Jack Bogle - Two Fund Portfolio

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Randtor
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Re: Jack Bogle - Two Fund Portfolio

Post by Randtor »

anon_investor wrote: Sun May 24, 2020 7:45 am
nanameg wrote: Sun May 24, 2020 7:17 am
columbia wrote: Sun May 24, 2020 6:25 am Boring old Balanced Index is only down 4% this year.
Yes. If I’ve decided against international funds is there any disadvantage to using this balanced index one fund approach as opposed to the 2 fund? I’m 64 and trying to find a true buy and hold strategy since I panicked in March and did our portfolio some real damage.

It might be better for me to just have one fund...but I don’t know if the balanced fund at 60/40 makes sense forever...into our 80’s and beyond if necessary.
The Vanguard Balanced Index Fund is a great set it and forget it investment if 60/40 is your desired asset allocation.
The balanced index fund (VBIAX) actually looks like a very good choice if 60/40 is your AA. In comparing this with VSMGX (Life Strategy Moderate Growth - see "longinvest"'s post on the one fund portfolio), it appears to be a better choice. I did a comparison on the VG website - easy enough for anyone to do - 4 funds.... VBIAX , VSMGX, and the 2 funds that are highly regarded in this thread - VBTLX (total bond) and VTSAX (total stock). In doing so, VBIAX makes a very good showing.

There are so many VG funds, I have to say I was unaware of this one. I will be researching it more today. I may end up shifting my thought process (based on this very preliminary evaluation) and use a one fund portfolio with VBIAX as my choice. Or -for the next 6 months or so - I could go 3 funds for comparison sake - VBIAX, VBTLX and VTSAX. It looks like the expense ratio is less for VBIAX than the combination of the other 2, and the volatility is not as much either.

The beauty of a one fund portfolio, as has been pointed out in various threads : if it contains stocks AND bonds, the fund can be held in taxable or non taxable, and there is no need for rebalancing, since that is taken care of by the fund managers.
Hmmm, food for thought!
"Whats done is done, and can't be undone"
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Re: Jack Bogle - Two Fund Portfolio

Post by ruralavalon »

Randtor wrote: Sun May 24, 2020 9:27 am
anon_investor wrote: Sun May 24, 2020 7:45 am
nanameg wrote: Sun May 24, 2020 7:17 am
columbia wrote: Sun May 24, 2020 6:25 am Boring old Balanced Index is only down 4% this year.
Yes. If I’ve decided against international funds is there any disadvantage to using this balanced index one fund approach as opposed to the 2 fund? I’m 64 and trying to find a true buy and hold strategy since I panicked in March and did our portfolio some real damage.

It might be better for me to just have one fund...but I don’t know if the balanced fund at 60/40 makes sense forever...into our 80’s and beyond if necessary.
The Vanguard Balanced Index Fund is a great set it and forget it investment if 60/40 is your desired asset allocation.
The balanced index fund (VBIAX) actually looks like a very good choice if 60/40 is your AA. In comparing this with VSMGX (Life Strategy Moderate Growth - see "longinvest"'s post on the one fund portfolio), it appears to be a better choice. I did a comparison on the VG website - easy enough for anyone to do - 4 funds.... VBIAX , VSMGX, and the 2 funds that are highly regarded in this thread - VBTLX (total bond) and VTSAX (total stock). In doing so, VBIAX makes a very good showing.

There are so many VG funds, I have to say I was unaware of this one. I will be researching it more today. I may end up shifting my thought process (based on this very preliminary evaluation) and use a one fund portfolio with VBIAX as my choice. Or -for the next 6 months or so - I could go 3 funds for comparison sake - VBIAX, VBTLX and VTSAX. It looks like the expense ratio is less for VBIAX than the combination of the other 2, and the volatility is not as much either.

The beauty of a one fund portfolio, as has been pointed out in various threads : if it contains stocks AND bonds, the fund can be held in taxable or non taxable, and there is no need for rebalancing, since that is taken care of by the fund managers.
Hmmm, food for thought!
For a taxable account you could consider Vanguard Tax-Managed Balanced Fund Admiral Shares (VTMFX) ER 0.09%, which has a 50/50 asset allocation.
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Taylor Larimore
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Balanced Funds?

Post by Taylor Larimore »

Bogleheads:

A single balanced fund holding stocks and bonds has the advantage of simplicity but the disadvantages of tax-inefficiency and a fixed asset-allocation.

Balanced funds belong in tax-advantaged accounts (IRAs; 401ks; etc.). However, if the investor is determined to use a balanced fund in a taxable account, consider Vanguard Tax-Managed Balanced Fund (VTMFX).

Best wishes
Taylor
Jack Bogle's Words of Wisdom: "Managed mutual funds are astonishingly tax-inefficient."
"Simplicity is the master key to financial success." -- Jack Bogle
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Re: Jack Bogle - Two Fund Portfolio

Post by longinvest »

Dear Randtor,
Randtor wrote: Sun May 24, 2020 9:27 am The balanced index fund (VBIAX) actually looks like a very good choice if 60/40 is your AA. In comparing this with VSMGX (Life Strategy Moderate Growth - see "longinvest"'s post on the one fund portfolio), it appears to be a better choice. I did a comparison on the VG website - easy enough for anyone to do - 4 funds.... VBIAX , VSMGX, and the 2 funds that are highly regarded in this thread - VBTLX (total bond) and VTSAX (total stock). In doing so, VBIAX makes a very good showing.
I would exercise great caution before acting on an intention to select between funds based on their past performance. Here's a link to an awesome post of forum founder and author Taylor Larimore about What Experts Say About "Past Performance" along with some excerpts:
Taylor Larimore wrote: Sun Jan 25, 2015 1:51 pm
[...]
Jack Bogle: "The biggest mistake investors make is looking backward at performance and thinking it’ll recur in the future." "No analysis of the past, no matter how painstaking, assures future superiority." "What comes out of the lab is seldom reflected in the real world."

Bogleheads' Guide to Investing: "Using past performance to pick tomorrow's winning mutual funds is such a bad idea that the government requires a statement similar to this: "Past performance is no guarantee of future performance." Believe it!"
[...]
Vanguard Study: "Persistence of performance among past winners is no more predictable than a flip of a coin."

Jason Zweig, author and Wall Street Journal columnist: "Buying funds based purely on their past performance is one of the stupidest things an investor can do."
[...]
Here are some facts about the two funds you compared. As of April 30, 2020, the Vanguard Balanced Index Fund (VBIAX) holds 3,187 stocks and 7,829 bonds, all domestic US securities. In contrast, the Vanguard LifeStrategy Moderate Growth Fund (VSMGX) holds 10,981 stocks and 15,573 bonds, partly domestic US (with a moderate home bias) and partly international (ex US) securities.

I suggest reading a post I wrote as reply to forum member Abuss368 earlier in this thread:
longinvest wrote: Sat Nov 30, 2019 4:37 pm [...]
Don't you think that a portfolio concentrated into the stock and bond securities of a single winning country, the US, could deliver a significant reward for its concentration risk?

The thing is this: taking risk can result into great rewards, but it can also result into steep penalties, as Japanese domestic-only stock investors have learned over the last three decades.

Investing into a diversified portfolio which includes both domestic and international securities (possibly with a moderate home bias) will always underperform the higher performing market. A diversified portfolio is never the best performing one.
[...]
The goal of Bogleheads investing isn't to win; it's to not lose. Broadly diversifying one's investments leads to boring average returns. But, that's exactly what Bogleheads are looking for: reliably getting average returns, guaranteeing that they'll never be losers!
[...]
Finally, about the tax efficiency of using a One-Fund Portfolio, here are parts of a post I wrote on your recent thread:
longinvest wrote: Thu May 21, 2020 5:40 pm [...]
Many investors mistakenly think that the objective should be to minimize taxes. Minimizing taxes is easy: in general, the poorer one is, the less taxes one pays. So, to eliminate taxes on portfolio gains, one simply needs to have a $0 portfolio. Problem solved. Some tax-efficient fund placement strategies sometimes succeed at reducing taxes by effectively reducing after-tax wealth. That isn't very sensible.

A better objective is to aim for higher after-tax portfolio withdrawals in retirement. This is an extremely difficult problem to solve, as a lower-returning portfolio, before taxes, can sometimes generate higher after-tax withdrawals.

The One-Fund Portfolio thread contains a mathematical proof that using a mirrored asset location strategy is good enough:
longinvest wrote: Thu Oct 17, 2019 12:28 am Here's the thing. If prioritizing bonds in tax-advantaged accounts turns out to be best over one's specific lifetime, a mirrored allocation will turn out to be superior to having prioritized stocks in tax-advantaged accounts. If prioritizing stocks in tax-advantaged accounts turns out to be best over one's specific lifetime, a mirrored allocation will turn out to be superior to having prioritized bonds in tax-advantaged accounts. A mirrored allocation is thus mathematically guaranteed not to turn out to have been the worst location strategy among these three strategies, even if tax laws change in unexpected ways.
Some people might consider this mathematical guarantee, of not being the worst asset location strategy, "not very attractive", yet I have not seen a mathematical proof of a "more attractive" asset location strategy that is guaranteed to always beat a simple mirrored allocation strategy.

It's quite similar to indexing, when you think about it. William Sharpe's theorem guarantees that a simple total-market cap-weighted index investment strategy is guaranteed to never be worse than average (before fees). Some people might consider this mathematical guarantee "not very attractive", yet I have not seen a mathematical proof of a "more attractive" investment strategy that is guaranteed to always beat it.
I'd be careful not to let the tax tail wag the asset allocation dog. As of April 30, 2020, the Vanguard Tax-Managed Balanced Fund (VTMFX) only holds 891 stocks and 1,946 bonds, all domestic US securities.

Best regards,

longinvest
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Re: Jack Bogle - Two Fund Portfolio

Post by abuss368 »

Randtor wrote: Sun May 24, 2020 9:27 am
anon_investor wrote: Sun May 24, 2020 7:45 am
nanameg wrote: Sun May 24, 2020 7:17 am
columbia wrote: Sun May 24, 2020 6:25 am Boring old Balanced Index is only down 4% this year.
Yes. If I’ve decided against international funds is there any disadvantage to using this balanced index one fund approach as opposed to the 2 fund? I’m 64 and trying to find a true buy and hold strategy since I panicked in March and did our portfolio some real damage.

It might be better for me to just have one fund...but I don’t know if the balanced fund at 60/40 makes sense forever...into our 80’s and beyond if necessary.
The Vanguard Balanced Index Fund is a great set it and forget it investment if 60/40 is your desired asset allocation.
The balanced index fund (VBIAX) actually looks like a very good choice if 60/40 is your AA. In comparing this with VSMGX (Life Strategy Moderate Growth - see "longinvest"'s post on the one fund portfolio), it appears to be a better choice. I did a comparison on the VG website - easy enough for anyone to do - 4 funds.... VBIAX , VSMGX, and the 2 funds that are highly regarded in this thread - VBTLX (total bond) and VTSAX (total stock). In doing so, VBIAX makes a very good showing.

There are so many VG funds, I have to say I was unaware of this one. I will be researching it more today. I may end up shifting my thought process (based on this very preliminary evaluation) and use a one fund portfolio with VBIAX as my choice. Or -for the next 6 months or so - I could go 3 funds for comparison sake - VBIAX, VBTLX and VTSAX. It looks like the expense ratio is less for VBIAX than the combination of the other 2, and the volatility is not as much either.

The beauty of a one fund portfolio, as has been pointed out in various threads : if it contains stocks AND bonds, the fund can be held in taxable or non taxable, and there is no need for rebalancing, since that is taken care of by the fund managers.
Hmmm, food for thought!
You have presented some very good options that are simple and effective. I prefer the simplicity of Jack Bogle's and Warren Buffett's Two Fund Portfolio. It has worked well even with the most recent downturn.
John C. Bogle: “Simplicity is the master key to financial success."
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Re: Jack Bogle - Two Fund Portfolio

Post by Randtor »

Longinvest,

All good points, and understandable. I get that we cannot base the future of any investment on its past performance. But... how did you decide which fund to go with? I am guessing you researched it, including past performance. Why else would anyone pick one fund over another very similar one? Perhaps I am showing my lack of investment experience.

What I am concerned with is not just about paying taxes. It's the simple 4% rule. If I am to draw 4% of my portfolio down every year, with no other income to fall back on (other than my already accounted for SS), I want to be assured that I will not deplete my account. Looking at VBIAX and VSMGX, I was concerned with year over year return after taxes. Have they delivered 4% or more? For me, that's the key.

Thanks for the comments Longinvest. Your one fund is still receiving my consideration based on your in depth informative posts.

Taylor ; RuralAvalon ... thank you also for your recommendations on VTMFX. I am not "really determined" to use a balanced fund in taxable. My situation is that I have no more contributions to non taxable. I will need to rebalance to bring my AA in line with what I "think" I want. Regardless of where that ends up being, I will need to shift non taxable IRA holdings as I add to my taxable account in order to stay within my AA wishes.

It will take a bit of work, but once done I should be able to keep my rebalancing efforts to a minimum.
"Whats done is done, and can't be undone"
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Re: Jack Bogle - Two Fund Portfolio

Post by longinvest »

Randtor wrote: Sun May 24, 2020 8:26 pm Longinvest,
...
Randtor, to keep this thread on topic I've replied in your personal investments thread.
Bogleheads investment philosophy | One-ETF global balanced index portfolio | VPW
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Re: Jack Bogle - Two Fund Portfolio

Post by bfeenix44 »

abuss368 wrote: Sun May 24, 2020 7:23 pm
You have presented some very good options that are simple and effective. I prefer the simplicity of Jack Bogle's and Warren Buffett's Two Fund Portfolio. It has worked well even with the most recent downturn.
I regularly follow "The Calm Post" thread and this "Two Fund Portfolio" thread. Lately, I've read some of the "Still Using Total Bond Market?" thread, and the discussions around there needing to be a recommendation for something better than Total Bond.

I am still practicing "tuning out the noise".... has the virus really changed things that much, or am I just reading too many threads?

tamara
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Re: Jack Bogle - Two Fund Portfolio

Post by 1789 »

anon_investor wrote: Sun May 24, 2020 8:51 am
Randtor wrote: Sun May 24, 2020 8:44 am
Triple digit golfer wrote: Sun May 24, 2020 6:23 am I was explaining a close friend this game is like playing tennis with Williams sisters (very famous and maybe a cliche example i know) and he said he would consider playing with them
as experience even he lose money. Later a week (3 weeks ago) he bought UAL at 28$ by telling me it should go up. I told him wrong move. In hindsight it seems WB was on the other side of that trade :oops:
Isn't that the worst, when a bad decision works out and your point is then completely and forever missed?

The best thing that could happen to a market timer is to lose a little bit early and give up

UAL is now down to 25$ - point made I guess :-) !
They always learn eventually...

I dont think the story is done yet. My friend says he wants to stay the course with UAL :oops:
"My conscience wants vegetarianism to win over the world. And my subconscious is yearning for a piece of juicy meat. But what do i want?" (Andrei Tarkovsky)
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Re: Jack Bogle - Two Fund Portfolio

Post by anon_investor »

1789 wrote: Mon May 25, 2020 12:34 pm
anon_investor wrote: Sun May 24, 2020 8:51 am
Randtor wrote: Sun May 24, 2020 8:44 am
Triple digit golfer wrote: Sun May 24, 2020 6:23 am I was explaining a close friend this game is like playing tennis with Williams sisters (very famous and maybe a cliche example i know) and he said he would consider playing with them
as experience even he lose money. Later a week (3 weeks ago) he bought UAL at 28$ by telling me it should go up. I told him wrong move. In hindsight it seems WB was on the other side of that trade :oops:
Isn't that the worst, when a bad decision works out and your point is then completely and forever missed?

The best thing that could happen to a market timer is to lose a little bit early and give up

UAL is now down to 25$ - point made I guess :-) !
They always learn eventually...

I dont think the story is done yet. My friend says he wants to stay the course with UAL :oops:
They always learn eventually... just maybe not today :twisted: !
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Market Timing

Post by Taylor Larimore »

anon_investor wrote:They always learn eventually... just maybe not today :twisted: !
How true. I'm embarrassed to admit that I once wrote a market-timing newsletter.

Best wishes.
Taylor
Jack Bogle's Words of Wisdom: "I do not know of anybody who had done market-timing successfully. I don't even know anybody who knows anybody who has done it successfully and consistently."
"Simplicity is the master key to financial success." -- Jack Bogle
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Re: Jack Bogle - Two Fund Portfolio

Post by abuss368 »

bfeenix44 wrote: Sun May 24, 2020 11:49 pm
abuss368 wrote: Sun May 24, 2020 7:23 pm
You have presented some very good options that are simple and effective. I prefer the simplicity of Jack Bogle's and Warren Buffett's Two Fund Portfolio. It has worked well even with the most recent downturn.
I regularly follow "The Calm Post" thread and this "Two Fund Portfolio" thread. Lately, I've read some of the "Still Using Total Bond Market?" thread, and the discussions around there needing to be a recommendation for something better than Total Bond.

I am still practicing "tuning out the noise".... has the virus really changed things that much, or am I just reading too many threads?

tamara
I read the same “concerns” about Total Bond during the financial crisis. The beauty of the Two Fund Portfolio is no other unnecessary bond funds are needed.

I have learned when experts disagree it probably does not make much difference.
John C. Bogle: “Simplicity is the master key to financial success."
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Re: Jack Bogle - Two Fund Portfolio

Post by abuss368 »

Total Stock Index Fund should be declaring and paying a dividend for the quarter. Vanguard's website has not yet updated with the information. I am curious of the payout considering the recent market trauma.

Total Stock is an excellent fund and Mr. Bogle's favorite.
John C. Bogle: “Simplicity is the master key to financial success."
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Re: Jack Bogle - Two Fund Portfolio

Post by abuss368 »

The quarterly dividend for Total Stock for June 2020 did not decline from the prior year and came in at 0.3389 a share.

The prior year 2nd quarter dividend was 0.2647 a share.

Who knows what the next quarter(s) will bring.
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Re: Jack Bogle - Two Fund Portfolio

Post by 1789 »

Randtor wrote: Sun May 24, 2020 9:27 am
anon_investor wrote: Sun May 24, 2020 7:45 am
nanameg wrote: Sun May 24, 2020 7:17 am
columbia wrote: Sun May 24, 2020 6:25 am Boring old Balanced Index is only down 4% this year.
Yes. If I’ve decided against international funds is there any disadvantage to using this balanced index one fund approach as opposed to the 2 fund? I’m 64 and trying to find a true buy and hold strategy since I panicked in March and did our portfolio some real damage.

It might be better for me to just have one fund...but I don’t know if the balanced fund at 60/40 makes sense forever...into our 80’s and beyond if necessary.
The Vanguard Balanced Index Fund is a great set it and forget it investment if 60/40 is your desired asset allocation.
The balanced index fund (VBIAX) actually looks like a very good choice if 60/40 is your AA. In comparing this with VSMGX (Life Strategy Moderate Growth - see "longinvest"'s post on the one fund portfolio), it appears to be a better choice. I did a comparison on the VG website - easy enough for anyone to do - 4 funds.... VBIAX , VSMGX, and the 2 funds that are highly regarded in this thread - VBTLX (total bond) and VTSAX (total stock). In doing so, VBIAX makes a very good showing.

There are so many VG funds, I have to say I was unaware of this one. I will be researching it more today. I may end up shifting my thought process (based on this very preliminary evaluation) and use a one fund portfolio with VBIAX as my choice. Or -for the next 6 months or so - I could go 3 funds for comparison sake - VBIAX, VBTLX and VTSAX. It looks like the expense ratio is less for VBIAX than the combination of the other 2, and the volatility is not as much either.

The beauty of a one fund portfolio, as has been pointed out in various threads : if it contains stocks AND bonds, the fund can be held in taxable or non taxable, and there is no need for rebalancing, since that is taken care of by the fund managers.
Hmmm, food for thought!
Seems i missed this post. I actually like VBIAX a lot. Of course things can change until i become 60 years old bu if i am still alive then i can think of implementing one fund portfolio --> VBIAX. I am OK with only local stocks. It would be easier to maintain for my heirs. Most of our portfolio is in tax advantaged space and probably will be like that in future as well.
"My conscience wants vegetarianism to win over the world. And my subconscious is yearning for a piece of juicy meat. But what do i want?" (Andrei Tarkovsky)
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Re: Jack Bogle - Two Fund Portfolio

Post by abuss368 »

1789 wrote: Thu Jul 02, 2020 12:38 pm
Randtor wrote: Sun May 24, 2020 9:27 am
anon_investor wrote: Sun May 24, 2020 7:45 am
nanameg wrote: Sun May 24, 2020 7:17 am
columbia wrote: Sun May 24, 2020 6:25 am Boring old Balanced Index is only down 4% this year.
Yes. If I’ve decided against international funds is there any disadvantage to using this balanced index one fund approach as opposed to the 2 fund? I’m 64 and trying to find a true buy and hold strategy since I panicked in March and did our portfolio some real damage.

It might be better for me to just have one fund...but I don’t know if the balanced fund at 60/40 makes sense forever...into our 80’s and beyond if necessary.
The Vanguard Balanced Index Fund is a great set it and forget it investment if 60/40 is your desired asset allocation.
The balanced index fund (VBIAX) actually looks like a very good choice if 60/40 is your AA. In comparing this with VSMGX (Life Strategy Moderate Growth - see "longinvest"'s post on the one fund portfolio), it appears to be a better choice. I did a comparison on the VG website - easy enough for anyone to do - 4 funds.... VBIAX , VSMGX, and the 2 funds that are highly regarded in this thread - VBTLX (total bond) and VTSAX (total stock). In doing so, VBIAX makes a very good showing.

There are so many VG funds, I have to say I was unaware of this one. I will be researching it more today. I may end up shifting my thought process (based on this very preliminary evaluation) and use a one fund portfolio with VBIAX as my choice. Or -for the next 6 months or so - I could go 3 funds for comparison sake - VBIAX, VBTLX and VTSAX. It looks like the expense ratio is less for VBIAX than the combination of the other 2, and the volatility is not as much either.

The beauty of a one fund portfolio, as has been pointed out in various threads : if it contains stocks AND bonds, the fund can be held in taxable or non taxable, and there is no need for rebalancing, since that is taken care of by the fund managers.
Hmmm, food for thought!
Seems i missed this post. I actually like VBIAX a lot. Of course things can change until i become 60 years old bu if i am still alive then i can think of implementing one fund portfolio --> VBIAX. I am OK with only local stocks. It would be easier to maintain for my heirs. Most of our portfolio is in tax advantaged space and probably will be like that in future as well.
Jack Bogle has said a simple Balanced Index Fund would work very well for most investors.

This was discussed in many of his books.
John C. Bogle: “Simplicity is the master key to financial success."
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Re: Market Timing

Post by bck63 »

Taylor Larimore wrote: Mon May 25, 2020 1:17 pm
anon_investor wrote:They always learn eventually... just maybe not today :twisted: !
How true. I'm embarrassed to admit that I once wrote a market-timing newsletter.

Best wishes.
Taylor
Jack Bogle's Words of Wisdom: "I do not know of anybody who had done market-timing successfully. I don't even know anybody who knows anybody who has done it successfully and consistently."
Mr. Larimore, you've changed the financial lives of many for the extreme better. You have nothing to be embarrassed about. :-) I sold my last individual stock not quite two years ago, am 100% index funds and have never felt better about my financial life. Thank you, sir.
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bck63

Post by Taylor Larimore »

bck63:

I appreciate your post.

Best wishes.
Taylor
Jack Bogle's Words of Wisdom: "It is character, not numbers, that make the world go ‘round. How can we possibly measure the qualities of human existence that give our lives and careers meaning? How about grace, kindness, and integrity?"
"Simplicity is the master key to financial success." -- Jack Bogle
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Re: Market Timing

Post by abuss368 »

bck63 wrote: Fri Jul 03, 2020 8:09 am
Taylor Larimore wrote: Mon May 25, 2020 1:17 pm
anon_investor wrote:They always learn eventually... just maybe not today :twisted: !
How true. I'm embarrassed to admit that I once wrote a market-timing newsletter.

Best wishes.
Taylor
Jack Bogle's Words of Wisdom: "I do not know of anybody who had done market-timing successfully. I don't even know anybody who knows anybody who has done it successfully and consistently."
Mr. Larimore, you've changed the financial lives of many for the extreme better. You have nothing to be embarrassed about. :-) I sold my last individual stock not quite two years ago, am 100% index funds and have never felt better about my financial life. Thank you, sir.
Amen. I have learned a wealth of investing and simplicity both in life and financially from Taylor and Jack Bogle.
John C. Bogle: “Simplicity is the master key to financial success."
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Re: Jack Bogle - Two Fund Portfolio

Post by abuss368 »

Bogleheads -

For those Bogleheads that invest in the Two Fund Portfolio, I am interested to hear your thoughts, experiences, and perspectives regarding the roller coaster ride of the markets this year. How have you done? Have you stayed the course? Rebalanced?

Please share!
John C. Bogle: “Simplicity is the master key to financial success."
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Re: Jack Bogle - Two Fund Portfolio

Post by bfeenix44 »

abuss368 wrote: Sat Jul 18, 2020 9:46 pm Bogleheads -

For those Bogleheads that invest in the Two Fund Portfolio, I am interested to hear your thoughts, experiences, and perspectives regarding the roller coaster ride of the markets this year. How have you done? Have you stayed the course? Rebalanced?

Please share!
I'm a newbie to indexea and starting a bit late in life (age 58) but have started and am staying the course. My Vanguard accounts are less than 6 months old, so it's been scary this year with the COVID stuff, but I did a LOT of reading before making my decision and it helped give me confidence to move my Ed Jones over to Vanguard.

I'm POA and caretaker for my folks in their mid-nineties, and just opened a Vanguard two-fund for them, as well. Putting new money in that, and looking at the best way to move their Ed Jones over eventually.

I continue to read a lot on the forum, and sometimes I get caught up in all the different opinions about different bonds, but then I think... the forum members in those threads have probably been investing a lot longer than I have, and they possibly have quite a bit more money.

The most important thing for me right now is to keep it simple.

(abuss368, I have appreciated your posts in the past. You're always very encouraging and informative, and help keep me level-headed!)

tamara
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Re: Jack Bogle - Two Fund Portfolio

Post by Atticus713 »

Hi Abuss368 and Forum,
Thank you Abuss368 for always being positive, upbeat, encouraging, and generous with your guidance! Like Tamara, my husband and I are relatively new to all this and recently started Investing in our 50’s. I joined the forum just over a year ago. We started with an approximation of the 3-Fund Portfolio in my 403b (S&P 500, Small Cap, International, Total Bond) after reading Taylor’s wonderfully clear and informative TFP book. After reading more forum threads, Boglehead books, and the wiki, we recently simplified my 403b to, essentially, a “two”-fund portfolio (56% S&P500, 14% small cap index, 30% US Total Bond Index). To even further simplify, we’ll next probably rebalance out of the small cap index and move that % over to our bond fund once the market eventually recovers. Then we’ll be left with a true two-fund portfolio at 56% S&P 500 and 44% US Total Bond Index. Also, during the recent downturn we did our first 2 Backdoor Roth IRAs through Vanguard and chose VBIAX (a one fund version of the two fund portfolio) again for its hands off simplicity—recognizing that the more we tinker, the more mistakes we’ll likely make! So, all in all, we’ve made several changes while finding our comfort zone, but hopefully now will settle into a “stay the course” mode. Many thanks again to Taylor, Abuss368, and the other wonderful Forum members for your help!
Best,
Atticus713
“Simplicity is the master key to financial success” J.C. Bogle | Total U.S. Stock (or S&P 500) Index + Total U.S. Bond Index | Age-10 in Bonds | Rebalance Annually | Stay the Course
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Re: Jack Bogle - Two Fund Portfolio

Post by mrspock »

abuss368 wrote: Sat Jul 18, 2020 9:46 pm Bogleheads -

For those Bogleheads that invest in the Two Fund Portfolio, I am interested to hear your thoughts, experiences, and perspectives regarding the roller coaster ride of the markets this year. How have you done? Have you stayed the course? Rebalanced?

Please share!
I've been a two funder since I read Bogle's book "Common Sense on Mutual Funds" maybe 4-5 years ago. I did rebalance within a few days prior to the March -- pure luck as my 5% band hit. I've stayed the course through all this, (started out 70/30 now ~75/25) and as a result, my portfolio is at an all time high including new money I've added along the way.

Things I discovered: The equity side was the least of my concerns, what hurt (psychologically) the most through all this was my muni bonds tanking in March due to the liquidity crunch, they somewhat failed me at the moment I needed them most (rebalancing + ballast). My thinking now is to buy somewhat longer duration bond fund, along with a fairly short duration fund which together equate to the duration of an intermediate fund, my thinking is this gives me more options should this happen again (perhaps the short duration fund doesn't tank as much and I'd use this for the rebalance).
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Re: Jack Bogle - Two Fund Portfolio

Post by Ferdinand2014 »

abuss368 wrote: Sat Jul 18, 2020 9:46 pm Bogleheads -

For those Bogleheads that invest in the Two Fund Portfolio, I am interested to hear your thoughts, experiences, and perspectives regarding the roller coaster ride of the markets this year. How have you done? Have you stayed the course? Rebalanced?

Please share!
abuss368,

No changes here. As you know, my portfolio consists mostly of the S&P 500 (FXAIX Er 0.015) and cash (t-bills). I do not rebalance ever. I add to it every week in our SEP and taxable by automatic contribution. DW’s 403b was NINDX (Columbia Large Cap index Er 0.20) which will be transitioned to (VTSAX Er 0.04) in August after a year of fighting for cheaper options. I have been lucky that my job was not impacted at all and the cancelation of travel plans and the retirement of my last loans has been deflationary to my budget with extra going to savings. According to Fidelity I am up 7.74 % over the past rolling 12 months as if nothing happened.
“You only find out who is swimming naked when the tide goes out.“ — Warren Buffett
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Re: Jack Bogle - Two Fund Portfolio

Post by ruralavalon »

bfeenix44 wrote: Sat Jul 18, 2020 11:50 pmThe most important thing for me right now is to keep it simple.
Always a top priority for us.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started
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Post by Taylor Larimore »

ruralavalon wrote: Sun Jul 19, 2020 8:58 am
bfeenix44 wrote: Sat Jul 18, 2020 11:50 pmThe most important thing for me right now is to keep it simple.
Always a top priority for us.
bfeenix44:

Many years ago I read a book titled "Walden Pond" by the great philosopher, Henry David Thoreau. His book changed my life--and my investment philosophy. This is the book's theme:
Our life is frittered away by detail. Simplify. Simplify.
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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Re: Jack Bogle - Two Fund Portfolio

Post by abuss368 »

ruralavalon wrote: Sun Jul 19, 2020 8:58 am
bfeenix44 wrote: Sat Jul 18, 2020 11:50 pmThe most important thing for me right now is to keep it simple.
Always a top priority for us.
In my opinion, the further along in our investment journey we become, the more I am convinced simplicity is the master key to financial success.

Thank you Jack Bogle!
John C. Bogle: “Simplicity is the master key to financial success."
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Re: Jack Bogle - Two Fund Portfolio

Post by abuss368 »

Atticus713 wrote: Sun Jul 19, 2020 1:56 am Hi Abuss368 and Forum,
Thank you Abuss368 for always being positive, upbeat, encouraging, and generous with your guidance! Like Tamara, my husband and I are relatively new to all this and recently started Investing in our 50’s. I joined the forum just over a year ago. We started with an approximation of the 3-Fund Portfolio in my 403b (S&P 500, Small Cap, International, Total Bond) after reading Taylor’s wonderfully clear and informative TFP book. After reading more forum threads, Boglehead books, and the wiki, we recently simplified my 403b to, essentially, a “two”-fund portfolio (56% S&P500, 14% small cap index, 30% US Total Bond Index). To even further simplify, we’ll next probably rebalance out of the small cap index and move that % over to our bond fund once the market eventually recovers. Then we’ll be left with a true two-fund portfolio at 56% S&P 500 and 44% US Total Bond Index. Also, during the recent downturn we did our first 2 Backdoor Roth IRAs through Vanguard and chose VBIAX (a one fund version of the two fund portfolio) again for its hands off simplicity—recognizing that the more we tinker, the more mistakes we’ll likely make! So, all in all, we’ve made several changes while finding our comfort zone, but hopefully now will settle into a “stay the course” mode. Many thanks again to Taylor, Abuss368, and the other wonderful Forum members for your help!
Best,
Atticus713
Hi Atticus713 -

In my opinion you have an excellent plan in place. Simplifying your portfolio (and life as I have also learned) pays dividends over a lifetime!

Please do not hesitate to stop back and post any Two Fund Portfolio questions you may have here on this thread.

Best.
John C. Bogle: “Simplicity is the master key to financial success."
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Re: "Our life is frittered away by detail"

Post by abuss368 »

Taylor Larimore wrote: Sun Jul 19, 2020 10:03 am
ruralavalon wrote: Sun Jul 19, 2020 8:58 am
bfeenix44 wrote: Sat Jul 18, 2020 11:50 pmThe most important thing for me right now is to keep it simple.
Always a top priority for us.
bfeenix44:

Many years ago I read a book titled "Walden Pond" by the great philosopher, Henry David Thoreau. His book changed my life--and my investment philosophy. This is the book's theme:
Our life is frittered away by detail. Simplify. Simplify.
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."
Thanks Taylor! You have mentioned this much and I feel I should read this book!
John C. Bogle: “Simplicity is the master key to financial success."
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Re: Jack Bogle - Two Fund Portfolio

Post by LadyGeek »

It's in the public domain (Project Gutenberg License):

- Walden, and On The Duty Of Civil Disobedience by Henry David Thoreau - Free Ebook

Books can be discussed in the consumer issues forum.
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Re: Jack Bogle - Two Fund Portfolio

Post by HRG »

bck63,
I sold my last individual stock not quite two years ago, am 100% index funds and have never felt better about my financial life.
It would be nice to get to that point for me, but I hold many individual stocks that have done much better than my index funds/etfs. The stocks that don't do better than the index, get moved to the index. I wholly support Bogle's philosophy and have read all his and Taylor's books.
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Re: Jack Bogle - Two Fund Portfolio

Post by spdoublebass »

HRG wrote: Mon Jul 20, 2020 2:33 pm bck63,
I sold my last individual stock not quite two years ago, am 100% index funds and have never felt better about my financial life.
It would be nice to get to that point for me, but I hold many individual stocks that have done much better than my index funds/etfs. The stocks that don't do better than the index, get moved to the index. I wholly support Bogle's philosophy and have read all his and Taylor's books.
So when your stocks don’t do better you sell them when they are low and buy TSM when it’s high?
I'm trying to think, but nothing happens
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Re: Jack Bogle - Two Fund Portfolio

Post by abuss368 »

HRG wrote: Mon Jul 20, 2020 2:33 pm bck63,
I sold my last individual stock not quite two years ago, am 100% index funds and have never felt better about my financial life.
It would be nice to get to that point for me, but I hold many individual stocks that have done much better than my index funds/etfs. The stocks that don't do better than the index, get moved to the index. I wholly support Bogle's philosophy and have read all his and Taylor's books.
Jack Bogle always said total market indexing is the gold standard. Anything else is a dilution of that standard.
John C. Bogle: “Simplicity is the master key to financial success."
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Re: Jack Bogle - Two Fund Portfolio

Post by HRG »

spdoublebass,
So when your stocks don’t do better you sell them when they are low and buy TSM when it’s high?
In a nutshell that is what I've been doing and I tell everyone they should just go with the total stock market index fund. I like to compare performance of an individual stock to either the SPY or TSM from the time I bought the stock. If the future projections are not beneficial, I'll sell the stock and move it to one of my index funds. This is only in my rollover IRA. No mutual funds or ETFs in my taxable account.
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Re: Jack Bogle - Two Fund Portfolio

Post by HRG »

abuss368,
Jack Bogle always said total market indexing is the gold standard. Anything else is a dilution of that standard.
Yes, Jack always had good wisdom. Wish I could have met him in person. Taylor has now moved into that slot. :happy
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Post by Taylor Larimore »

HRG wrote: Mon Jul 20, 2020 7:00 pm abuss368,
Jack Bogle always said total market indexing is the gold standard. Anything else is a dilution of that standard.
Yes, Jack always had good wisdom. Wish I could have met him in person. Taylor has now moved into that slot. :happy
abuss368:

This may be the greatest compliment I ever received. Unfortunately it is not even close.

Best wishes.
Taylor
Warren Buffett's Words of Wisdom: “If a statue is ever erected to honor the person who has done the most for American investors, the hands down choice should be Jack Bogle.”
"Simplicity is the master key to financial success." -- Jack Bogle
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Re: Jack Bogle - Two Fund Portfolio

Post by Randtor »

Taylor Larimore wrote: Mon Jul 20, 2020 7:15 pm
HRG wrote: Mon Jul 20, 2020 7:00 pm abuss368,
Jack Bogle always said total market indexing is the gold standard. Anything else is a dilution of that standard.
Yes, Jack always had good wisdom. Wish I could have met him in person. Taylor has now moved into that slot. :happy
abuss368:

This may be the greatest compliment I ever received. Unfortunately it is not even close.

Best wishes.
Taylor
Warren Buffett's Words of Wisdom: “If a statue is ever erected to honor the person who has done the most for American investors, the hands down choice should be Jack Bogle.”
Never having had the pleasure of meeting Jack or you, Taylor, I can honestly say you have both influenced me for sure, and countless others, in unfathomable ways. Yes, IMHO, and I am sure many others, you DO belong in the same stratosphere!
"Whats done is done, and can't be undone"
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Re: "Not even close"

Post by mrspock »

Taylor Larimore wrote: Mon Jul 20, 2020 7:15 pm
Warren Buffett's Words of Wisdom: “If a statue is ever erected to honor the person who has done the most for American investors, the hands down choice should be Jack Bogle.”
Sounds like a good “go fund me” campaign. We can lobby to have placed outside the NYSE somewhere or outside Vanguard HQ. It would fast become a pilgrimage for every index investor to get a photo in front of it :) .

EDIT: Turns out there already is one at Vanguard HQ, behold....

Image
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Re: Jack Bogle - Two Fund Portfolio

Post by Triple digit golfer »

People are out there knocking down statues, so I say we get some Bogleheads and go erect a Taylor statue and inscribe it "King of the Bogleheads."

Taylor, you have probably saved people millions of dollars, perhaps even more, by simply spreading your wisdom. In addition to excellent books, you've done it over tens of thousands of posts with the utmost charisma, respect, and kindness. You are one of a kind.
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My special day

Post by Taylor Larimore »

Triple digit golfer wrote: Mon Jul 20, 2020 8:09 pm People are out there knocking down statues, so I say we get some Bogleheads and go erect a Taylor statue and inscribe it "King of the Bogleheads."

Taylor, you have probably saved people millions of dollars, perhaps even more, by simply spreading your wisdom. In addition to excellent books, you've done it over tens of thousands of posts with the utmost charisma, respect, and kindness. You are one of a kind.
Triple digit golfer:

Imagine what it is like to open your computer in the morning and the first thing you read is your message, above !!!!

Thank you, triple digit golfer, for making today a very special day in my life.

Best wishes.
Taylor
The wisdom of Jack Bogle in the Dedication of his book, The First 50 Years: "Dedicated to all of the human beings who have meant so much to me during the first 50 years of my career--and especially those "Bogleheads" of the Internet, that dedicated and loyal cadre of Vanguard Diehards who give me strength to carry on my mission."
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Re: My special day

Post by abuss368 »

Taylor Larimore wrote: Tue Jul 21, 2020 10:16 am
Triple digit golfer wrote: Mon Jul 20, 2020 8:09 pm People are out there knocking down statues, so I say we get some Bogleheads and go erect a Taylor statue and inscribe it "King of the Bogleheads."

Taylor, you have probably saved people millions of dollars, perhaps even more, by simply spreading your wisdom. In addition to excellent books, you've done it over tens of thousands of posts with the utmost charisma, respect, and kindness. You are one of a kind.
Triple digit golfer:

Imagine what it is like to open your computer in the morning and the first thing you read is your message, above !!!!

Thank you, triple digit golfer, for making today a very special day in my life.

Best wishes.
Taylor
The wisdom of Jack Bogle in the Dedication of his book, The First 50 Years: "Dedicated to all of the human beings who have meant so much to me during the first 50 years of my career--and especially those "Bogleheads" of the Internet, that dedicated and loyal cadre of Vanguard Diehards who give me strength to carry on my mission."
A wonderful post to a thread dedicated to Jack Bogle and his Two Fund Portfolio!
John C. Bogle: “Simplicity is the master key to financial success."
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Re: My special day

Post by Triple digit golfer »

Taylor Larimore wrote: Tue Jul 21, 2020 10:16 am
Triple digit golfer wrote: Mon Jul 20, 2020 8:09 pm People are out there knocking down statues, so I say we get some Bogleheads and go erect a Taylor statue and inscribe it "King of the Bogleheads."

Taylor, you have probably saved people millions of dollars, perhaps even more, by simply spreading your wisdom. In addition to excellent books, you've done it over tens of thousands of posts with the utmost charisma, respect, and kindness. You are one of a kind.
Triple digit golfer:

Imagine what it is like to open your computer in the morning and the first thing you read is your message, above !!!!

Thank you, triple digit golfer, for making today a very special day in my life.

Best wishes.
Taylor
The wisdom of Jack Bogle in the Dedication of his book, The First 50 Years: "Dedicated to all of the human beings who have meant so much to me during the first 50 years of my career--and especially those "Bogleheads" of the Internet, that dedicated and loyal cadre of Vanguard Diehards who give me strength to carry on my mission."
My pleasure, Taylor, and I meant every bit of it. Thank you for your wisdom and kindness.
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Re: Jack Bogle - Two Fund Portfolio

Post by bck63 »

Triple digit golfer wrote: Mon Jul 20, 2020 8:09 pm Taylor, you have probably saved people millions of dollars, perhaps even more, by simply spreading your wisdom. In addition to excellent books, you've done it over tens of thousands of posts with the utmost charisma, respect, and kindness. You are one of a kind.
+1000
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Re: Jack Bogle - Two Fund Portfolio

Post by bck63 »

abuss368 wrote: Mon Jul 20, 2020 5:31 pm Jack Bogle always said total market indexing is the gold standard. Anything else is a dilution of that standard.
I do prefer the S&P 500 over total market for several reasons. It helps me stay the course.
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Re: Jack Bogle - Two Fund Portfolio

Post by abuss368 »

bck63 wrote: Tue Jul 21, 2020 5:51 pm
abuss368 wrote: Mon Jul 20, 2020 5:31 pm Jack Bogle always said total market indexing is the gold standard. Anything else is a dilution of that standard.
I do prefer the S&P 500 over total market for several reasons. It helps me stay the course.
Interesting. Please share how the S&P 500 helps you stay the course.
John C. Bogle: “Simplicity is the master key to financial success."
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Re: Jack Bogle - Two Fund Portfolio

Post by AerialWombat »

For those Bogleheads doing the two-fund portfolio in taxable brokerage accounts, what are you using for your fixed income component?
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Re: Jack Bogle - Two Fund Portfolio

Post by Ferdinand2014 »

AerialWombat wrote: Tue Jul 21, 2020 7:03 pm For those Bogleheads doing the two-fund portfolio in taxable brokerage accounts, what are you using for your fixed income component?
Cash (treasury bills)
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Re: Jack Bogle - Two Fund Portfolio

Post by abuss368 »

AerialWombat wrote: Tue Jul 21, 2020 7:03 pm For those Bogleheads doing the two-fund portfolio in taxable brokerage accounts, what are you using for your fixed income component?
Vanguard Intermediate Tax Exempt
John C. Bogle: “Simplicity is the master key to financial success."
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Re: Jack Bogle - Two Fund Portfolio

Post by anon_investor »

AerialWombat wrote: Tue Jul 21, 2020 7:03 pm For those Bogleheads doing the two-fund portfolio in taxable brokerage accounts, what are you using for your fixed income component?
Series I Savings Bonds.
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Re: Jack Bogle - Two Fund Portfolio

Post by bck63 »

abuss368 wrote: Tue Jul 21, 2020 6:38 pm
bck63 wrote: Tue Jul 21, 2020 5:51 pm
abuss368 wrote: Mon Jul 20, 2020 5:31 pm Jack Bogle always said total market indexing is the gold standard. Anything else is a dilution of that standard.
I do prefer the S&P 500 over total market for several reasons. It helps me stay the course.
Interesting. Please share how the S&P 500 helps you stay the course.
I would rather be less diversified. It gives me more of a sense of ownership of the companies. When things get volatile, I can go to a list of S&P 500 companies, pick one and read about it, and tell myself "you own that. Don't panic." Owning 500 companies seems more real to me than owning 3,500. It just works for me.

I own a portion of 500 of the biggest and best companies in the world. Who wouldn't want to own such an investment?

In reality, the returns have been virtually identical since the creation of the total market index fund. Yes, small caps may again outperform in the future and that's fine. I'll take what I get.
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