wrote:I have a question about the term "gambling" itself, as it is used in this thread: Are we talking about the highly speculative idea of going to Graham & Doddsville here? Or about max levered daytrading of commodities for 5 hours a day?happyisland wrote:[...] to burn up to 5% of your holdings.
But that's just my five percent two cents!
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Re: 'Play Money' - why 5%?
Reposting my thoughts from the other thread.
I think the logic behind the 5% is that in order to satisfy the speculation urge, an investor would need to feel that the possible gain is 'worth it' to satisfy their belief that it is possible to outperform the market. However, ideally it is not so much that the possible losses prevent achievement of their family retirement goals. For most people I would guess 5% about hits that sweet spot.
The idea is something like the logic why some will 'waste' 5% or more purchasing an annuity, when it is not the optimal spending of their investment capital. In one case you are betting on a superior return to satisfy a desire for risk, and in the other you are giving up some return in exchange for satisfying a need for security. One can argue that both satisfy an 'illogical emotional need' related to investing. However my DW points out that many consumer choices, cars, food, have as much emotional content as 'pure utility' content. Every coke purchase is half fizzy sugar water and half memories.
Ultimately one will be happier with both their investment financial needs and their investment emotional needs fulfilled. In one case you have an illogical need for perceived income safety and in the other an illogical need for the perceived possibility of outperforming the market.
I think the logic behind the 5% is that in order to satisfy the speculation urge, an investor would need to feel that the possible gain is 'worth it' to satisfy their belief that it is possible to outperform the market. However, ideally it is not so much that the possible losses prevent achievement of their family retirement goals. For most people I would guess 5% about hits that sweet spot.
The idea is something like the logic why some will 'waste' 5% or more purchasing an annuity, when it is not the optimal spending of their investment capital. In one case you are betting on a superior return to satisfy a desire for risk, and in the other you are giving up some return in exchange for satisfying a need for security. One can argue that both satisfy an 'illogical emotional need' related to investing. However my DW points out that many consumer choices, cars, food, have as much emotional content as 'pure utility' content. Every coke purchase is half fizzy sugar water and half memories.
Ultimately one will be happier with both their investment financial needs and their investment emotional needs fulfilled. In one case you have an illogical need for perceived income safety and in the other an illogical need for the perceived possibility of outperforming the market.
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Re: 'Play Money' - why 5%?
I am with you 100% about spending your money however you like. I know many people with hobbies that I think are far more wasteful than researching stocks. I guess the issue I have is with characterizing this 'play money' account as part of invested retirement assets. It seems safer to think of any 'play money' as a completely separate account. This might prevent 'doubling down', as nisiprius warned, and also force the 'player' to be honest with him or herself about what was really going on.in_reality wrote:Well how much do you spend on your hobbies? That is something that varies considerably by person.happyisland wrote:I get it, but there's an interesting tension in Boglehead thinking between trying to squeeze out the last hundredths of a percent of ER, while simultaneously green-lighting yourself to burn up to 5% of your holdings.
To me, it seems like a hobby. People derive enjoyment, or intellectual satisfaction from looking at investments, the markets and picking out something they think will do well. Then you can see in real time how it did and for what reasons.
Some people actually do well with their play money. Some do not of course. Whatever the cost ends up being I think should be considered a hobby expense.
I mean if was into biotech for fun, I'd end up reading about all the related developments to the field. Same if it were energy or bitcoins or whatever.
Anyway, I am overweighted in emerging markets. Maybe that is my play money.
As for 5%, it seems too high to be a useful rule. 5% of my portfolio in something really risky would not be playing.
I don't see many Bogleheads saying don't ever spend your money. I see Bogleheads mostly saying be frugal and wise, and use your money carefully for a comfortable fulfilling life. So, I don't see play money as being inconsistent. Bogleheads sometimes get a nice car or bigger house or take a cruise or invest play money. If they are doing those things without having their financials in order, I'd be concerned.
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Re: 'Play Money' - why 5%?
What leads you to believe everyone is fine with that?happyisland wrote:Given that people obsess over whittling down their expense ratios to nothing, it is just strange to me that everyone is fine with saying "go ahead and speculate with a randomly chosen percentage of your portfolio".
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Re: 'Play Money' - why 5%?
I now realize that they're not, and that the 5% suggestion is actually a way to try to get people to speculate less. The end goal being that people with the 'itch' to speculate can compare their 'play money' results to their index fund holdings' performance, realize the inefficiency of speculation, and move to a completely fact-based approach to investing.jstrazzere wrote:What leads you to believe everyone is fine with that?happyisland wrote:Given that people obsess over whittling down their expense ratios to nothing, it is just strange to me that everyone is fine with saying "go ahead and speculate with a randomly chosen percentage of your portfolio".
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Re: 'Play Money' - why 5%?
How often do you see people posting retirement assets that include 'play money'? I haven't seen it myself actually.happyisland wrote: I guess the issue I have is with characterizing this 'play money' account as part of invested retirement assets. It seems safer to think of any 'play money' as a completely separate account. This might prevent 'doubling down', as nisiprius warned, and also force the 'player' to be honest with him or herself about what was really going on.
I've never seen anyone say "keep 5% allocated to play and then rebalance into it".
I've only seen it suggested that if you are going to play, that it be a set amount and if you lose it, it's gone.
[but of course with any gambling the thrill of playing might be too much to resist and stopping]
Last edited by in_reality on Sun Sep 28, 2014 7:01 pm, edited 1 time in total.
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Re: 'Play Money' - why 5%?
Alternatively, we think 5% is an allowable loss because we have 20 digits total and we can survive the loss of a finger or toe fairly well.Christine_NM wrote:We like to divide things into 5s and 10s because our first computers were 5 fingers on two hands.john94549 wrote:The concept is, alas, lost to historians. Ancient Egyptians used the 5% rule when burying artifacts (as in "if it's lost and forgotten, never mind."). Romans used it when designing aqueducts (5% loss of water, no biggee). Military historians chalk it up to "allowable losses". You get the drift. 5% is expendable.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.
Re: 'Play Money' - why 5%?
I chose 5% because it's a nice round number, and if things did go wrong (and they have sometimes), it's not the end of the world. I do it, not because it's rational, but because it satiates my appetite for risk. With all my other money I'm very conservative and adhere to the Boglehead rules pretty strictly.
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Re: 'Play Money' - why 5%?
Not a big toe! You'll lose your balance.nisiprius wrote:Alternatively, we think 5% is an allowable loss because we have 20 digits total and we can survive the loss of a finger or toe fairly well.
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Re: 'Play Money' - why 5%?
5% seems a little vague to me. What is "less risky" 5% in one stock or 1% each in 10 stocks?
Re: 'Play Money' - why 5%?
I use 5% to invest in speculative stocks - it paid off with TSLA, but it isn't always going to be like that. I use 5% because even if I lose the entire amount (not likely to happen in 1 year, but not impossible), the amount lost will not set you back significantly (especially if the company goes under after the course of say 5 years after investment). Depends on your risk tolerance though.
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Re: 'Play Money' - why 5%?
Yeah I get no "fun" from trying to pick stocks (or other gambling forms) so 100% is to plan.livesoft wrote:I have 0% play money. I think 5% or whatever is just a way to let people off the hook.
Re: 'Play Money' - why 5%?
TS,
In my case, to be precise, it is 10K.
A) It is much less than 5% of my total portfolio. Hence, I am comfortable in losing it.
B) I aim for 10X to 30X return. At 2K per stock, if I hit one of them, it will be 20K to 60K. Hence, it is big enough to worth my effort.
That is my logic.
KlangFool
In my case, to be precise, it is 10K.
A) It is much less than 5% of my total portfolio. Hence, I am comfortable in losing it.
B) I aim for 10X to 30X return. At 2K per stock, if I hit one of them, it will be 20K to 60K. Hence, it is big enough to worth my effort.
That is my logic.
KlangFool
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