Poll: Principles of Boglehead Philosophy

Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.

Principles of Boglehead Philosophy

Keep Investing Costs Low
230
28%
Use Index Funds
98
12%
Diversify Your Investments
112
14%
Manage Investment Risk Carefully
11
1%
Slice and Dice for Better Returns
2
0%
Simplify Investing
30
4%
Stay The Course
158
19%
Minimize Taxes on your Investments
11
1%
Market Timing
2
0%
Market Timing Only When the Signs are Overwhelming
1
0%
Set an Investment Plan and Stick To It
27
3%
Live Below Your Means
86
10%
Live Frugally
4
0%
Ignore The Noise
25
3%
Stay Out Of Debt
10
1%
Manage Debt Prudently
6
1%
Invest As Much Money As You Can
11
1%
Concentrate on Domestic Investments
0
No votes
International Investments are Important
1
0%
Other (please specify)
4
0%
 
Total votes: 829

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VictoriaF
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Re: Poll: Principles of Boglehead Philosopy

Post by VictoriaF » Sat Jan 24, 2015 1:55 pm

Petrocelli wrote:
hornet96 wrote:So yes, I voted for "living below your means" as a Boglehead principle. Without that, nearly every other principle breaks down.
So "living below your means" isn't equated with being frugal? I can wear a Rolex and still be a Boglehead? That's good news.
If you Live Beyond Your Means (the other LBYM), buy a $10k watch, and engrave "Boglehead" on it--is it a Boglehead watch?

Victoria
Last edited by VictoriaF on Sat Jan 24, 2015 2:16 pm, edited 1 time in total.
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hornet96
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Re: Poll: Principles of Boglehead Philosopy

Post by hornet96 » Sat Jan 24, 2015 1:59 pm

Petrocelli wrote:
hornet96 wrote:
Petrocelli wrote:I don't think an investing philosophy should involve spending. That's a separate thing entirely. If you are a good saver, and have a good income, you can spend like a drunken sailor and still follow every precept of Boglehead investing.
So in other words, you actually agree since the drunken sailor, by default, must be living below his means in order to be saving anything.

If you spend more than you earn, the rest of the conversation about Boglehead "investing" principles becomes moot. If you spend down your portfolio too aggressively in retirement, you are living above your means and again the investing principles become moot.

So yes, I voted for "living below your means" as a Boglehead principle. Without that, nearly every other principle breaks down.
So "living below your means" isn't equated with being frugal? I can wear a Rolex and still be a Boglehead? That's good news.
By definition, you are correct. If you truly have the means to buy a Rolex, then by all means wear one. The key is in truly understanding what your "means" really are. And those means may change over time.

"Being frugal" has a different meaning depending on what your "means" are. I have a feeling that being frugal means something different to Warren Buffett than it does to me. :wink:

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Re: Poll: Principles of Boglehead Philosopy

Post by Munir » Sat Jan 24, 2015 2:18 pm

lack_ey wrote:
Grt2bOutdoors wrote:Keep Investing Costs Low, Diversify Your Investments, Stay the Course! Carry on!
Voted the same.

Indexing is really a tool—and not necessarily the only one—for implementing the first two.

Really, I think keeping taxes low should be a poll response as well unless you lump that in with keeping costs low.
Maybe using index funds is intended to mean "use passive investments". I would prefer the latter wording and add "if possible".

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Re: Poll: Principles of Boglehead Philosopy

Post by Johno » Sat Jan 24, 2015 3:45 pm

hornet96 wrote:
Petrocelli wrote:
hornet96 wrote:
Petrocelli wrote:I don't think an investing philosophy should involve spending. That's a separate thing entirely.
So in other words, you actually agree since the drunken sailor, by default, must be living below his means in order to be saving anything.

So yes, I voted for "living below your means" as a Boglehead principle. Without that, nearly every other principle breaks down.
So "living below your means" isn't equated with being frugal? I can wear a Rolex and still be a Boglehead? That's good news.
1. By definition, you are correct. If you truly have the means to buy a Rolex, then by all means wear one. The key is in truly understanding what your "means" really are. And those means may change over time.

2. "Being frugal" has a different meaning depending on what your "means" are. I have a feeling that being frugal means something different to Warren Buffett than it does to me. :wink:
1. I think you, I and he basically agree on this

2. But I don't think everyone who considers themselves a BH does. To take the example of Buffett, who some here treat as a semi-deity, I don't think you'd ever see him flashing a Rolex at least in public (there's the separate sometimes contentious debate whether or to what degree the public Buffett is a PR act; I personally guess the PR Buffett and the real Buffett have a good deal in common even if not really the same person either).

There's a certain idea not infrequently expressed here that BH-ian frugality should be at least partly an absolute, a neo-Calvinist/Puritanical kind of vibe. Someone said it on a 'personal finance ' thread just recently, something like 'frugality is a mindset whether you make $50k or $50mil a year' clarifying that that didn't just mean $50k person spending only $35k on consumption and the $50mil person spending $35mil on consumption, by giving examples like 'avoid eating out because it's cheaper to buy raw ingredients and cook'. And of course you *do* save money by not eating out no matter how much you make, it's just that it's an eventually trivial difference the more you make, and a trivial difference is just...trivial. And you might agree, but I don't think that's unanimous among BH's.

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Re: Poll: Principles of Boglehead Philosophy

Post by bengal22 » Sat Jan 24, 2015 4:17 pm

I still prefer living within your means. I care about the BH philosophy because it enables me to enjoy the things that I enjoy. I think living a frugal lifestyle where one lives below their means is wasting an awful lot of good years. Work hard/smart to have a great income, save to a reasonable goal, and live your life well. Not a big fan of delayed gratification. I think the whole frugality thing has been unofficially added on to the BH philosophy.
"Earn All You Can; Give All You Can; Save All You Can." .... John Wesley

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Re: Poll: Principles of Boglehead Philosophy

Post by Petrocelli » Sat Jan 24, 2015 6:48 pm

Two thoughts:

1. The problem I have is the word "below" in the phrase "live below your means." I would say a person should "live within your means."

2. How Buffett or Bogle spend their money or run their lives has nothing to do with how I live mine. For crying out loud, Buffett was pretty much a polygamist. No wonder his wives didn't get him a Rolex.

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Re: Poll: Principles of Boglehead Philosopy

Post by YDNAL » Sun Jan 25, 2015 7:41 am

VictoriaF wrote:
YDNAL wrote:Nonsense.

The Boglehead philosophy isn't about "having fun" with it, or about "goals, fantasy."

The philosophy is an activity of thought meant to guide action all of the time. "The most effective number to focus on" is ALL.
Previously, YDNAL wrote:10 Principles of the Bogleheads investment philosophy......
You treat this thread as the "Bogleheads Doctrine." For me, it's a guide for prioritizing Bogleheads' principles. Nonsense is in the eyes of the beholder. (emphasis added)
Negative... no doctrine, instead an activity of thought meant to guide action all of the time (as stated).

That said, it makes NO SENSE to "prioritize" looking at expense ratios down to the fourth decimal place (0.0010 vs. 0.0005, for instance) while at the same time *unnecessarily* paying 25% (or whatever) in taxes on earnings, or to attempt timing the market when we know odds of consistent success are against us.
VictoriaF » Fri Jan 23, 2015 2:18 pm wrote:I voted for:
1. Keep investing costs low
2. Stay the course
3. Other (please specify)
Lastly, a philosophy is not "10 long-term goals [that] will remain a fantasy; if you focus on achieving three things (or fewer), you are much more likely to get there."
VictoriaF » Fri Jan 23, 2015 8:59 pm wrote:Ten, eleven, or whatever is the right number of the Bogleheads principles, provide a comprehensive view of one's personal financial management. Perhaps, things like adequate insurance and estate planning belong here, too.

However, the most effective number to focus on is THREE. If you have a list of 10 items on your daily to-do list, you may not complete any of them by the end of the day; if you have three items you will have all of them done. If you have 10 long-term goals, they will remain a fantasy; if you focus on achieving three things (or fewer), you are much more likely to get there.
Landy | Be yourself, everyone else is already taken -- Oscar Wilde

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Re: Poll: Principles of Boglehead Philosophy

Post by nisiprius » Sun Jan 25, 2015 8:17 am

There's a sort of wise joke that's been going the rounds--I heard it in connection with barbershop quartetting. The story goes by asserting that someone asked [insert famous barbershop quartet here] how they got to be so good. The spokesperson says,

"Oh, it's simple. We had a plan. Back in 2005 we made a list of 100 things about our performance that needed improvement, in order of priority. Then we focussed our attention solely on improving the highest priority issue, until we nailed it, then moved on to the next, and so on."

"Amazing. So you just went down the list and knocked off 100 issues one by one?"

"No, so far we haven't gotten beyond #4."
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.

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Re: Poll: Principles of Boglehead Philosopy

Post by VictoriaF » Sun Jan 25, 2015 8:24 am

YDNAL wrote:
VictoriaF wrote:
YDNAL wrote:Nonsense.

The Boglehead philosophy isn't about "having fun" with it, or about "goals, fantasy."

The philosophy is an activity of thought meant to guide action all of the time. "The most effective number to focus on" is ALL.
Previously, YDNAL wrote:10 Principles of the Bogleheads investment philosophy......
You treat this thread as the "Bogleheads Doctrine." For me, it's a guide for prioritizing Bogleheads' principles. Nonsense is in the eyes of the beholder. (emphasis added)
Negative... no doctrine, instead an activity of thought meant to guide action all of the time (as stated).

That said, it makes NO SENSE to "prioritize" looking at expense ratios down to the fourth decimal place (0.0010 vs. 0.0005, for instance) while at the same time *unnecessarily* paying 25% (or whatever) in taxes on earnings, or to attempt timing the market when we know odds of consistent success are against us.
VictoriaF » Fri Jan 23, 2015 2:18 pm wrote:I voted for:
1. Keep investing costs low
2. Stay the course
3. Other (please specify)
Lastly, a philosophy is not "10 long-term goals [that] will remain a fantasy; if you focus on achieving three things (or fewer), you are much more likely to get there."
VictoriaF » Fri Jan 23, 2015 8:59 pm wrote:Ten, eleven, or whatever is the right number of the Bogleheads principles, provide a comprehensive view of one's personal financial management. Perhaps, things like adequate insurance and estate planning belong here, too.

However, the most effective number to focus on is THREE. If you have a list of 10 items on your daily to-do list, you may not complete any of them by the end of the day; if you have three items you will have all of them done. If you have 10 long-term goals, they will remain a fantasy; if you focus on achieving three things (or fewer), you are much more likely to get there.

1. Keeping expenses low is the cornerstone of the Bogleheads philosophy.
- Implementation of low-cost index funds is Jack Bogle's main contribution to personal finance.
- "Low cost" is not the same as the "lowest cost."

2. For most Boglehead newcomers, the best first step is to leave their advisers and high-expense funds and move their money to Vanguard.
- If the immediate transfer to Vanguard is not prudent due to capital gains or termination fines, start putting new money to Vanguard.
- For a new investor, investing in Vanguard should come first and optimizing taxes can be addressed later.

3. Goals are not equivalent to philosophy. However, this poll combines the elements of both:
- For an experienced Boglehead, it's an expression of his views on the key features of the community.
- For a new Boglehead, it's a guide to getting started.

Victoria
WINNER of the 2015 Boglehead Contest. | Every joke has a bit of a joke. ... The rest is the truth. (Marat F)

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Re: Poll: Principles of Boglehead Philosophy

Post by JPH » Sun Jan 25, 2015 8:26 am

"Live below your means" is my #!. If I hadn't done that I would not have had anything to invest. "Avoid debt" is #2. Going into debt is about the most self-destructive financial move one can make. My #3 is "Avoid the noise." This seems similar to "Stay the course," but for me has a more specific meaning.
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Re: Poll: Principles of Boglehead Philosopy

Post by YDNAL » Sun Jan 25, 2015 9:17 am

VictoriaF wrote:1. Keeping expenses low is the cornerstone of the Bogleheads philosophy.
- Implementation of low-cost index funds is Jack Bogle's main contribution to personal finance.
- "Low cost" is not the same as the "lowest cost."

2. For most Boglehead newcomers, the best first step is to leave their advisers and high-expense funds and move their money to Vanguard.
- If the immediate transfer to Vanguard is not prudent due to capital gains or termination fines, start putting new money to Vanguard.
- For a new investor, investing in Vanguard should come first and optimizing taxes can be addressed later.

3. Goals are not equivalent to philosophy. However, this poll combines the elements of both:
- For an experienced Boglehead, it's an expression of his views on the key features of the community.
- For a new Boglehead, it's a guide to getting started.

Victoria
Huh?

1. A philosophy can (and should) be applicable to all level of savers/investors -- new or experienced.
Previously, YDNAL wrote:10 Principles of the Bogleheads investment philosophy.

Code: Select all

1 Develop a workable plan
2 Invest early and often
3 Never bear too much or too little risk
4 Diversify
5 Never try to time the market
6 Use index funds when possible
7 Keep costs low
8 Minimize taxes
9 Invest with simplicity
10 Stay the course
2. Vanguard is not the only index fund, low cost provider.

3. You equated 10 principles** of BH philosophy to "goals"
VictoriaF » Fri Jan 23, 2015 8:59 pm wrote:Ten, eleven, or whatever is the right number of the Bogleheads principles, provide a comprehensive view of one's personal financial management. Perhaps, things like adequate insurance and estate planning belong here, too.

... If you have 10 long-term goals, they will remain a fantasy; if you focus on achieving three things (or fewer), you are much more likely to get there.
** A Forum concensus the last 3 years (no edits).
nisiprius wrote:...Dan Kohn did the first draft, many edits by (in alphabetical order) Barry Barnitz, CyberBob, Kevin M, louis c, LadyGeek, Linuxizer, and Stickman:

The first draft originally had only five points:
1 Save a lot
2 Asset Allocation (Holding Bonds) Is Essential
3 Buy Low Cost Index Funds Covering the Whole Stock Market
4 Tax Efficiency Matters
5 Stay the Course
The expansion to 10 points occurred in 25 March 2012 and was mostly the work of Barry Barnitz.
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VictoriaF
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Re: Poll: Principles of Boglehead Philosophy

Post by VictoriaF » Sun Jan 25, 2015 9:50 am

Landy,

For any abstract concept, there is a spectrum of descriptions. In the case of the Bogleheads philosophy, this spectrum may include the following (from the least to the most comprehensive):
1. A single the most important principle.
2. Three most important principles.
3. Five-to-ten most important principles.
4. Ten most important principles, as described in the Bogleheads Wiki.
5. A paper describing a practical implementation of the Bogleheads philosophy.
6. An expanded paper describing a practical implementation of the Bogleheads philosophy, including use cases and what-if scenarios.
7. A book on implementing the Bogleheads philosophy.

Each level of description is valid when it's appropriate for the level of the discussion. This particular poll asked for the top-three, and the voting has produced the top three principles.

I disagree with you that any discussion of the Bogleheads philosophy must address all ten principles listed in the Wiki. In some contexts, it's very useful; in others, it's too much information.

Victoria
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Re: Poll: Principles of Boglehead Philosophy

Post by YDNAL » Sun Jan 25, 2015 10:16 am

VictoriaF wrote:I disagree with you that any discussion of the Bogleheads philosophy must address all ten principles listed in the Wiki. In some contexts, it's very useful; in others, it's too much information.
We shall remain in disagreement, because a philosophy is a comprehensive (and non-exclusive) body of principles -- whether it relates to our investing lives or personal lives.
VictoriaF wrote:For any abstract concept, there is a spectrum of descriptions. In the case of the Bogleheads philosophy, this spectrum may include the following (from the least to the most comprehensive):
1. A single the most important principle.
2. Three most important principles.
3. Five-to-ten most important principles.
4. Ten most important principles, as described in the Bogleheads Wiki.
5. A paper describing a practical implementation of the Bogleheads philosophy.
6. An expanded paper describing a practical implementation of the Bogleheads philosophy, including use cases and what-if scenarios.
7. A book on implementing the Bogleheads philosophy.
In our personal lives, our hygiene philosophy should include brushing the teeth and cleaning our bodies -- hopefully all Bogleheads do both, and without ranking. :beer
Last edited by YDNAL on Sun Jan 25, 2015 10:19 am, edited 1 time in total.
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Re: Poll: Principles of Boglehead Philosophy

Post by bengal22 » Sun Jan 25, 2015 10:19 am

Live below your means is not even on the top 10 WIKI list. It does state "save all you can" but I think the emphasis is a lot different. I think some have kidnapped the BH philosophy and emphasized a frugal life style.

I think the key is to live a balanced life throughout our life span(accumulation and retirement) and not a frugal monk-like existence. Just saying.
"Earn All You Can; Give All You Can; Save All You Can." .... John Wesley

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Re: Poll: Principles of Boglehead Philosopy

Post by minesweep » Sun Jan 25, 2015 11:09 am

Dulocracy wrote:
Grt2bOutdoors wrote:Keep Investing Costs Low, Diversify Your Investments, Stay the Course! Carry on!
I feel accomplished. Those are precisely the three for which I voted. If my answers are the same as Grt2bOutdoors, then I feel like I am on the right path.
Double Ditto!

I didn't choose "Live Below Your Means" because I'm retired (with Vanguard Admiral status.) So for me, It doesn't rank up there in the top 3 because I feel that I've won the game.

Mike

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Re: Poll: Principles of Boglehead Philosophy

Post by Munir » Mon Jan 26, 2015 1:10 pm

Low-cost diversified passive investing sums it up for me. My life-style has nothing to do with being a BH even though I think $5K watches are a waste of money (and ostentatious).

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Re: Poll: Principles of Boglehead Philosophy

Post by Johno » Mon Jan 26, 2015 2:06 pm

bengal22 wrote:Live below your means is not even on the top 10 WIKI list. It does state "save all you can" but I think the emphasis is a lot different. I think some have kidnapped the BH philosophy and emphasized a frugal life style.
I agree. Or at least there's a substantial cadre of people who post on this forum who are committed to a (n absolute terms, not just spending a fixed % below income) frugal life style. I suppose they don't all consider it as a necessarily part of the 'BH philosophy' though to be fair. Perhaps they're just frugal and BH's, separately, in their own view.

This potential divide might have been illustrated better by options of 'live within your means' v 'live frugally' in the poll. 'Live below your means' can be interpreted various ways, either 'below you means enough to save what you need to save' (which I would say is *within* your means); or 'everyone should keep their thermostat set annoying low in the winter, never buy books but always borrow from the library, drive junker cars into the ground etc no matter how much money they have because that's just the right way to live, just because'. Exaggerating a little on latter, but not much. :D

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Re: Poll: Principles of Boglehead Philosophy

Post by AviN » Tue Feb 03, 2015 12:46 pm

To me, Boglehead investing is evidence-based investing. All investing ideas are considered here as long as they are supported by evidence. :)

Avi

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Re: Poll: Principles of Boglehead Philosophy

Post by fanmail » Tue Feb 03, 2015 12:55 pm

Keep investing costs low
Stay the course
Live below your means

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