Jack Bogle's answer to the question: Let’s hear your quick advice for a primer on personal finances.

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Rowan Oak
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Jack Bogle's answer to the question: Let’s hear your quick advice for a primer on personal finances.

Post by Rowan Oak » Sun Jul 22, 2018 9:16 pm

From an interview he did with Freakonomics Radio
August 2, 2017
by Stephen J. Dubner

This is a podcast so you can listen to his interview here:
http://freakonomics.com/podcast/everyth ... fraid-ask/

DUBNER: Let’s hear your quick advice for a primer on personal finances. Aside from investing in index funds— we know you’re going to advocate that. But it sounds like you’ve got a personal philosophy in terms of personal finance as well.

BOGLE: It’s pretty simple: avoid emotions and concentrate on the economics. Invest for the long term and don’t trade. The ups and downs of the markets are unpredictable and foolish in the short term.

DUBNER: You say that as someone who’s successful at avoiding emotions, but you have to know that most people aren’t, whether we’re talking about investing or saving versus spending or politics or whatever. How did you either get to be the rational thinker that you are, or how do you advise people to move in that direction? Because plainly it’s not so easy for most people.

BOGLE: No. Let me be honest. It’s not easy for me. When we get one of these 50 percent declines, I’ve faced three of them in my career. It’s not fun. I get a knot in my stomach. A lifetime of experience, 65 years of experience in this field, has taught me that emotions are evil and therefore you really ought to fight to keep them out of the equation. Because the day you are most concerned is the day the market hits bottom and that’s the day you want to get out. The day you will want to get in? When the market it’s a new high. Well, believe me, buying in at the market’s new high and selling out at the market’s bottom is a very difficult way to make money.

DUBNER: What about spending versus saving? How would you counsel someone to think about that?

BOGLE: Well, every family is different. Given the unequal distribution of income, 20 percent of the families can’t possibly invest. They’re trying to stay alive, keep the wolf from the door, keep the children fed and housed and warm. When you get well up the scale of living, you’re able to afford more. People should pay themselves first out of every paycheck and have a contribution to a pension plan and just keep putting it away. Don’t even look at it. Don’t peek! When you open your envelope when you’re age 65 and are retired, be sure and have a good cardiologist with you because you’re going to faint.

DUBNER: Faint with happiness, not with shock.

BOGLE: Faint with happiness, right. You won’t believe it!
Last edited by Rowan Oak on Mon Jul 23, 2018 10:09 am, edited 1 time in total.
“If you can get good at destroying your own wrong ideas, that is a great gift.” – Charlie Munger

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steve roy
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Re: Jack Bogle's answer to the question: Let’s hear your quick advice for a primer on personal finances.

Post by steve roy » Sun Jul 22, 2018 9:58 pm

Great, simple, straightforward advice, for which thanks.

The longer I’m in the game the more I’m convinced that a Target Date Fund is the way to go.

Set and ignore (to the best of your ability).

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Lancelot
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Re: Jack Bogle's answer to the question: Let’s hear your quick advice for a primer on personal finances.

Post by Lancelot » Sun Jul 22, 2018 10:09 pm

Rowan Oak wrote:
Sun Jul 22, 2018 9:16 pm

BOGLE: No. Let me be honest. It’s not easy for me. When we get one of these 50 percent declines, I’ve faced three of them in my career. It’s not fun. I get a knot in my stomach. A lifetime of experience, 65 years of experience in this field, has taught me that emotions are evil and therefore you really ought to fight to keep them out of the equation. Because the day you are most concerned is the day the market hits bottom and that’s the day you want to get out. The day you will want to get in? When the market it’s a new high. Well, believe me, buying in at the market’s new high and selling out at the market’s bottom is a very difficult way to make money.
For young investors, the steep declines are where the money is made- over the long term. I know one guy that's around 50 now and bailed out of stocks in 2009 and never got back in. Another was a retiree, that also bailed in 2009 and went to cash. He depleted his retirement savings at around age 75. Those 50% drops are indeed gutwrenching but that goes with the territory.

Good article, thanks for sharing.
No Where for Very Long...

Miriam2
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Re: Jack Bogle's answer to the question: Let’s hear your quick advice for a primer on personal finances.

Post by Miriam2 » Sun Jul 22, 2018 11:14 pm

Rowan Oak wrote: From an interview he did with Freakonomics Radio
August 2, 2017
by Stephen J. Dubner

This is a podcast so you can listen to his interview here:
http://freakonomics.com/podcast/everyth ... fraid-ask/
I once heard a different interview where Jack Bogle was talking about THIS interview with what he called "those guys over there in Freakonomics" - I think he enjoyed their interview with him very much.

Thank you for posting this.

retiringwhen
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Re: Jack Bogle's answer to the question: Let’s hear your quick advice for a primer on personal finances.

Post by retiringwhen » Mon Jul 23, 2018 11:29 am

This was a very influential interview at least from my family's perspective.

I have a brother who was a casual (passive as in not managing) investor using EJ.

He is also a Freakonomics listener.

He called me after hearing that podcast asking some questions since I had mentioned a was a passive/Vanguard investor in earlier conversations.

It start his process of dumping a fee-based advisor and moving to mostly an all index approach....

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Rowan Oak
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Re: Jack Bogle's answer to the question: Let’s hear your quick advice for a primer on personal finances.

Post by Rowan Oak » Sun Sep 02, 2018 8:38 am

retiringwhen wrote:
Mon Jul 23, 2018 11:29 am
This was a very influential interview at least from my family's perspective.

I have a brother who was a casual (passive as in not managing) investor using EJ.

He is also a Freakonomics listener.

He called me after hearing that podcast asking some questions since I had mentioned a was a passive/Vanguard investor in earlier conversations.

It start his process of dumping a fee-based advisor and moving to mostly an all index approach....
Amazing what a short interview with Jack Bogle can do. I have found that it's very difficult to convince others of the Bogleheads investment philosophy (or anything that doesn't align with their current thinking) once they've chosen another way (sunk-cost fallacy + confirmation bias? while of course this applies to me as well hence the difficulty). I think you have to be open and actively searching for the truth. Unfortunately, you usually don't get to this point without some hard lessons -not always, but sometimes. If you're lucky you'll read one of Jack's books or happen upon one of his interviews at just the right time.
“If you can get good at destroying your own wrong ideas, that is a great gift.” – Charlie Munger

Dandy
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Re: Jack Bogle's answer to the question: Let’s hear your quick advice for a primer on personal finances.

Post by Dandy » Sun Sep 02, 2018 9:41 am

once again the well meaning but dumb and dangerous don't peek advice. He really should stop saying that. Everyone needs to look at their financial statements on a somewhat frequent basis to make sure all is ok. If there is an error or fraud financial firms expect you to give them reasonably prompt notice. You can't say "but Mr. Bogle told me not to look".

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Rowan Oak
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Re: Jack Bogle's answer to the question: Let’s hear your quick advice for a primer on personal finances.

Post by Rowan Oak » Sun Sep 02, 2018 10:01 am

Dandy wrote:
Sun Sep 02, 2018 9:41 am
once again the well meaning but dumb and dangerous don't peek advice. He really should stop saying that. Everyone needs to look at their financial statements on a somewhat frequent basis to make sure all is ok. If there is an error or fraud financial firms expect you to give them reasonably prompt notice. You can't say "but Mr. Bogle told me not to look".
Do you think he means it so literally? Isn't it just his way of saying ignore the noise and the short-term ups and downs of the market.
“If you can get good at destroying your own wrong ideas, that is a great gift.” – Charlie Munger

Dandy
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Re: Jack Bogle's answer to the question: Let’s hear your quick advice for a primer on personal finances.

Post by Dandy » Sun Sep 02, 2018 11:10 am

Rowan Oak wrote:
Sun Sep 02, 2018 10:01 am
Do you think he means it so literally? Isn't it just his way of saying ignore the noise and the short-term ups and downs of the market.
He doesn't qualify it. He could say "in theory it would be best if people didn't peek..". If he doesn't mean it he should say so because some non investment/financial savvy people will likely follow it. The issue becomes even more concerning since many choose not to get their financial statements on line. So, they have to take more action to do what they should be doing rather than just opening the mail.

bmelikia
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Re: Jack Bogle's answer to the question: Let’s hear your quick advice for a primer on personal finances.

Post by bmelikia » Sun Sep 02, 2018 11:34 am

steve roy wrote:
Sun Jul 22, 2018 9:58 pm
Great, simple, straightforward advice, for which thanks.

The longer I’m in the game the more I’m convinced that a Target Date Fund is the way to go.

Set and ignore (to the best of your ability).
I’m sure there are better strategies but I’ve decided that this is the best strategy for me too. . .
"I would rather die with money, than live without it...." - Bogleheads member Ron | | "The greatest enemy of a good plan, is the dream of a perfect plan." | -Bogle

Kevin8696
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Re: Jack Bogle's answer to the question: Let’s hear your quick advice for a primer on personal finances.

Post by Kevin8696 » Sun Sep 02, 2018 2:07 pm

bmelikia wrote:
Sun Sep 02, 2018 11:34 am
steve roy wrote:
Sun Jul 22, 2018 9:58 pm
Great, simple, straightforward advice, for which thanks.

The longer I’m in the game the more I’m convinced that a Target Date Fund is the way to go.

Set and ignore (to the best of your ability).
I’m sure there are better strategies but I’ve decided that this is the best strategy for me too. . .
Your Bogle quote on the perfect plan is actually from Prussian General Karl Von Clausewitz, circa 1832.

https://www.goodreads.com/quotes/433005 ... e-dream-of

:happy

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burt
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Re: Jack Bogle's answer to the question: Let’s hear your quick advice for a primer on personal finances.

Post by burt » Sun Sep 02, 2018 5:55 pm

steve roy wrote:
Sun Jul 22, 2018 9:58 pm
Great, simple, straightforward advice, for which thanks.

The longer I’m in the game the more I’m convinced that a Target Date Fund is the way to go.

Set and ignore (to the best of your ability).
+1
The older I get, I think more about a balanced index fund.

burt

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