Are we just way over complicating this?

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Sandtrap
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Re: Are we just way over complicating this?

Post by Sandtrap » Wed Jun 27, 2018 12:53 pm

TomatoTomahto wrote:
Wed Jun 27, 2018 12:03 pm
willthrill81 wrote:
Wed Jun 27, 2018 11:43 am
Turbo29 wrote:
Wed Jun 27, 2018 11:27 am
Wouldn't a balanced fund cause issues if the stock market was down and you needed to withdraw money? With separate funds you could withdraw from the fixed income fund but with the balanced you would necessarily by pulling from both stocks and bonds at the same time.
Balanced funds are rebalanced all the time, which is the same thing you would be doing if you owned them separately. Spending down bonds when stocks are down is harder to implement than many realize (the devil is in the details); I've not seen much evidence that doing so provides substantial improvement.
Why is it difficult to spend down bonds (when stocks are down or, for that matter, not down)? That’s one of the reasons I have an n-Fund Portfolio.
What is an "n-Fund Portfolio"

j :D

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verbose
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Re: Are we just way over complicating this?

Post by verbose » Wed Jun 27, 2018 1:02 pm

Yes, we overcomplicate it, mostly for fun.

Except for taxes.

MathWizard
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Re: Are we just way over complicating this?

Post by MathWizard » Wed Jun 27, 2018 1:43 pm

The financial services industry over-complicates things.

This forum is a refuge of sanity among bitcoin miners, the house flippers,
and the high leverage investors ...

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TomatoTomahto
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Re: Are we just way over complicating this?

Post by TomatoTomahto » Wed Jun 27, 2018 2:04 pm

Sandtrap wrote:
Wed Jun 27, 2018 12:53 pm
TomatoTomahto wrote:
Wed Jun 27, 2018 12:03 pm
willthrill81 wrote:
Wed Jun 27, 2018 11:43 am
Turbo29 wrote:
Wed Jun 27, 2018 11:27 am
Wouldn't a balanced fund cause issues if the stock market was down and you needed to withdraw money? With separate funds you could withdraw from the fixed income fund but with the balanced you would necessarily by pulling from both stocks and bonds at the same time.
Balanced funds are rebalanced all the time, which is the same thing you would be doing if you owned them separately. Spending down bonds when stocks are down is harder to implement than many realize (the devil is in the details); I've not seen much evidence that doing so provides substantial improvement.
Why is it difficult to spend down bonds (when stocks are down or, for that matter, not down)? That’s one of the reasons I have an n-Fund Portfolio.
What is an "n-Fund Portfolio"

j :D
If you weren’t pulling my leg, and I am 50-50 on whether that’s the case, by n-Fund Portfolio I meant 2-fund portfolio, or 3-fund portfolio, or in my case, a 4-fund portfolio. For what it’s worth, I don’t think it’s awfully complicated at all. Now, tilting and overweighting and factoring and all that stuff, now that’s complicated 😉

It is my impression that putting everything in a balanced fund is too simple. My goal is a portfolio as simple as possible, but not simpler. That’s the basis of my goofy liability matching portfolio; a sufficient amount in fixed income and all new money goes to equities. Please don’t ask what I intend to do during drawdown; I don’t know yet.

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TheTimeLord
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Re: Are we just way over complicating this?

Post by TheTimeLord » Wed Jun 27, 2018 2:07 pm

9-5 Suited wrote:
Wed Jun 27, 2018 12:37 pm
There are basically a handful of never-ending debates that are introduced constantly for entertaining banter. Because the questions have no actual verifiable answer, the debates shall continue :)

Tilting to small and value
I don't
International exposure
Blew out all of that a couple weeks back in a fit of simplifying
Mortgage payoff vs. investing
Paid off my mortgage, I laughed through 2007-2009
How to structure an emergency fund
Had one with lots of very safe instruments, but for simplification it has been absorbed back into my portfolio because even though I am still working I am starting to run my finances like I was already retired
Stock vs. bond allocation
Conservative now that I have deluded myself into thinking I have won
Help my parents are with Edward Jones!
Parents deceased, but mostly likely would have let them do what they wanted as long as it just wasn't totally ridiculous
Dave Ramsey and the debt snowball
Don't much care to listen to Dave but I agree debt sucks the life out of you

That about covers 90% of the threads I follow :) Highly entertaining and always great to hear from the great posters on the forum.
IMHO, Investing should be about living the life you want, not avoiding the life you fear. | Run, You Clever Boy! [9085]

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TheTimeLord
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Re: Are we just way over complicating this?

Post by TheTimeLord » Wed Jun 27, 2018 2:07 pm

HomerJ wrote:
Wed Jun 27, 2018 12:48 pm
9-5 Suited wrote:
Wed Jun 27, 2018 12:37 pm
There are basically a handful of never-ending debates that are introduced constantly for entertaining banter. Because the questions have no actual verifiable answer, the debates shall continue :)

Tilting to small and value
International exposure
Mortgage payoff vs. investing
How to structure an emergency fund
Stock vs. bond allocation
Help my parents are with Edward Jones!
Dave Ramsey and the debt snowball

That about covers 90% of the threads I follow :) Highly entertaining and always great to hear from the great posters on the forum.
You forgot

"Can I retire with $30 million? Not quite sure yet."

and

"Is 1% the new 4%?"
My favorites for sure.
IMHO, Investing should be about living the life you want, not avoiding the life you fear. | Run, You Clever Boy! [9085]

new2bogle
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Re: Are we just way over complicating this?

Post by new2bogle » Wed Jun 27, 2018 2:18 pm

KlangFool wrote:
Wed Jun 27, 2018 10:30 am
dcabler wrote:
Wed Jun 27, 2018 10:22 am
There are a number of people here, myself included, that go beyond a 1, 2 or 3 fund portfolio and have no issue with dealing with the additional complexity that might come with it. I really enjoy those particular discussions, actually. Doing so isn't for everybody, as evidenced by the comments by the 3-fund proponents each time a non 3-fund discussion starts. That said, it's also obvious that there is never going to be agreement on things like tilting, factors, or even whether to include international as these subjects come up over and over again here. But I'm happy that such discussions are allowed here!
dcabler,

Even 3-funds portfolio is overly complicated for many folks. Many folks could not handle rebalancing in the face of a bear or bull market. I am probably one of those. I will know more about my ability to rebalance in the next bear market.

KlangFool
With the way things are going, you should know very soon. (as should I)

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Sandtrap
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Re: Are we just way over complicating this?

Post by Sandtrap » Wed Jun 27, 2018 2:19 pm

TomatoTomahto wrote:
Wed Jun 27, 2018 2:04 pm
Sandtrap wrote:
Wed Jun 27, 2018 12:53 pm
TomatoTomahto wrote:
Wed Jun 27, 2018 12:03 pm
willthrill81 wrote:
Wed Jun 27, 2018 11:43 am
Turbo29 wrote:
Wed Jun 27, 2018 11:27 am
Wouldn't a balanced fund cause issues if the stock market was down and you needed to withdraw money? With separate funds you could withdraw from the fixed income fund but with the balanced you would necessarily by pulling from both stocks and bonds at the same time.
Balanced funds are rebalanced all the time, which is the same thing you would be doing if you owned them separately. Spending down bonds when stocks are down is harder to implement than many realize (the devil is in the details); I've not seen much evidence that doing so provides substantial improvement.
Why is it difficult to spend down bonds (when stocks are down or, for that matter, not down)? That’s one of the reasons I have an n-Fund Portfolio.
What is an "n-Fund Portfolio"

j :D
If you weren’t pulling my leg, and I am 50-50 on whether that’s the case, by n-Fund Portfolio I meant 2-fund portfolio, or 3-fund portfolio, or in my case, a 4-fund portfolio. For what it’s worth, I don’t think it’s awfully complicated at all. Now, tilting and overweighting and factoring and all that stuff, now that’s complicated 😉

It is my impression that putting everything in a balanced fund is too simple. My goal is a portfolio as simple as possible, but not simpler. That’s the basis of my goofy liability matching portfolio; a sufficient amount in fixed income and all new money goes to equities. Please don’t ask what I intend to do during drawdown; I don’t know yet.
Brain fart.
simplicity eludes me at times.
"n" as n variable.
Got it.
thanks.
j

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TomatoTomahto
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Re: Are we just way over complicating this?

Post by TomatoTomahto » Wed Jun 27, 2018 2:28 pm

Brain fart.
simplicity eludes me at times.
"n" as n variable.
Got it.
thanks.
That makes sense; it happens. You’re usually on top of things, so I wondered if you were kidding me. Now, brain farts, those I understand. 🤪

JustinR
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Re: Are we just way over complicating this?

Post by JustinR » Wed Jun 27, 2018 2:49 pm

Having a single fund isn't tax efficient though...

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FIREchief
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Re: Are we just way over complicating this?

Post by FIREchief » Wed Jun 27, 2018 2:51 pm

9-5 Suited wrote:
Wed Jun 27, 2018 12:37 pm
There are basically a handful of never-ending debates that are introduced constantly for entertaining banter. Because the questions have no actual verifiable answer, the debates shall continue :)

Tilting to small and value
International exposure
Mortgage payoff vs. investing
How to structure an emergency fund
Stock vs. bond allocation
Help my parents are with Edward Jones!
Dave Ramsey and the debt snowball

That about covers 90% of the threads I follow :) Highly entertaining and always great to hear from the great posters on the forum.
That is a very complete and accurate list! :sharebeer

A new and growing trend is "I'm sick of my stable, high paying job because somebody is mean to me; should I just quit?" Probably a sign of changing demographics..... :twisted:
I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.

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Re: Are we just way over complicating this?

Post by knpstr » Wed Jun 27, 2018 3:00 pm

TheTimeLord wrote:
Wed Jun 27, 2018 7:52 am
The more posts I read, including my own, them more convinced I am that either we are inventing scenarios to worry about or just discussing things for sport. In fact, it seems to me the wisest person in the kingdom might be someone who just opens a Vanguard account with one fund the Balanced Index fund then contributes to it monthly and never looks back but just gets on with their life? Thoughts?
Yes certainly -- the index fund was developed for the "know-nothing" investor. It makes it so one can get a satisfactory return with virtually no effort/concern. People act like landlording is hard. Way more time is spent people researching/discussing factor investing than it does to manage a rental house.

I think you are spot on with your post! :beer
Very little is needed to make a happy life; it is all within yourself, in your way of thinking. -Marcus Aurelius

KlangFool
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Re: Are we just way over complicating this?

Post by KlangFool » Wed Jun 27, 2018 3:08 pm

JustinR wrote:
Wed Jun 27, 2018 2:49 pm
Having a single fund isn't tax efficient though...
It may not matter.

A) All investments are in the tax-advantaged account.

and/or

B) Taxable investment is too small to matter.

KlangFool

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vitaflo
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Re: Are we just way over complicating this?

Post by vitaflo » Wed Jun 27, 2018 3:25 pm

TheTimeLord wrote:
Wed Jun 27, 2018 7:52 am
In fact, it seems to me the wisest person in the kingdom might be someone who just opens a Vanguard account with one fund the Balanced Index fund then contributes to it monthly and never looks back but just gets on with their life? Thoughts?
My wife does this. She has auto-investment turned on. She went over 5 years without looking at the value of her portfolio. When she finally did, she was surprised at how large the portfolio had gotten. She hasn't looked at the value since, but keeps contributing every month. She doesn't even know what bogleheads are, but she is one more than she knows.

SGM
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Re: Are we just way over complicating this?

Post by SGM » Wed Jun 27, 2018 3:32 pm

TheTimeLord wrote:
Wed Jun 27, 2018 7:52 am
The more posts I read, including my own, them more convinced I am that either we are inventing scenarios to worry about or just discussing things for sport. In fact, it seems to me the wisest person in the kingdom might be someone who just opens a Vanguard account with one fund the Balanced Index fund then contributes to it monthly and never looks back but just gets on with their life? Thoughts?
I have noticed lately a tendency to invent scenarios to worry about and have wondered why people start them. It must be for entertainment.

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willthrill81
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Re: Are we just way over complicating this?

Post by willthrill81 » Wed Jun 27, 2018 3:36 pm

TomatoTomahto wrote:
Wed Jun 27, 2018 12:48 pm
Turbo29 wrote:
Wed Jun 27, 2018 12:27 pm
TomatoTomahto wrote:
Wed Jun 27, 2018 12:03 pm
willthrill81 wrote:
Wed Jun 27, 2018 11:43 am
Turbo29 wrote:
Wed Jun 27, 2018 11:27 am
Wouldn't a balanced fund cause issues if the stock market was down and you needed to withdraw money? With separate funds you could withdraw from the fixed income fund but with the balanced you would necessarily by pulling from both stocks and bonds at the same time.
Balanced funds are rebalanced all the time, which is the same thing you would be doing if you owned them separately. Spending down bonds when stocks are down is harder to implement than many realize (the devil is in the details); I've not seen much evidence that doing so provides substantial improvement.
Why is it difficult to spend down bonds (when stocks are down or, for that matter, not down)? That’s one of the reasons I have an n-Fund Portfolio.
If you have a balanced fund (say it's 50/50) and you sell $100 worth you are selling $50 of stocks and $50 of bonds. If you sell $100 of a bond fund, you are selling $100 of bonds.

By having a 2-fund portfolio you can decide which asset class you wish to liquidate when you sell. With a balanced fund you are stuck liquidating the percentages of each that make up the fund.
I get that. My thoughts also. I’m looking for clarification from willthrill81.
As I said, the devil is in the details.

When precisely will you spend from bonds? When stocks are down? Down from their all time high, last year's close, etc.? What if bonds are down as well?

When precisely will you replenish the bonds? When stocks are up? Up from when? Over what period will you replenish the bonds?

These questions can be answered, but I've not heard of a single person who has thoroughly addressed them a priori when implementing this strategy. Those employing this method seem to be winging it, which opens the door for all sorts of behavioral problems. Regardless, it's more complicated than it seems on the surface, as I said to begin with.

Further, how do you know that this process will be more effective than using a traditional AA model, which is nearly all of the withdrawal rate research has used? How do you determine what this effectiveness is (e.g. higher withdrawal rate, lower failure rate)?
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

dbr
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Re: Are we just way over complicating this?

Post by dbr » Wed Jun 27, 2018 3:39 pm

willthrill81 wrote:
Wed Jun 27, 2018 3:36 pm

As I said, the devil is in the details.

When precisely will you spend from bonds? When stocks are down? Down from their all time high, last year's close, etc.? What if bonds are down as well?

When precisely will you replenish the bonds? When stocks are up? Up from when?

These questions can be answered, but I've not heard of a single person who has answered them a priori when implementing this strategy. They seem to be winging it, which opens the door for all sorts of behavioral problems.

Further, how do you know that this process will be more effective than using a traditional AA model, which is nearly all of the withdrawal rate research has used? How do you determine what this effectiveness is (e.g. higher withdrawal rate, lower failure rate)?
You are probably right.

I guess by traditional AA model you mean the traditional answer to the question, which is that you keep the AA on target by spending from whatever is over-allocated and that eventually one explicitly rebalances if needed. That method could also allow spending from whatever you feel like, is most convenient, tax efficient, etc. as long as one does not drive over a rebalancing trigger to do it.

jebmke
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Re: Are we just way over complicating this?

Post by jebmke » Wed Jun 27, 2018 3:48 pm

9-5 Suited wrote:
Wed Jun 27, 2018 12:37 pm
There are basically a handful of never-ending debates that are introduced constantly for entertaining banter. Because the questions have no actual verifiable answer, the debates shall continue :)

Tilting to small and value
International exposure
Mortgage payoff vs. investing
How to structure an emergency fund
Stock vs. bond allocation
Help my parents are with Edward Jones!
Dave Ramsey and the debt snowball

That about covers 90% of the threads I follow :) Highly entertaining and always great to hear from the great posters on the forum.
You left off the mother of all "dead horse" threads - Dividends
When you discover that you are riding a dead horse, the best strategy is to dismount.

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willthrill81
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Re: Are we just way over complicating this?

Post by willthrill81 » Wed Jun 27, 2018 3:59 pm

dbr wrote:
Wed Jun 27, 2018 3:39 pm
I guess by traditional AA model you mean the traditional answer to the question, which is that you keep the AA on target by spending from whatever is over-allocated and that eventually one explicitly rebalances if needed. That method could also allow spending from whatever you feel like, is most convenient, tax efficient, etc. as long as one does not drive over a rebalancing trigger to do it.
Correct.

I'm not opposed to bucket strategies per se; I actually think that they make more intuitive sense than a fixed AA. But execution is where one can run into real trouble with them. It's another layer of complication that may not be necessary or even helpful.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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Sandtrap
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Re: Are we just way over complicating this?

Post by Sandtrap » Wed Jun 27, 2018 5:09 pm

FIREchief wrote:
Wed Jun 27, 2018 2:51 pm
9-5 Suited wrote:
Wed Jun 27, 2018 12:37 pm
There are basically a handful of never-ending debates that are introduced constantly for entertaining banter. Because the questions have no actual verifiable answer, the debates shall continue :)

Tilting to small and value
International exposure
Mortgage payoff vs. investing
How to structure an emergency fund
Stock vs. bond allocation
Help my parents are with Edward Jones!
Dave Ramsey and the debt snowball

That about covers 90% of the threads I follow :) Highly entertaining and always great to hear from the great posters on the forum.
That is a very complete and accurate list! :sharebeer

A new and growing trend is "I'm sick of my stable, high paying job because somebody is mean to me; should I just quit?" Probably a sign of changing demographics..... :twisted:
LOL. . . LOL
Thanks.
Made my day. Passing this on to DW.
mahalo,
jim :D

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Sandtrap
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Re: Are we just way over complicating this?

Post by Sandtrap » Wed Jun 27, 2018 5:13 pm

jebmke wrote:
Wed Jun 27, 2018 3:48 pm
9-5 Suited wrote:
Wed Jun 27, 2018 12:37 pm
There are basically a handful of never-ending debates that are introduced constantly for entertaining banter. Because the questions have no actual verifiable answer, the debates shall continue :)

Tilting to small and value
International exposure
Mortgage payoff vs. investing
How to structure an emergency fund
Stock vs. bond allocation
Help my parents are with Edward Jones!
Dave Ramsey and the debt snowball

That about covers 90% of the threads I follow :) Highly entertaining and always great to hear from the great posters on the forum.
You left off the mother of all "dead horse" threads - Dividends
Also. . . .
". . . What financial advice for my friend, coworker, relative, etc, who is in debt, in trouble, given bad advice, or too smart and wrong and . . . . . doesn't want advice. . . . ?" :shock:

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TheTimeLord
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Re: Are we just way over complicating this?

Post by TheTimeLord » Wed Jun 27, 2018 5:15 pm

Sandtrap wrote:
Wed Jun 27, 2018 5:09 pm
FIREchief wrote:
Wed Jun 27, 2018 2:51 pm
9-5 Suited wrote:
Wed Jun 27, 2018 12:37 pm
There are basically a handful of never-ending debates that are introduced constantly for entertaining banter. Because the questions have no actual verifiable answer, the debates shall continue :)

Tilting to small and value
International exposure
Mortgage payoff vs. investing
How to structure an emergency fund
Stock vs. bond allocation
Help my parents are with Edward Jones!
Dave Ramsey and the debt snowball

That about covers 90% of the threads I follow :) Highly entertaining and always great to hear from the great posters on the forum.
That is a very complete and accurate list! :sharebeer

A new and growing trend is "I'm sick of my stable, high paying job because somebody is mean to me; should I just quit?" Probably a sign of changing demographics..... :twisted:
LOL. . . LOL
Thanks.
Made my day. Passing this on to DW.
mahalo,
jim :D
Years ago my DW and I told her parents we were considering changing jobs because we weren't enjoying our work. It had never occurred to them people could or were supposed to enjoy work, after all it was work and you only did it for a paycheck. I guess that is this generations equivalent to that statement.
IMHO, Investing should be about living the life you want, not avoiding the life you fear. | Run, You Clever Boy! [9085]

Shallowpockets
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Re: Are we just way over complicating this?

Post by Shallowpockets » Wed Jun 27, 2018 5:15 pm

True. But not only with investing and money. People over complicate everything. Just look at some of the questions asked on these forums.
I would not be surprised if someone posted, which is better for a banana split, chocolate or vanilla?
Or, if I buy one and get one free, should I buy two?
Some of us like to discuss things. Some of us don't have a clue. That's why things are overcomplicated.

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TheTimeLord
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Re: Are we just way over complicating this?

Post by TheTimeLord » Wed Jun 27, 2018 5:22 pm

I am stunned how quickly my attitudes in this area are changing. I think it is because I am reaching the point where the few more dollars I will add over the remainder of my work life could add some buffer but likely will not affect any change in my spending or behavior. So complexity just seems like a time wasting chore for no discernible change to my situation.
IMHO, Investing should be about living the life you want, not avoiding the life you fear. | Run, You Clever Boy! [9085]

jebmke
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Re: Are we just way over complicating this?

Post by jebmke » Wed Jun 27, 2018 5:28 pm

TheTimeLord wrote:
Wed Jun 27, 2018 5:22 pm
I am stunned how quickly my attitudes in this area are changing. I think it is because I am reaching the point where the few more dollars I will add over the remainder of my work life could add some buffer but likely will not affect any change in my spending or behavior. So complexity just seems like a time wasting chore for no discernible change to my situation.
I jumped on this when I first sat down to sort out whether we were on track to retire early - this was about when I turned 50. I hadn't really paid much attention prior to that - to a large extent because we had limited visibility. When I realized how long it took me to get a complete picture I realized that if I left the mess to my spouse (assuming I croaked first) she would dig me up and stomp on my body for leaving such a mess.
When you discover that you are riding a dead horse, the best strategy is to dismount.

marcopolo
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Re: Are we just way over complicating this?

Post by marcopolo » Wed Jun 27, 2018 5:36 pm

willthrill81 wrote:
Wed Jun 27, 2018 3:36 pm
TomatoTomahto wrote:
Wed Jun 27, 2018 12:48 pm
Turbo29 wrote:
Wed Jun 27, 2018 12:27 pm
TomatoTomahto wrote:
Wed Jun 27, 2018 12:03 pm
willthrill81 wrote:
Wed Jun 27, 2018 11:43 am


Balanced funds are rebalanced all the time, which is the same thing you would be doing if you owned them separately. Spending down bonds when stocks are down is harder to implement than many realize (the devil is in the details); I've not seen much evidence that doing so provides substantial improvement.
Why is it difficult to spend down bonds (when stocks are down or, for that matter, not down)? That’s one of the reasons I have an n-Fund Portfolio.
If you have a balanced fund (say it's 50/50) and you sell $100 worth you are selling $50 of stocks and $50 of bonds. If you sell $100 of a bond fund, you are selling $100 of bonds.

By having a 2-fund portfolio you can decide which asset class you wish to liquidate when you sell. With a balanced fund you are stuck liquidating the percentages of each that make up the fund.
I get that. My thoughts also. I’m looking for clarification from willthrill81.
As I said, the devil is in the details.

When precisely will you spend from bonds? When stocks are down? Down from their all time high, last year's close, etc.? What if bonds are down as well?

When precisely will you replenish the bonds? When stocks are up? Up from when? Over what period will you replenish the bonds?

These questions can be answered, but I've not heard of a single person who has thoroughly addressed them a priori when implementing this strategy. Those employing this method seem to be winging it, which opens the door for all sorts of behavioral problems. Regardless, it's more complicated than it seems on the surface, as I said to begin with.

Further, how do you know that this process will be more effective than using a traditional AA model, which is nearly all of the withdrawal rate research has used? How do you determine what this effectiveness is (e.g. higher withdrawal rate, lower failure rate)?
I tend to favor the AA model (perhaps with a rising glide path, I am just getting started with withdrawal stage, so still debating it internally a bit), so I have not studied it very much in-depth, but doesn't McClung's Prime Harvesting method provide a pretty specific set of rules for withdrawing from bonds first, and when to replenish? I seem to recall, that combined with an EM withdrawal strategy, it was (historically) found to be pretty efficient?
Once in a while you get shown the light, in the strangest of places if you look at it right.

Nate79
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Re: Are we just way over complicating this?

Post by Nate79 » Wed Jun 27, 2018 5:40 pm

What? You mean I don't need to create a 50 page IPS and then create a 100 page thread to discuss the details?

I believe that 90% of the complexity of this site and the way people invest and make investing decisions is well beyond any statistical accuracy for justifying the reasoning they do what they do. But people are so delusional to see what they are doing is pure finger in the wind even though they believe because they ran 752 backtests on portfoliovisualizer that it justifies everything they do.

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Sandtrap
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Re: Are we just way over complicating this?

Post by Sandtrap » Wed Jun 27, 2018 5:45 pm

Shallowpockets wrote:
Wed Jun 27, 2018 5:15 pm
True. But not only with investing and money. People over complicate everything. Just look at some of the questions asked on these forums.
I would not be surprised if someone posted, which is better for a banana split, chocolate or vanilla?
Or, if I buy one and get one free, should I buy two?
Some of us like to discuss things. Some of us don't have a clue. That's why things are overcomplicated.
1 Allocate 50/50. Chocolate/vanilla on the banana split. or. . . 1/3 chocolate, vanilla, strawberry to diversify.
2 DW would say absolutely yes. Buy 2 get 2 free, or more. Always follow DW.

Solution to over-complication?
Only discuss what is substantive and actionable per forum guidelines.
And the forum will decide what is substantive depending on the day, time, and general flavor of the day. :shock:

The value of these threads is taking a light hearted break from more serious matters such as personal investment finance. :D

j

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Re: Are we just way over complicating this?

Post by Fallible » Wed Jun 27, 2018 6:44 pm

TheTimeLord wrote:
Wed Jun 27, 2018 7:52 am
The more posts I read, including my own, them more convinced I am that either we are inventing scenarios to worry about or just discussing things for sport. In fact, it seems to me the wisest person in the kingdom might be someone who just opens a Vanguard account with one fund the Balanced Index fund then contributes to it monthly and never looks back but just gets on with their life? Thoughts?
From what I've seen over the years, there are people who post on the forum to learn the Bogleheads' way of investing, then learn it, apply it to their individual situations and contentedly get on with the rest of their lives. They may be the "wisest" you describe, and the luckiest. Then there are those who learn and apply their lessons but stick around because they've become generally interested in investing, maybe for the numbers or the psychology of it or out of fear or greed or a combination of some, or all of it. In fact, some BH pros have written that this general investing interest is a big reason the Bogleheads represent a "tiny" minority of investors. Whatever, I hope those of us who do stick around can continue to learn and appropriately share our learning in as straightforward and simple a way as possible with the new Bogleheads.
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Re: Are we just way over complicating this?

Post by Alexa9 » Wed Jun 27, 2018 6:48 pm

I notice this with news articles as well. Last week coffee is the devil! This week it cures cancer and heart disease. It's the same thing on here with small cap value and other debates. I would rather hear both sides however than be oblivious to it all. I think it's good to disconnect from all media for long stretches sometimes though.

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Re: Are we just way over complicating this?

Post by VictoriaF » Wed Jun 27, 2018 6:57 pm

TheTimeLord wrote:
Wed Jun 27, 2018 7:52 am
The more posts I read, including my own, them more convinced I am that either we are inventing scenarios to worry about or just discussing things for sport. In fact, it seems to me the wisest person in the kingdom might be someone who just opens a Vanguard account with one fund the Balanced Index fund then contributes to it monthly and never looks back but just gets on with their life? Thoughts?
A single Vanguard balanced fund is an ideal scenario that you can implement only when you have been retired and have consolidated all your money in one place. And even then you will have separate taxable and tax-deferred funds.

Complications arise when you also have:
- old funds that you don't want to sell to avoid capital gains
- I bonds or EE bonds
- retirement funds that have some advantages over Vanguard, e.g., TSP or TIAA
- 529 accounts for the progeny
- CDs from different banks and credit unions.

I also think it's prudent to diversify retirement assets across at least two custodians. If a computer glitch or calamity cuts you out from Vanguard, you could use Fidelity while the things get sorted out, and vice versa.

And so the simplicity is not all that simple.

Victoria
Last edited by VictoriaF on Wed Jun 27, 2018 7:13 pm, edited 1 time in total.
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Re: Are we just way over complicating this?

Post by VictoriaF » Wed Jun 27, 2018 7:04 pm

2015 wrote:
Wed Jun 27, 2018 11:59 am
The opportunity cost inherent in abandoning simplicity for complexity is profound. The rich invest in time, the poor in money. Viewed through this lens alone, if your time is spent "investing" in money, you're (much) poorer than you think.
Brilliant!

Victoria
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Re: Are we just way over complicating this?

Post by FIREchief » Wed Jun 27, 2018 7:18 pm

TheTimeLord wrote:
Wed Jun 27, 2018 5:15 pm
Years ago my DW and I told her parents we were considering changing jobs because we weren't enjoying our work. It had never occurred to them people could or were supposed to enjoy work, after all it was work and you only did it for a paycheck. I guess that is this generations equivalent to that statement.
Very possibly so. That said, I firmly believe that many younger folks have work ethics that are second to none, and see the value of a good, steady paycheck as well as any of us ever did. Like every generation, it only takes a few "special" ones to give the whole group a bad name. 8-)
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Re: Are we just way over complicating this?

Post by randomguy » Wed Jun 27, 2018 7:26 pm

Turbo29 wrote:
Wed Jun 27, 2018 12:27 pm
TomatoTomahto wrote:
Wed Jun 27, 2018 12:03 pm
willthrill81 wrote:
Wed Jun 27, 2018 11:43 am
Turbo29 wrote:
Wed Jun 27, 2018 11:27 am
Wouldn't a balanced fund cause issues if the stock market was down and you needed to withdraw money? With separate funds you could withdraw from the fixed income fund but with the balanced you would necessarily by pulling from both stocks and bonds at the same time.
Balanced funds are rebalanced all the time, which is the same thing you would be doing if you owned them separately. Spending down bonds when stocks are down is harder to implement than many realize (the devil is in the details); I've not seen much evidence that doing so provides substantial improvement.
Why is it difficult to spend down bonds (when stocks are down or, for that matter, not down)? That’s one of the reasons I have an n-Fund Portfolio.
If you have a balanced fund (say it's 50/50) and you sell $100 worth you are selling $50 of stocks and $50 of bonds. If you sell $100 of a bond fund, you are selling $100 of bonds.

By having a 2-fund portfolio you can decide which asset class you wish to liquidate when you sell. With a balanced fund you are stuck liquidating the percentages of each that make up the fund.
You have 400 bucks. The market drops 50%. you withdrawal 100 dollars. Is there a difference between
a) selling 50 dollars of bonds to restore the AA at 150/150 and then selling 50 dollars of each
b) Selling 100 dollars of bonds and ending up at 100/100?

There are slight tax differences but in the end you end up in the same rough spot.

Now if you let your AA float all bets are off. You are doing some bucket/market timing strategy which isn't going to map well to a fixed AA approach.

There are definitely tax benefits to breaking things up into chunks but I have never understood the idea that it allows you to avoid selling stocks when they are down. Of course I also think that selling stocks when they are down is a great idea. You just have to make sure to buy them also.

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Re: Are we just way over complicating this?

Post by willthrill81 » Wed Jun 27, 2018 7:39 pm

marcopolo wrote:
Wed Jun 27, 2018 5:36 pm
I tend to favor the AA model (perhaps with a rising glide path, I am just getting started with withdrawal stage, so still debating it internally a bit), so I have not studied it very much in-depth, but doesn't McClung's Prime Harvesting method provide a pretty specific set of rules for withdrawing from bonds first, and when to replenish? I seem to recall, that combined with an EM withdrawal strategy, it was (historically) found to be pretty efficient?
I'm not familiar with that withdrawal strategy; there are many published strategies. Perhaps you could enlighten me.
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Re: Are we just way over complicating this?

Post by abuss368 » Wed Jun 27, 2018 7:43 pm

TheTimeLord wrote:
Wed Jun 27, 2018 7:52 am
The more posts I read, including my own, them more convinced I am that either we are inventing scenarios to worry about or just discussing things for sport. In fact, it seems to me the wisest person in the kingdom might be someone who just opens a Vanguard account with one fund the Balanced Index fund then contributes to it monthly and never looks back but just gets on with their life? Thoughts?
Hi TheTimeLord -

Jack Bogle has written many times that most investors would be well served by investing in a simple balanced index fund. In fact, Mr. Bogle has said that his grandchildren's accounts are invested in Vanguard Balanced Index Fund.

Best.
John C. Bogle: "You simply do not need to put your money into 8 different mutual funds!" | | Disclosure: Three Fund Portfolio + U.S. & International REITs

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Re: Are we just way over complicating this?

Post by 1210sda » Wed Jun 27, 2018 7:44 pm

fire5soon wrote:
Wed Jun 27, 2018 9:34 am
My wife however would have a very difficult time even rebalancing the classic 3 fund portfolio.

investing and math just isn’t her thing and she has absolutely no desire to be involved.

how quickly adverse things can happen in life and how quickly I may be out of the picture.
For me, this is the most important reason for simplifying.

In many relationships, one person is the financial whiz and the other just has no interest in finance and investing.

The "whiz" may think this is too easy, who couldn't do re balancing? In less than 30 minutes a year I can manage my portfolio. Yet.......

We owe it to our significant other to set up our financial affairs in such a manner that the less interested party can take over as a survivor or caretaker without being overwhelmed.

Thanks fire5soon for your post.

1210

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Re: Are we just way over complicating this?

Post by JustinR » Wed Jun 27, 2018 9:10 pm

FIREchief wrote:
Wed Jun 27, 2018 2:51 pm
A new and growing trend is "I'm sick of my stable, high paying job because somebody is mean to me; should I just quit?" Probably a sign of changing demographics..... :twisted:
Actually more people in this generation will FIRE than any before it due to exactly that mindset. They don't take [poor --admin LadyGeek] work conditions or slaving away until 67 for granted like their predecessors did. They know there's more to life than that so they'll work smart to get it. They have options and the tools to achieve it. Haven't you heard the cliche about millennials hopping jobs every two years to drastically increase their pay? Thats a really common thing and it works.

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Re: Are we just way over complicating this?

Post by marcopolo » Wed Jun 27, 2018 9:52 pm

willthrill81 wrote:
Wed Jun 27, 2018 7:39 pm
marcopolo wrote:
Wed Jun 27, 2018 5:36 pm
I tend to favor the AA model (perhaps with a rising glide path, I am just getting started with withdrawal stage, so still debating it internally a bit), so I have not studied it very much in-depth, but doesn't McClung's Prime Harvesting method provide a pretty specific set of rules for withdrawing from bonds first, and when to replenish? I seem to recall, that combined with an EM withdrawal strategy, it was (historically) found to be pretty efficient?
I'm not familiar with that withdrawal strategy; there are many published strategies. Perhaps you could enlighten me.
This is pretty thorough analysis of the Prime Harvesting approach:

https://earlyretirementnow.com/2017/04/ ... arvesting/
Once in a while you get shown the light, in the strangest of places if you look at it right.

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Re: Are we just way over complicating this?

Post by Sasquatch » Wed Jun 27, 2018 9:52 pm

TheTimeLord wrote:
Wed Jun 27, 2018 7:52 am
Vanguard account with one fund the Balanced Index fund
Are you referring to VBIAX ?

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Re: Are we just way over complicating this?

Post by randomguy » Wed Jun 27, 2018 9:53 pm

JustinR wrote:
Wed Jun 27, 2018 9:10 pm
FIREchief wrote:
Wed Jun 27, 2018 2:51 pm
A new and growing trend is "I'm sick of my stable, high paying job because somebody is mean to me; should I just quit?" Probably a sign of changing demographics..... :twisted:
Actually more people in this generation will FIRE than any before it due to exactly that mindset. They don't take [poor --admin LadyGeek] work conditions or slaving away until 67 for granted like their predecessors did. They know there's more to life than that so they'll work smart to get it. They have options and the tools to achieve it. Haven't you heard the cliche about millennials hopping jobs every two years to drastically increase their pay? Thats a really common thing and it works.
More people will FIRE because there are more people. The percentage probably hasn't changed. The term FIRing is new. The concept goes back a long ways (at least to the 80s and I wouldn't be shocked it it was the 1780s:)). And I think it is more accurate to say you will "HEAR" a lot more about it. 20 years ago the people that retired early didn't have blogs and the like to shout it out to the world. It is very, very easy to pay attention to the people shouting loudly (i.e. All those FIRE people who are WORKING on blogs :)). The media in general is good at taking small trends and trying to make them big. The internet takes that and allows much smaller subgroups to meet up and form echo chambers.

There also have been people quiting stable high paying jobs forever also. Again you just didn't hear about it if it was outside of your immediate circle of friends 20 years ago. And I remember when I started work about how it was Gen X that was job skipping every 2 years with no loyalty.:) Heck I bet if we had all of Socrates writing we would learn about how the new generation just wasn't dedicated and keep going from one master to another because they were impatient.:)

Now access to cheap investment is pretty new. The concept (for better or worse. All those people that retired thinking 6% was safe were right most of the time and in their ignorance they didn't worry about 30% risk of ruin they were running) of the 4% rule is pretty new.

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Re: Are we just way over complicating this?

Post by willthrill81 » Wed Jun 27, 2018 10:34 pm

marcopolo wrote:
Wed Jun 27, 2018 9:52 pm
willthrill81 wrote:
Wed Jun 27, 2018 7:39 pm
marcopolo wrote:
Wed Jun 27, 2018 5:36 pm
I tend to favor the AA model (perhaps with a rising glide path, I am just getting started with withdrawal stage, so still debating it internally a bit), so I have not studied it very much in-depth, but doesn't McClung's Prime Harvesting method provide a pretty specific set of rules for withdrawing from bonds first, and when to replenish? I seem to recall, that combined with an EM withdrawal strategy, it was (historically) found to be pretty efficient?
I'm not familiar with that withdrawal strategy; there are many published strategies. Perhaps you could enlighten me.
This is pretty thorough analysis of the Prime Harvesting approach:

https://earlyretirementnow.com/2017/04/ ... arvesting/
Thanks. It's an interesting idea. However, ERN notes that for 1966 retirees, that method only increased the withdrawal rate by .2%, not what I would call a substantial increase. Plus, he noted that this method works best when bonds perform well. It seems unlikely that bonds will perform as well over the next 10-20 years as they did from 1980-2000.
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Re: Are we just way over complicating this?

Post by FIREchief » Wed Jun 27, 2018 10:36 pm

JustinR wrote:
Wed Jun 27, 2018 9:10 pm
FIREchief wrote:
Wed Jun 27, 2018 2:51 pm
A new and growing trend is "I'm sick of my stable, high paying job because somebody is mean to me; should I just quit?" Probably a sign of changing demographics..... :twisted:
Actually more people in this generation will FIRE than any before it due to exactly that mindset. They don't take [poor --admin LadyGeek] work conditions or slaving away until 67 for granted like their predecessors did. They know there's more to life than that so they'll work smart to get it. They have options and the tools to achieve it. Haven't you heard the cliche about millennials hopping jobs every two years to drastically increase their pay? Thats a really common thing and it works.
LOL. You've given me the best entertainment of the day. Work (smart) away!!

People have changed jobs to bump their pay for decades. Do you really thing this generation invented this? Glad you have the options and tools. We've always had the ability to acquire tools (i.e. valuable skills) and options (i.e. the ability to sell those skills to the highest bidder). Has anything really changed? (other than some cry babies quiting jobs, not as part of a strategy to find the best option but instead because somebody was mean to them)

Also, see my post immediately prior in this thread. I have a lot of respect for many in the "current" generation. :sharebeer
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Re: Are we just way over complicating this?

Post by willthrill81 » Wed Jun 27, 2018 10:39 pm

randomguy wrote:
Wed Jun 27, 2018 9:53 pm
It is very, very easy to pay attention to the people shouting loudly (i.e. All those FIRE people who are WORKING on blogs :)).
I think that most of the FIRE community places more emphasis on the financial independence side of it and less on the retirement (i.e. not doing anything that involves compensation) side of it. I don't see this as being disingenuous. If someone wants to pursue a passion that they might make some money doing, maybe even a lot if they get lucky, that doesn't mean that they wouldn't be FI without it. A lot of people would get really bored without doing something productive with their lives, and productivity very often leads to compensation on some level. Plus, I suspect that there are a lot of bloggers in the FIRE community who aren't making enough money doing it to pay for their lattes.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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Re: Are we just way over complicating this?

Post by JustinR » Thu Jun 28, 2018 12:02 am

randomguy wrote:
Wed Jun 27, 2018 9:53 pm
JustinR wrote:
Wed Jun 27, 2018 9:10 pm
FIREchief wrote:
Wed Jun 27, 2018 2:51 pm
A new and growing trend is "I'm sick of my stable, high paying job because somebody is mean to me; should I just quit?" Probably a sign of changing demographics..... :twisted:
Actually more people in this generation will FIRE than any before it due to exactly that mindset. They don't take [poor --admin LadyGeek] work conditions or slaving away until 67 for granted like their predecessors did. They know there's more to life than that so they'll work smart to get it. They have options and the tools to achieve it. Haven't you heard the cliche about millennials hopping jobs every two years to drastically increase their pay? Thats a really common thing and it works.
More people will FIRE because there are more people. The percentage probably hasn't changed. The term FIRing is new. The concept goes back a long ways (at least to the 80s and I wouldn't be shocked it it was the 1780s:)). And I think it is more accurate to say you will "HEAR" a lot more about it. 20 years ago the people that retired early didn't have blogs and the like to shout it out to the world. It is very, very easy to pay attention to the people shouting loudly (i.e. All those FIRE people who are WORKING on blogs :)). The media in general is good at taking small trends and trying to make them big. The internet takes that and allows much smaller subgroups to meet up and form echo chambers.

There also have been people quiting stable high paying jobs forever also. Again you just didn't hear about it if it was outside of your immediate circle of friends 20 years ago. And I remember when I started work about how it was Gen X that was job skipping every 2 years with no loyalty.:) Heck I bet if we had all of Socrates writing we would learn about how the new generation just wasn't dedicated and keep going from one master to another because they were impatient.:)

Now access to cheap investment is pretty new. The concept (for better or worse. All those people that retired thinking 6% was safe were right most of the time and in their ignorance they didn't worry about 30% risk of ruin they were running) of the 4% rule is pretty new.
FIREchief wrote:
Wed Jun 27, 2018 10:36 pm
LOL. You've given me the best entertainment of the day. Work (smart) away!!

People have changed jobs to bump their pay for decades. Do you really thing this generation invented this? Glad you have the options and tools. We've always had the ability to acquire tools (i.e. valuable skills) and options (i.e. the ability to sell those skills to the highest bidder). Has anything really changed? (other than some cry babies quiting jobs, not as part of a strategy to find the best option but instead because somebody was mean to them)

Also, see my post immediately prior in this thread. I have a lot of respect for many in the "current" generation. :sharebeer
I think you're vastly underestimating the difference between this generation and the previous. The amount of information and resources we have today is several magnitudes beyond what the previous generation had. Thanks to FB, Linkedin, Glassdoor, etc. people have access to salary and benefits info, recruiters, employee reviews, connections on a national scale. Recruiters can find you by doing a simple search and message you instantly. You have a friends list of hundreds of connections that can help you find the next job. I have no idea what older people would have done...check their newspaper classified section or send telegrams to every company? I'm gonna guess most people were stuck in their local area because their reach of information was so low.

Investing is incredible accessible now. Any 18 year old can find the Bogleheads forum (because someone mentioned it on Reddit) and learn how to invest immediately on their own. Anyone can learn how to FIRE by reading a few blogs. They can maximize their credit card rewards by checking a few things online. Some older people may have figured out job hopping, but think about how today hundreds of people knowing the instant you switched jobs because you simply changed your work status and now everyone is exposed to that concept until it's the norm. Is being FI the norm? Not nearly yet, but one day it could be.

Thanks to social networks, blogs, feeds, if you're online you can just stumble onto information you might not have even been looking for. You can learn about investing or FIRE even if none of your friends told you about it. In the 90s you may have never found out something if your circle of 10 total friends never mentioned it.

Anyways, sorry for derailing the OP! Yes, a one-fund is something anybody can do. Imagine how someone would find the information in this thread in the 90s. Probably wouldn't.

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Re: Are we just way over complicating this?

Post by FIREchief » Thu Jun 28, 2018 12:59 am

Telegrams?? :confused

I accepted a job half way accross the country over 35 years ago (led to FIRE), and I don't believe I ever sent a telegram. I guess my memory is failing.... 8-)
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Re: Are we just way over complicating this?

Post by TwstdSista » Thu Jun 28, 2018 4:35 am

I don't know. A significant portion of the population finds a three-fund portfolio to be complicated, especially taking into account tax efficiency. But then there's the guy with 10 retirement accounts, divided up into 10 funds at 10% each who claims it's "simple" (that one made my head spin....)

Target Date funds are perfect for most people. I find the 3-fund portfolio perfectly simple for me. Someone mentioned a 5-fund portfolio that took 30 minutes each month to "maintain" -- I think that's too much. (I could do it, but I would set up a single spreadsheet to reduce that 30 minutes down to 5-10).

Meh, I enjoy learning. And my investments are perfectly boring.

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Re: Are we just way over complicating this?

Post by cheesepep » Thu Jun 28, 2018 4:43 am

I got to say that a lot of these posts irritate me because people are overly complicating things, especially the "Can I afford this house/car?" questions. The answer, quite frankly, is super easy, but people still post them supposedly with a radically different scenario from the hundred other ones.

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Re: Are we just way over complicating this?

Post by bayview » Thu Jun 28, 2018 6:32 am

JustinR wrote:
Wed Jun 27, 2018 9:10 pm
FIREchief wrote:
Wed Jun 27, 2018 2:51 pm
A new and growing trend is "I'm sick of my stable, high paying job because somebody is mean to me; should I just quit?" Probably a sign of changing demographics..... :twisted:
Actually more people in this generation will FIRE than any before it due to exactly that mindset. They don't take [poor --admin LadyGeek] work conditions or slaving away until 67 for granted like their predecessors did. They know there's more to life than that so they'll work smart to get it. They have options and the tools to achieve it. Haven't you heard the cliche about millennials hopping jobs every two years to drastically increase their pay? Thats a really common thing and it works.
Employment timing, IMO. :wink:
The continuous execution of a sound strategy gives you the benefit of the strategy. That's what it's all about. --Rick Ferri

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Re: Are we just way over complicating this?

Post by Dandy » Thu Jun 28, 2018 7:26 am

You can make things complicated or simple - too complicated or simplistic. Some of the decisions that affect this are knowledge, time, patience and interest. Anytime you choose a balanced or all in one fund you usually have a trade off between simplicity and desired content/allocation.

For the Balanced Fund (which I own and like) you may want a 50/50 allocation but it is 60/40, you may want some International equity/bond or inflation protected securities exposure but it has none. So, it is good, reasonable and simple. If you are ok with the trade offs then you have a good simple investment for a tax advantaged account - not so great for a taxable account. Taxes could be another trade off. So maybe Balanced Index for tax advantaged and Tax Managed Balanced for taxable account.

Of course on the fixed income side we tend to ignore non bond fund products, e.g. CDs, Savings, Money Markets, Individual TIPS, I bonds, etc. which can play an important role but aren't necessarily critical.

While I could live with Balanced Index in tax advantaged and Tax Managed Balanced in taxable I prefer a bit more complexity at this stage of life - too many trade offs.

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