Three most important elements of investment success

[Rick Ferri]

Complexity is the mother of simplicity. The more I read on Bogleheads about the optimal blend of 37 different factors in a portfolio, the more I'm reminded that none of that matters to your success. The three key elements of investment success are:

1) Spend below your means and save the excess.
2) Take full advantage of tax savings by using tax-deferred and tax-free accounts.
3) Invest in a very simple portfolio of broad market index funds using an allocation you can stick with.

Repeat 1-3 until wealthy.

Thank you very much.

Rick Ferri

[747driver]

Well said.

[jello_nailer]

Occam's Razor.
Basically - when there are multiple solutions, the simplest one, or the one with the least assumptions, is the better choice. Goes back 800 years, probably still true.

[RJC]

This is a great reminder especially after reading all those US/INTL threads.

[vineviz]

Complexity is the mother of simplicity. The more I read on Bogleheads about the optimal blend of 37 different factors in a portfolio . . .

I'd like to see the thread where someone is optimizing exposure to 37 different factors. Link, please?

Seriously, the three elements you laid out represent excellent advice. Why cloud the message with snarky comments and strawman arguments?

[Nate79]

This is very good advice. I especially agree with #1 as I believe savings rate trumps almost everything.

[David Jay]

Complexity is the mother of simplicity. The more I read on Bogleheads about the optimal blend of 37 different factors in a portfolio . . .

I'd like to see the thread where someone is optimizing exposure to 37 different factors. Link, please?

Your sarcasm detector is inop.

[tadamsmar]

Complexity is the mother of simplicity. The more I read on Bogleheads about the optimal blend of 37 different factors in a portfolio, the more I'm reminded that none of that matters to your success. The three key elements of investment success are:

1) Spend below your means and save the excess.
2) Take full advantage of tax savings by using tax-deferred and tax-free accounts.
3) Invest in a very simple portfolio of broad market index funds using an allocation you can stick with.

Repeat 1-3 until wealthy.

Thank you very much.

Rick Ferri

Not exactly on the mark, or did you mean?:

1. Spend one cent below your means and save that.
2. Devote all your free time on tax avoidance.

Probably not,

1. "Save enough" is better.
2. You need to apply the 80-20 rule or similar to tax avoidance. Tax avoidance is a bottomless pit.

[1955Chevy]

Tax avoidance is a bottomless pit.

I don't think this captures what he said. He didn't say "Use tax avoidance" which would indeed be muddy.

He said to utilize tax deferred/free accounts, which will be taking advantage of tax savings. Again, keeping it simple.

[Howard Donnelly]

I love it!

One question please: Would you explain your statement: "Complexity is the mother of simplicity."?

[Sandtrap]

Yes.
There are many paths to wealth and all of them share and include those three concepts.

Thanks for posting.
j

[mtmingus]

Great summary!
Have been practicing both (1) and (2) consistently and learnt how important (3) is till a few years ago!

[dcabler]

Yes.
There are many paths to wealth and all of them share and include those three concepts.

Thanks for posting.
j

Thank you! Quite a diplomatic way of putting it.

[nisiprius]

Occam's Razor.
Basically - when there are multiple solutions, the simplest one, or the one with the least assumptions, is the better choice. Goes back 800 years, probably still true.

He didn't mention Occam, but in 2001, Bogle wrote:

Pillar 2. When All Else Fails, Fall Back on Simplicity.

There are an infinite number of strategies worse than this one: Commit, over a period of a few years, half of your assets to a stock index fund and half to a bond index fund. Ignore interim fluctuations in their net asset values. Hold your positions for as long as you live, subject only to infrequent and marginal adjustments as your circumstances change. When there are multiple solutions to a problem, choose the simplest one.

For the record, in case anyone cites a spurious Einstein quotation, the Quote Investigator could not find evidence that Einstein really said "Everything should be made as simple as possible, but not simpler." That appears to be composer Roger Sessions' paraphrase of what he "remembers" Einstein said "in effect." The closest thing to an actual quotation from Einstein is a 1933 passage:

It can scarcely be denied that the supreme goal of all theory is to make the irreducible basic elements as simple and as few as possible without having to surrender the adequate representation of a single datum of experience.

[9-5 Suited]

Simplicity is of immense value in a number of different ways, and this advice is spot on. Savings rate will dominate most any other decision en route to financial success, although perhaps growing one’s income isn’t talked about enough as a key pillar.

One quibble, Occam’s Razor doesn’t really apply to the Bogleheads vs. Swedroeheads debates. That principle is about not introducing additional assumptions when explaining phenomena. Like if a package shows up at your door, Occam’s Razor says the UPS man left it there not a spaceship from Mars.

[nisiprius]

John C. Bogle devoted a full chapter of Common Sense on Mutual Funds to "Investing with Simplicity." The chapter is very similar to this speech on the Vanguard website, Investing with Simplicity.; a pity that technical glitches have resulted in the loss of all charts.

For years I used the Fidelity Freedom 2020 fund, which is a fund of funds. The current composition is:

Fidelity Series Intrinsic Opportunities Fund 5.61%
Fidelity Series Large Cap Stock Fund 4.73%
Fidelity Series Growth Company Fund 4.41%
Fidelity Series Stock Selector Large Cap Value Fund 3.65%
Fidelity Series Value Discovery Fund 2.62%
Fidelity Series Opportunistic Insights Fund 2.43%
Fidelity Series Blue Chip Growth Fund 2.16%
Fidelity Series Small Cap Opportunities Fund 1.97%
Fidelity Series Large Cap Value Index Fund 1.34%
Fidelity Series All-Sector Equity Fund 1.21%
Fidelity Series Small Cap Discovery Fund 0.63%

Fidelity Series Commodity Strategy Fund 2.79%

Fidelity Series International Growth Fund 5.72%
Fidelity Series International Value Fund 5.31%
Fidelity Series International Small Cap Fund 1.25%
Fidelity Series Canada Fund 0.59%

Fidelity Series Emerging Markets Opportunities Fund 6.24%
Fidelity Series Emerging Markets Fund 0.66%

Fidelity Series Investment Grade Bond Fund 24.75%
Fidelity Series Long-Term Treasury Bond Index Fund 5.41%
Fidelity Series Inflation-Protected Bond Index Fund 5.50%
Fidelity Series High Income Fund 0.74%
Fidelity Series Floating Rate High Income Fund 0.14%
Fidelity Series International Credit Fund 0.07%
Fidelity Series Emerging Markets Debt Fund 0.69%
Fidelity Series Real Estate Income Fund 0.49%
Fidelity Series Government Money Market Fund 6.84%
Fidelity Series Short-Term Credit Fund 1.70%
Fidelity Cash Central Fund 0.26%

When I first became aware of Vanguard Target Retirement 2020, it was a fund-of-funds with four funds in it. They have since added a fifth. I remember thinking there was something deeply wrong, that Vanguard was taking some kind of lazy shortcut, that this was some kind of junior-grade, amateur-night fund.

Needless to say... Portfolio 1 is 100% Fidelity Freedom 2020...

Source



Although the differences are small, over twelve years I don't see that Fidelity got any benefit at all from their complexity.

[SmileyFace]

The biggest element to my investment success is what I would think of as rule #0 to be inserted in front of 1 through 3:

#0) Maximize your salary/income to your highest ability so you have more money to invest.

If you choose a job/career that makes little money you can follow 1 through 3 to your hearts content and never be wealthy. (Very little excess to save)
If you choose a job/career that makes a high salary - you can make lots of mistakes before you implement rules 1 through 3 and still become very wealthy.

[Stinky]

1) Spend below your means and save the excess.
2) Take full advantage of tax savings by using tax-deferred and tax-free accounts.
3) Invest in a very simple portfolio of broad market index funds using an allocation you can stick with.

Repeat 1-3 until wealthy.

The Boglehead philosophy in less than 50 words.

Very well stated.

[caponicus]

Nice graphic comparing Fidelity Freedom Fund 2020 vs Vanguard Target Retirement 2020. I suppose Fidelity's 0.60 expense ratio can explain a big part of the difference in CAGR. That ER is why I abandoned their fund, just as much if not more so than it's complexity.

[Greg in Idaho]

Complexity is the mother of simplicity. The more I read on Bogleheads about the optimal blend of 37 different factors in a portfolio, the more I'm reminded that none of that matters to your success. The three key elements of investment success are:

1) Spend below your means and save the excess.
2) Take full advantage of tax savings by using tax-deferred and tax-free accounts.
3) Invest in a very simple portfolio of broad market index funds using an allocation you can stick with.

Repeat 1-3 until wealthy.

Thank you very much.

Rick Ferri

Yep...so why are we still here???

[Mickey7]

As always, spot on Rick.

[oldzey]

Complexity is the mother of simplicity. The more I read on Bogleheads about the optimal blend of 37 different factors in a portfolio, the more I'm reminded that none of that matters to your success. The three key elements of investment success are:

1) Spend below your means and save the excess.
2) Take full advantage of tax savings by using tax-deferred and tax-free accounts.
3) Invest in a very simple portfolio of broad market index funds using an allocation you can stick with.

Repeat 1-3 until wealthy.

Thank you very much.

Rick Ferri

Thanks for continuing to remind us of Jack's mission, Rick!

[overst33r]

Complexity is the mother of simplicity. The more I read on Bogleheads about the optimal blend of 37 different factors in a portfolio, the more I'm reminded that none of that matters to your success. The three key elements of investment success are:

1) Spend below your means and save the excess.
2) Take full advantage of tax savings by using tax-deferred and tax-free accounts.
3) Invest in a very simple portfolio of broad market index funds using an allocation you can stick with.

Repeat 1-3 until wealthy.

Thank you very much.

Rick Ferri

Yep...so why are we still here???

Us youngins need a reminder every now and then.

[flyingaway]

Complexity is the mother of simplicity. The more I read on Bogleheads about the optimal blend of 37 different factors in a portfolio, the more I'm reminded that none of that matters to your success. The three key elements of investment success are:

1) Spend below your means and save the excess.
2) Take full advantage of tax savings by using tax-deferred and tax-free accounts.
3) Invest in a very simple portfolio of broad market index funds using an allocation you can stick with.

Repeat 1-3 until wealthy.

Thank you very much.

Rick Ferri

Every ordinary people can do that.
The really "smart" guys (e.g., hedge fund managers) will say that they can trade stocks and live above the means and still retire early.

[Rick Ferri]

I love it!

One question please: Would you explain your statement: "Complexity is the mother of simplicity."?

My friend, Allan Roth (who is undergoing hip surgery today) often says, "There is complexity in finding simplicity".

Einstein says, "Out of complexity, find simplicity"

I said, "Complexity is the mother of simplicity."

OK, so, I'm not Einstein.

Rick

[Rick Ferri]

Complexity is the mother of simplicity. The more I read on Bogleheads about the optimal blend of 37 different factors in a portfolio, the more I'm reminded that none of that matters to your success. The three key elements of investment success are:

1) Spend below your means and save the excess.
2) Take full advantage of tax savings by using tax-deferred and tax-free accounts.
3) Invest in a very simple portfolio of broad market index funds using an allocation you can stick with.

Repeat 1-3 until wealthy.

Thank you very much.

Rick Ferri

Yep...so why are we still here???

Because we LOVE being here!

[Howard Donnelly]

I love it!

One question please: Would you explain your statement: "Complexity is the mother of simplicity."?

My friend, Allan Roth (who is undergoing hip surgery today) often says, "There is complexity in finding simplicity".

Einstein says, "Out of complexity, find simplicity"

I said, "Complexity is the mother of simplicity."

OK, so, I'm not Einstein.

Rick

Thank you, Rick.

[fortyofforty]

Complexity is the mother of simplicity. The more I read on Bogleheads about the optimal blend of 37 different factors in a portfolio, the more I'm reminded that none of that matters to your success. The three key elements of investment success are:

1) Spend below your means and save the excess.
2) Take full advantage of tax savings by using tax-deferred and tax-free accounts.
3) Invest in a very simple portfolio of broad market index funds using an allocation you can stick with.

Repeat 1-3 until wealthy.

Thank you very much.

Rick Ferri

Thank you, Rick. Simple and succinct. We all need reminders not to get hung up on the minutia that are debated endlessly here.

[Fallible]

Thanks, Rick, for that firm nudge back to simplicity, to the forest we too often lose sight of for the trees, to the big picture that can tell us what's really important to invest well, and to good old, plain old common sense. It's another reminder why (to paraphrase) investing is simple, but not we all-too-human investors.

[willthrill81]

I think we can simplify the wording even more so.

"Spend significantly less than you earn, and tax-efficiently invest your savings."

[Watty]

3) Invest in a very simple portfolio of broad market index funds using an allocation you can stick with.

I would suggest one change to be;

3) Invest in a very simple portfolio of low cost broad market index funds using an allocation you can stick with.


In a 401k where you do not have control of the funds that are available controlling the costs can be a challenge.

[Silence Dogood]

Excellent post, OP!

Maybe we should start a Boglehead haiku thread?

[trustquestioner]

I have my entire IRA in Wellington. Too simple?

[columbia]

John C. Bogle devoted a full chapter of Common Sense on Mutual Funds to "Investing with Simplicity." The chapter is very similar to this speech on the Vanguard website, Investing with Simplicity.; a pity that technical glitches have resulted in the loss of all charts.

For years I used the Fidelity Freedom 2020 fund, which is a fund of funds. The current composition is:

Fidelity Series Intrinsic Opportunities Fund 5.61%
Fidelity Series Large Cap Stock Fund 4.73%
Fidelity Series Growth Company Fund 4.41%
Fidelity Series Stock Selector Large Cap Value Fund 3.65%
Fidelity Series Value Discovery Fund 2.62%
Fidelity Series Opportunistic Insights Fund 2.43%
Fidelity Series Blue Chip Growth Fund 2.16%
Fidelity Series Small Cap Opportunities Fund 1.97%
Fidelity Series Large Cap Value Index Fund 1.34%
Fidelity Series All-Sector Equity Fund 1.21%
Fidelity Series Small Cap Discovery Fund 0.63%

Fidelity Series Commodity Strategy Fund 2.79%

Fidelity Series International Growth Fund 5.72%
Fidelity Series International Value Fund 5.31%
Fidelity Series International Small Cap Fund 1.25%
Fidelity Series Canada Fund 0.59%

Fidelity Series Emerging Markets Opportunities Fund 6.24%
Fidelity Series Emerging Markets Fund 0.66%

Fidelity Series Investment Grade Bond Fund 24.75%
Fidelity Series Long-Term Treasury Bond Index Fund 5.41%
Fidelity Series Inflation-Protected Bond Index Fund 5.50%
Fidelity Series High Income Fund 0.74%
Fidelity Series Floating Rate High Income Fund 0.14%
Fidelity Series International Credit Fund 0.07%
Fidelity Series Emerging Markets Debt Fund 0.69%
Fidelity Series Real Estate Income Fund 0.49%
Fidelity Series Government Money Market Fund 6.84%
Fidelity Series Short-Term Credit Fund 1.70%
Fidelity Cash Central Fund 0.26%

When I first became aware of Vanguard Target Retirement 2020, it was a fund-of-funds with four funds in it. They have since added a fifth. I remember thinking there was something deeply wrong, that Vanguard was taking some kind of lazy shortcut, that this was some kind of junior-grade, amateur-night fund.

Needless to say... Portfolio 1 is 100% Fidelity Freedom 2020...

Source



Although the differences are small, over twelve years I don't see that Fidelity got any benefit at all from their complexity.

TIAA target funds suffer from this problem, too (in addition to their bloated expenses).

20 different sub-funds:
https://www.nuveen.com/mutual-funds/tia ... titutional

[vineviz]

TIAA target funds suffer from this problem, too (in addition to their bloated expenses).

20 different sub-funds:

There's nothing wrong with having a lot of sub-funds, per se. It's arguably unnecessary (8-10 funds should be plenty) but it's not detrimental.

The high expenses, though, are definitely a red flag.

[Fallible]

I love it!

One question please: Would you explain your statement: "Complexity is the mother of simplicity."?

My friend, Allan Roth (who is undergoing hip surgery today) often says, "There is complexity in finding simplicity".

Einstein says, "Out of complexity, find simplicity"

I said, "Complexity is the mother of simplicity."

OK, so, I'm not Einstein.
Rick

I wondered the same thing as Howard. Close as I could come was that it often takes learning something complex to see how simple it is. And once you learn this and appreciate its simplicity, you can explain it simply.

And I'm not Einstein either.

[arcticpineapplecorp.]

John C. Bogle devoted a full chapter of Common Sense on Mutual Funds to "Investing with Simplicity." The chapter is very similar to this speech on the Vanguard website, Investing with Simplicity.; a pity that technical glitches have resulted in the loss of all charts.

For years I used the Fidelity Freedom 2020 fund, which is a fund of funds. The current composition is:

Fidelity Series Intrinsic Opportunities Fund 5.61%
Fidelity Series Large Cap Stock Fund 4.73%
Fidelity Series Growth Company Fund 4.41%
Fidelity Series Stock Selector Large Cap Value Fund 3.65%
Fidelity Series Value Discovery Fund 2.62%
Fidelity Series Opportunistic Insights Fund 2.43%
Fidelity Series Blue Chip Growth Fund 2.16%
Fidelity Series Small Cap Opportunities Fund 1.97%
Fidelity Series Large Cap Value Index Fund 1.34%
Fidelity Series All-Sector Equity Fund 1.21%
Fidelity Series Small Cap Discovery Fund 0.63%

Fidelity Series Commodity Strategy Fund 2.79%

Fidelity Series International Growth Fund 5.72%
Fidelity Series International Value Fund 5.31%
Fidelity Series International Small Cap Fund 1.25%
Fidelity Series Canada Fund 0.59%

Fidelity Series Emerging Markets Opportunities Fund 6.24%
Fidelity Series Emerging Markets Fund 0.66%

Fidelity Series Investment Grade Bond Fund 24.75%
Fidelity Series Long-Term Treasury Bond Index Fund 5.41%
Fidelity Series Inflation-Protected Bond Index Fund 5.50%
Fidelity Series High Income Fund 0.74%
Fidelity Series Floating Rate High Income Fund 0.14%
Fidelity Series International Credit Fund 0.07%
Fidelity Series Emerging Markets Debt Fund 0.69%
Fidelity Series Real Estate Income Fund 0.49%
Fidelity Series Government Money Market Fund 6.84%
Fidelity Series Short-Term Credit Fund 1.70%
Fidelity Cash Central Fund 0.26%

When I first became aware of Vanguard Target Retirement 2020, it was a fund-of-funds with four funds in it. They have since added a fifth. I remember thinking there was something deeply wrong, that Vanguard was taking some kind of lazy shortcut, that this was some kind of junior-grade, amateur-night fund.

Needless to say... Portfolio 1 is 100% Fidelity Freedom 2020...

Source



Although the differences are small, over twelve years I don't see that Fidelity got any benefit at all from their complexity.

So I was wondering if you were doing some sleight of hand stuff. You see, I was wondering (and was correct) if you were using the Fidelity Freedom 2020 Fund (FFFDX) or the Fidelity Freedom Index 2020 Fund (FPIFX), because as I've pointed out before, they're not the same. The freedom fund is actively managed unlike the freedom index fund. And therefore the freedom 2020 fund has higher costs to manage than the Freedom Index 2020 fund. You did, in fact, use the actively managed version of the 2020 fund with fidelity. Not sure if that was intentional or not.

So I re-ran the numbers to see if the fidelity freedom index2020 fund came closer to the vanguard td 2020 fund. Sure enough, it didn't. The fidelity freedom index 2020 fund also underperformed vanguard's 2020 td fund according to portfolio visualizer (here portfolio 1 is FPIFX, not FFFDX as originally used in Nisiprius' post):



source:
https://www.portfoliovisualizer.com/bac ... 0&total3=0

[looking]

Those multimillionaires made money investing stocks, none of them invested in the index fund in the fidelity or in the vanguard, i never heard those multimillionaires made money investing index fund.
So what i'm saying many ways to go for success in investing in the stock market.

[joe8d]

Complexity is the mother of simplicity. The more I read on Bogleheads about the optimal blend of 37 different factors in a portfolio, the more I'm reminded that none of that matters to your success. The three key elements of investment success are:

1) Spend below your means and save the excess.
2) Take full advantage of tax savings by using tax-deferred and tax-free accounts.
3) Invest in a very simple portfolio of broad market index funds using an allocation you can stick with.

Repeat 1-3 until wealthy.

Thank you very much.

Rick Ferri

[SantaClaraSurfer]

Agreed.

Number 1 is most of the ballgame. (We just downsized our vacation to keep to this goal. We will still have a blast!)

Number 2 can be counterintuitive (esp. maxing 401(k) and living on net pay) but is most of the rest of the ballgame.

Number 3 has less impact on ultimate outcomes, in my view, but has a vital role to play in dealing with challenges. Having a solid plan, keeping it simple, makes it easier to stay the course. Doing 1 & 2 can be undermined if you can't stick to it.

[livesoft]

1) Spend below your means and save the excess.
2) Take full advantage of tax savings by using tax-deferred and tax-free accounts.
3) Invest in a very simple portfolio of broad market index funds using an allocation you can stick with.

Repeat 1-3 until wealthy.

Thank goodness we can get out of the repetitive grind and do anything we want with our investing once we are wealthy.

[heyyou]

If you choose a job/career that makes little money you can follow 1 through 3 to your hearts content and never be wealthy. (Very little excess to save)
If you choose a job/career that makes a high salary - you can make lots of mistakes before you implement rules 1 through 3 and still become very wealthy.

Wealthy was not my goal, I only wanted a comfortable retirement. Note that saving a noticeable amount of your income for more than two decades, conditions you to living on less than those who spend all of a similar sized, or larger income. DW and I were able to retire early when my pension credits reached our post-savings spending level. That is far from wealthy, we just no longer needed to have jobs, in order to fund our conservative living expenses i.e. in 2008-2009.

[naha66]

The biggest element to my investment success is what I would think of as rule #0 to be inserted in front of 1 through 3:

#0) Maximize your salary/income to your highest ability so you have more money to invest.

If you choose a job/career that makes little money you can follow 1 through 3 to your hearts content and never be wealthy. (Very little excess to save)
If you choose a job/career that makes a high salary - you can make lots of mistakes before you implement rules 1 through 3 and still become very wealthy.

Says who,what's wealthy to you is not the same for me. They are plenty of lower middle class earners who consider themselves wealthy with between 500k and 1 millon in net worth at retirement, not everybody lives in a HCOL area.

[RadAudit]

Those multimillionaires made money investing stocks, none of them invested in the index fund in the fidelity or in the vanguard, i never heard those multimillionaires made money investing index fund.

They are plenty of lower middle class earners who consider themselves wealthy with between 500k and 1 millon in net worth at retirement, not everybody lives in a HCOL area.

Different people. Different goals.

My goal wasn't "wealth", per se. My goal was "enough." Simplicity and index funds were appropriate tools for getting to enough. Just hoping that "enough" is really enough. Maybe I should of erred on the high side of that estimate; but, time has a way of answering that question. So, we'll see. But, if I come up short - for whatever reason - index funds won't be reason for failure.

[SmileyFace]

The biggest element to my investment success is what I would think of as rule #0 to be inserted in front of 1 through 3:

#0) Maximize your salary/income to your highest ability so you have more money to invest.

If you choose a job/career that makes little money you can follow 1 through 3 to your hearts content and never be wealthy. (Very little excess to save)
If you choose a job/career that makes a high salary - you can make lots of mistakes before you implement rules 1 through 3 and still become very wealthy.

Says who,what's wealthy to you is not the same for me. They are plenty of lower middle class earners who consider themselves wealthy with between 500k and 1 millon in net worth at retirement, not everybody lives in a HCOL area.

Sure - its all relative.
I was keying in on the textbook definiton of wealthy:

someone who has accumulated substantial wealth relative to others in their society or reference group

You can't deny that even in a LCOL area its easier to build wealth if your income is on the upper end for the area you live in. Now if your goals are comfort/lifestyle/work-life-balance and wealth plays a lessor factor in these goals for you there is certainly nothing wrong with that.

[Ferdinand2014]

Complexity is the mother of simplicity. The more I read on Bogleheads about the optimal blend of 37 different factors in a portfolio, the more I'm reminded that none of that matters to your success. The three key elements of investment success are:

1) Spend below your means and save the excess.
2) Take full advantage of tax savings by using tax-deferred and tax-free accounts.
3) Invest in a very simple portfolio of broad market index funds using an allocation you can stick with.

Repeat 1-3 until wealthy.

Thank you very much.

Rick Ferri

A common trait of exceptionally intellectually gifted individuals is to be able to take a complex subject and make it simple to understand to an average person. Bogle, Buffett and Swensen come to mind. They also advocate simplicity in portfolio design.

[MathIsMyWayr]

1) Spend below your means and save the excess.
2) Take full advantage of tax savings by using tax-deferred and tax-free accounts.
3) Invest in a very simple portfolio of broad market index funds using an allocation you can stick with.

+1. 1) and 2) may be readily proved.
All the fancy voodoo arguments, terminologies, and pseudo math are created all the time to dispute or improve 3) with utter failure.

[dwickenh]

This is a great reminder especially after reading all those US/INTL threads.

+1

[dwickenh]

The biggest element to my investment success is what I would think of as rule #0 to be inserted in front of 1 through 3:

#0) Maximize your salary/income to your highest ability so you have more money to invest.

If you choose a job/career that makes little money you can follow 1 through 3 to your hearts content and never be wealthy. (Very little excess to save)
If you choose a job/career that makes a high salary - you can make lots of mistakes before you implement rules 1 through 3 and still become very wealthy.

I disagree. Wealth is relative to expenses. I did not maximize my salary/income to my highest ability(time constraints).
I spent ample time with my spouse and 4 children while striking a balance between career/income and home life.
I now have 40 times yearly expenses covered with investments at the age of 64 and 4 great children on their own.
That is wealthy to me, but may not impress those looking at numbers only.

Dan

[KlangFool]

The biggest element to my investment success is what I would think of as rule #0 to be inserted in front of 1 through 3:

#0) Maximize your salary/income to your highest ability so you have more money to invest.

If you choose a job/career that makes little money you can follow 1 through 3 to your hearts content and never be wealthy. (Very little excess to save)
If you choose a job/career that makes a high salary - you can make lots of mistakes before you implement rules 1 through 3 and still become very wealthy.

DaftInvestor,

<< If you choose a job/career that makes little money you can follow 1 through 3 to your hearts content and never be wealthy. >>

I disagreed.

1) Coming from a culture/country where the average gross saving rate 30+%, income is never an obstacle to saving.

2) Many of my family members are FI and millionaires. Not all of them have a high income.

3) In fact, in my opinion, besides not helpful, this is harmful. Many people complained that they could not save because their income is not high enough. This is true regardless of their income level. Average American gross saving rate is less than 5%. As per my observation, the low saving rate is consistent across all income level.

KlangFool