What made you get rid of your funny money?

[manlymatt83]

It seems like many Bogleheads, myself included, went through a phase of separating out some “funny money” for side bets — whether it be crypto, options, individual stocks, etc.

I also read a lot about Bogleheads who are strict index investors and don’t have this allocation.

Personally, I am a little addicted to instant gratification, so a side of funny money has always been interesting to me. But seeing my VTWAX investment grow has made me consider how much consolidating my “funny money” into VTWAX would increase the number of shares I own even more. My “funny money” is only about 10% of total allocation, but still!

Bogleheads who used to have funny money and don’t anymore - what changed for you to be 100% index without exception?

[Johndoefire65]

It's annoying and not worth the hassle... I'd rather set it and forget and do something else than spend my life reading markets and checking prices. I do have 2k invested into fundrise but it's such a tiny amount of my investments it doesn't make a difference

[Californiastate]

I found other hobbies.

[sailaway]

My "funny money" is from buying motifs before I realized you could buy index funds outside of workplace retirement accounts. I never really did play with it, although I sometimes chose a new motif when I had a lump sum.

I occasionally did some tax loss harvesting, and all partial shares were sold when Motif shut down and I made a transfer. But the rest are just sitting there fluctuating wildly, as some of it is TESLA. DRIP is off, so that I can reinvest any dividends in VXUS. Not worth selling anything with a gain while we are paying NIIT, given we will likely be in the 0% LTCG in a couple of years.

[ivgrivchuck]

I understand that when it comes to public stocks I'm at serious information and analytical disadvantage compared to big players.

I've never had a need to gamble. Because I'm at disadvantage, picking individual stocks/options becomes a negative expectations game, and I lose interest.

However if a situation in the future arises that I have an edge (information advantage, market inefficiency), I'm ready to make a significant side bet. I'm not actively looking, so chances of that happening are slim.

I do some arbitrage. For example if risk-free rate is 2%, equity risk premium is 5%, and I-bonds return 8%, it's pretty clear that there is an arbitrage opportunity, and a rational investor is going to put as much money into I-bonds as possible.

[bertilak]

I found other hobbies.

That's it exactly.

I don't look at investing as a hobby but as a way to ensure a comfortable retirement. Sure, I can afford to spend some of my nest egg on fun, games and hobbies (part of being comfortable!) but Investing is none of those things.

Before Bogleheads, investing was a somewhat onerous and stress-inducing chore. No longer. Now it's just part of live, like shaving and brushing one's teeth, things I don't want to over-complicate.

[Cheez-It Guy]

I never had any. I don't find stressing out and losing money fun. Same reason I don't gamble.

[Taylor Larimore]

manlymatt83:

I assume "funny money" means gambling on individual stocks.

My investment goals are too important to be gambled away on "funny money."

Best wishes.
Taylor

Jack Bogle's Words of Wisdom: ”Nine words comprising the best investing advice you will ever receive – Have a plan, invest properly, sit tight, don't peek.”

[Johny Fever]

We bought a hobby farm. That has been our funny money investment over the years.

[manlymatt83]

We bought a hobby farm. That has been our funny money investment over the years.

What’s a hobby farm?

[H-Town]

It seems like many Bogleheads, myself included, went through a phase of separating out some “funny money” for side bets — whether it be crypto, options, individual stocks, etc.

I also read a lot about Bogleheads who are strict index investors and don’t have this allocation.

Personally, I am a little addicted to instant gratification, so a side of funny money has always been interesting to me. But seeing my VTWAX investment grow has made me consider how much consolidating my “funny money” into VTWAX would increase the number of shares I own even more. My “funny money” is only about 10% of total allocation, but still!

Bogleheads who used to have funny money and don’t anymore - what changed for you to be 100% index without exception?

2008 crash. I didn't have a lot back then, but I lost half of what I gambled. Part of buying individual stocks is to know the right time to sell, not just guessing the right stocks that will have high return. So I closed that chapter of my life. From that point, I just invest in index funds. I don't care when I need to sell or which stocks to pick. I just care about how much I can save/invest in index fund. So I went on and focused on increasing my earning potential. It's the main reason why I achieved FI with > 50x.

[Doc7]

I am strictly opposed to any sort of “% or $” of investments going to fun/hobby/speculation although I know Bogle said it once so folks use that to do so. Every dollar of my family’s savings for investments is directed to work hard and as “correctly” as I know how, that is my role as steward of our finances.

I do however, enjoy the prerogative to spend my $112/Month actual “hobby money” as I see fit - as she does her own $112/mo - mostly I spend it on fried chicken, but occasionally a hunting license, ammo, or savings for a firearm. At one point I had about $1000 saved up of this hobby money, and I turned it into $4000 on GameStop. I turned it into basically $0 with LUMN options. These choices Have real and tangible impacts on my lifestyle, as observed by a worse truck, worse boat motor (a 7.5 HP 1981 Evinrude I bought for $35 cause that’s all I can “afford”, with a household income well north of $200K and annual retirement savings of > $60K) because of the choices I made gambling my $112/month I could direct towards these things.

If you reduce your “real portfolio” (currently or via redirecting future investments) to fun hobby gambling, I think that’s an incorrect action to take.

[Statistical]

It seems like many Bogleheads, myself included, went through a phase of separating out some “funny money” for side bets — whether it be crypto, options, individual stocks, etc.

I also read a lot about Bogleheads who are strict index investors and don’t have this allocation.

Personally, I am a little addicted to instant gratification, so a side of funny money has always been interesting to me. But seeing my VTWAX investment grow has made me consider how much consolidating my “funny money” into VTWAX would increase the number of shares I own even more. My “funny money” is only about 10% of total allocation, but still!

Bogleheads who used to have funny money and don’t anymore - what changed for you to be 100% index without exception?

Keeping track of my stock picks separately and seeing they underperformed VTI. I mean I knew stock picking was a losers game on a logical level but seeing cold hard numbers of my specific picks made it more real. Went back 10 years and saw overall my arguably high risk portfolio underperformed VTI by about 3% CAGR. That was enough. I like wealth more than playing "pro stockpicker".

The other aspect is that due to some life changes a taxable account makes up a larger portion of our net worth. Dumb stock picking games are bad enough in a tax sheltered account but in a taxable account you have the added drag of taxes. If I couldn't beat VTI without taxes well adding taxes would make it even worse.

[runner3081]

The initial intent was to make wild bets that would pay off. However, as our portfolio grew, this became such a small part of the whole picture that even if it DID go up 1000%, it wouldn't make a material difference on the overall picture. Didn't make sense to continue it at that point.

[Johny Fever]

We bought a hobby farm. That has been our funny money investment over the years.

What’s a hobby farm?

Basically my wife farms part time. Much smaller operation. She has 5 acres of peonies and 7 acres of organic veggies and about 100 acres of pastures for her horses. I should add that there are some pretty sweet tax loopholes if you plan it right. But you have to love this to do it...its not about the money for sure!
Someone once asked a farmer what he would do if he won the lottery and his reply was," Well I guess I will farm til I use up that money."

[galawdawg]

We bought a hobby farm. That has been our funny money investment over the years.

What’s a hobby farm?

Where you grow hobbies, of course..

[Ed 2]

It seems like many Bogleheads, myself included, went through a phase of separating out some “funny money” for side bets — whether it be crypto, options, individual stocks, etc.

I also read a lot about Bogleheads who are strict index investors and don’t have this allocation.

Personally, I am a little addicted to instant gratification, so a side of funny money has always been interesting to me. But seeing my VTWAX investment grow has made me consider how much consolidating my “funny money” into VTWAX would increase the number of shares I own even more. My “funny money” is only about 10% of total allocation, but still!

Bogleheads who used to have funny money and don’t anymore - what changed for you to be 100% index without exception?

There are bogleheads and there are bogleheads wannabe. I think you referred about the second category on this forum?

[UpperNwGuy]

I never had any. I don't find stressing out and losing money fun. Same reason I don't gamble.

I agree completely!

[celia]

I’m still investing in new “funny money” items as I learn about new things. I’m also conscious of simplifying our estate to make it easier for our future trustees. So I am going in two opposite directions at the same time.

I guess I am still interested in “diversification of problems”. (I help others solve their financial problems so will expect my heirs to clean up mine, if I haven’t done it before I die.)

[arcticpineapplecorp.]

i can't answer your question because i never had any funny money. all my money i considered serious money.

but just for fun i just ran two calculations:

1. the future value using an expected rate of return over the next 20 years (when I may retire) on my amount of annual contributions and the current balance.
2. the future value using the same expected rate of return over the next 20 years on my amount of annual contributions and 90% of the current balance.

I used 90% of my current balance in #2 because you're playing with 10% of your money. So you should see what just 90% vs 100% of your money growing will look like to see if it's worth it to you to potentially sacrifice the growth on 10% of your money. Spoiler alert: I don't.

For me (your mileage may vary) the difference equals around $300,000.

For you that might be funny money.

It's not for me.

If you expect a greater return, make larger contributions, and/or have a larger current balance, the difference can be even more staggering.

this of course assumes the other 10% went to $0. But that's the point, isn't it? Everybody says regarding funny money, "only be willing to play with money you can afford to lose, because you just might".

So you really want to look at the difference between how your contributions and current portfolio will grow vs. how your contributions and 90% of your current portfolio will grow. Otherwise, it's just mental accounting.

make sense?

[AnnetteLouisan]

My tiny ex US index allocation (around 3 percent of my 401k) is my fun money. No offense to ardent ex US investors. And again it’s worth distinguishing fun money from funny money, much like we refer to pension plans and not pension “schemes” as they do in the UK since it sounds a bit fishy unintentionally.

[Marseille07]

I had to reduce funny money because the BH 60/40 just keeps losing money and I had to shore up capital.

[jjj_22]

My funny money went to zero. Well, not actually, but close enough.

It was a little funny I guess, but not funny enough for me to want to do that again.

[slippinsurlies]

We bought a hobby farm. That has been our funny money investment over the years.

What’s a hobby farm?

Basically my wife farms part time. Much smaller operation. She has 5 acres of peonies and 7 acres of organic veggies and about 100 acres of pastures for her horses. I should add that there are some pretty sweet tax loopholes if you plan it right. But you have to love this to do it...its not about the money for sure!
Someone once asked a farmer what he would do if he won the lottery and his reply was," Well I guess I will farm til I use up that money."

That sounds like the life I want.

May I ask in what state you have a hobby farm?

[jmw]

Let's not forget airline miles and hotel points. You're giving up 2.0% to 2.6% or more in cash rewards when earning travel funny money via credit cards. Of course there are the large signup bonuses but the signup bonus is tiny when it is cash.

Unfortunately, when you try to redeem miles and points even back in the old days, it was difficult to get enough business class seats and luxury hotel rooms outside of Tuesdays and Wednesdays during the middle of the off-season when the kids are in school. Sometimes the redemption price is jacked up. US Airways 110K miles business awards and Hilton's 6-day reward were my favorites to get the best value for funny money but they're long gone. Combine that with easy liquidation with manufactured spending back in the old days and we were in heaven. Every so often, the miles and points depreciate considerably relative to the US dollar.

I got rid of the funny money by liquidating all of the points and miles by using them including the reserves I had held back for last minute funeral trips. The only reward I want is cash. I don't do manufactured spending anymore. I prefer the flat no rotating category cards but I do hold category cards just in case of a big purchase that matches the right category.

[Logan Roy]

It seems like many Bogleheads, myself included, went through a phase of separating out some “funny money” for side bets — whether it be crypto, options, individual stocks, etc.

I find it very useful for dealing with market stress. The need to feel in control, and not at the whim of markets, is behind most investing mistakes. So having fun money can be a great way to channel that neurosis. I recently bought MSCI China and Alibaba in my fun money account. Little bright spots at the moment – something nice to focus on. I might put Stops on them – generally my approach with fun money is limit downside. Not always smart with your core investments, but you want fun money to be a source of fun (and not failure/regret). That might be why people give up on fun money.

I'd just say: have it in a separate account. Preferably on a trading platform with zero transaction costs (so the will to fiddle can be exercised without reservation). Avoid options, CFDs, etc. unless absolutely necessary (the maths of trading those is terrible).

[sschullo]

2000 - 2003 crash, no more individual stocks.

[Bernmaster]

My picks performed so poorly in comparison to the market that I stopped.

After I stopped picking stocks with real money I continued doing so in a stockpicking game. Here my biggest positions were Gazprom and Wirecard - both went to zero

[Valuethinker]

My tiny ex US index allocation (around 3 percent of my 401k) is my fun money. No offense to ardent ex US investors. And again it’s worth distinguishing fun money from funny money, much like we refer to pension plans and not pension “schemes” as they do in the UK since it sounds a bit fishy unintentionally.

3% won't move the needle here or there-- negligible impact on your final wealth.

You have hitched your mast to (presumably) the US stock market. I feel a lot more comfortable doing that now, with the big internet stocks down a third typically, than I would have 6 months ago. It's clear the market is in a period of rebalancing, similar to the post 2000 period, what I don't know is for how long this goes on. Inflation wasn't a threat then, and monetary policy was very accommodating. Arguably that's what led to the US housing bubble (along with financial deregulation) of say 2002-2006.

and not pension “schemes” as they do in the UK since it sounds a bit fishy - to an American - unintentionally.

There. I fixed the sentence for you

In Glasgow, "schemes" are public housing (state provided) aka "Council houses" in England and "Projects" in America?

In Scotland "Tenements" are respectable middle class flats usually dating from the pre 1914 period. They typically have 11'+ ceilings and all the flats are organised around a central stairwell which is lit by a skylight. They are very popular and expensive, now. The New York Tenement museum has a good example of one (from memory a bit smaller) - but the Scottish ones were always middle class homes, w/as the NY one is about the immigrant experience on the ? Lower East Side-- overcrowding, squalor etc.

(If you ever get around to travelling to Berlin, there's also one in the Prinzlaer Berg area of former East Berlin (now very trendy). A typical working class flat of the 1900 vintage. I visited that one, at a different location, in 1990 when there was still an East Germany. But it has been recreated (with more in English, from memory)).

I don't know why we call them "Pension Schemes" but it probably has some actuarial origin-- it's slightly old-fashioned, I think. "My pension" is pretty standard usage. Only a specialist would talk about "pension plans".

[Valuethinker]

My picks performed so poorly in comparison to the market that I stopped.

After I stopped picking stocks with real money I continued doing so in a stockpicking game. Here my biggest positions were Gazprom and Wirecard - both went to zero

Gazprom was the cheapest energy producer out there. And it just paid a record dividend - but in roubles .

I had an Emerging Market Dividend fund (ticker SEDY) which was over 20% in Russia. That dropped to zero in about 3 months .

[RobLyons]

What made me get rid of funny money was losing it and the emotions of winning/losing. I don't want that feeling even with 5% of my investment portfolio.

[PicassoSparks]

My funny money is substantially outperforming my Boglehead money. That’s fine. I don’t expect it to last and I’m certainly under no illusions that I’m a brilliant stock picker.

[dcabler]

It seems like many Bogleheads, myself included, went through a phase of separating out some “funny money” for side bets — whether it be crypto, options, individual stocks, etc.

I also read a lot about Bogleheads who are strict index investors and don’t have this allocation.

Personally, I am a little addicted to instant gratification, so a side of funny money has always been interesting to me. But seeing my VTWAX investment grow has made me consider how much consolidating my “funny money” into VTWAX would increase the number of shares I own even more. My “funny money” is only about 10% of total allocation, but still!

Bogleheads who used to have funny money and don’t anymore - what changed for you to be 100% index without exception?

I got older, found out I didn't have the time for this and ultimately also got bored with it and moved on to something else... Like getting healthier.

Cheers.

[bubbadog]

My "funny money" is used to purchase and enjoy sports cars. I usually look for vehicles that are 10-15 years old that are not quite collectible and are obviously not the latest and greatest. With the recent run up in prices across the board, opportunities are pretty slim right now. I enjoy the hunt and sorting them out once I bring them home. I never make a great deal of money but I haven't sold one for less than my purchase price. On a side note, does anyone have a 2006-2012 Aston Martin Vantage manual roadster they want to part with?

[22twain]

We bought a hobby farm. That has been our funny money investment over the years.

What’s a hobby farm?

Where you grow hobbies, of course..

I was thinking it's where you ride hobby horses (of course, of course).

[toomanysidehustles]

Had (still have) a funny money crypto account. I put side hustle money, used bike sales, etc. Into I and it really took off. It allowed me to cash out and buy a couple houses. Not sure I'm allowed to talk about that on here though.

[superbrugha]

Why did I stop playing with funny money?

Two reasons

1. Losing most of it, eventually.

2. Developing a total obsession with trading and the markets. I was thinking of little else 18 hours a day, even at work. Clearly I have a very susceptible personality, and the internet and smartphones had me completely addicted.

I eventually had to move all of my savings off other brokers and onto Vanguard.

The fact you can only buy Vanguard funds stops me daytrading stocks, that alone is worth multiples of the platform charge.

[crg11]

The few times I tried, I failed despite watching my index investments continue to climb. It was a lesson that I am not better than the market and I should just devote mental space to other things.

[Creditcardguy]

We bought a hobby farm. That has been our funny money investment over the years.

What’s a hobby farm?

Where you grow hobbies, of course..

I did laugh out loud! Where’s the “like” button?

[tc101]

I make small bets. The total amount of money I make these bets with is less than 0.2% of my stock allocation, so it is insignificant. I make these small bets just to see if I can beat the market. I can't.

Why do this? I look at the return of my small bets, there on the screen next to the return of my index funds, and it is a good visible reminder not to make any larger bets.

Also, it is fun.

[fishandgolf]

I found other hobbies.

+100

Yep......I spend my funny money on fishing and golfing.....

[Johny Fever]

We bought a hobby farm. That has been our funny money investment over the years.

What’s a hobby farm?

Basically my wife farms part time. Much smaller operation. She has 5 acres of peonies and 7 acres of organic veggies and about 100 acres of pastures for her horses. I should add that there are some pretty sweet tax loopholes if you plan it right. But you have to love this to do it...its not about the money for sure!
Someone once asked a farmer what he would do if he won the lottery and his reply was," Well I guess I will farm til I use up that money."

That sounds like the life I want.

May I ask in what state you have a hobby farm?

We are in southwestern Michigan on the Lake Michigan shoreline. I still have an auto repair business and rebuild classic cars and DW is an ER Doc...we are selling the auto repair businesses and keeping the classic cars business and she has cut back to working maybe one shift every two weeks until they can get the new docs onboarded to replace her. We are both on Medicare now so that is an issue to be sure if you want to farm. No one wants to insure a farmer...LOL...if you love hard work, long hours then go for it...wish ya the best.

[JimmyD]

Never had any and even if I did, there's no way I'd put it any speculative investment or gamble it. I view every single, individual dollar as a small, money-making machine that must be tended to (invested wisely) in order for it to function optimally.

That said, every spare dollar gets invested according to our plan / IPS at the end of the month.

[Frank2012]

I got rid of my fun money because picking stocks became very stressful for me, and I picked one too may clunkers for it to make my winners worth it. Bottom line, the juice was not worth the squeeze.

[shess]

It seems like many Bogleheads, myself included, went through a phase of separating out some “funny money” for side bets — whether it be crypto, options, individual stocks, etc.

I also read a lot about Bogleheads who are strict index investors and don’t have this allocation.

Personally, I am a little addicted to instant gratification, so a side of funny money has always been interesting to me. But seeing my VTWAX investment grow has made me consider how much consolidating my “funny money” into VTWAX would increase the number of shares I own even more. My “funny money” is only about 10% of total allocation, but still!

Bogleheads who used to have funny money and don’t anymore - what changed for you to be 100% index without exception?

After awhile, say five or ten years, either your funny-money bets pan out, or they don't. I remember being really firmly convinced that I could do better than the market, but, well, over time the evidence wasn't on my side. I merely matched (or maybe slightly beat) the market. So I stopped bothering. Spending all that time to be merely just as good felt stupid when I could spend almost zero time and be just as good.

IMHO this is different from many other hobbies. I'm never going to be a competitive cyclist, but just being out there I get to see things and talk to friends and feel physical consequences (dopamine, fitness, etc). I'm not likely to make a living on my ceramics work, but I have some sweet mugs to drink coffee out of, and the mugs themselves act as memory keys, and they make nice gifts. Whereas stocks are much less comfy, I'm even losing my nostalgia for the position I hold in my last employer, which I used to be really committed to keeping. It's just a number on a spreadsheet at this point.

[slickracer]

It's annoying and not worth the hassle... I'd rather set it and forget and do something else than spend my life reading markets and checking prices. I do have 2k invested into fundrise but it's such a tiny amount of my investments it doesn't make a difference

100%!

[backpacker61]

Bogleheads who used to have funny money and don’t anymore - what changed for you to be 100% index without exception?

My employer began offering after-tax contributions with an in-plan Roth conversion option to the employee retirement savings plan as an employee benefit.

I'm 100% financially consumed now trying to contribute to the IRS limit for that each year. I just don't have discretionary earnings any longer to invest in "fun" investments. I'm not a super high earner. It's a nice benefit, but it keeps me cash poor.

[bertilak]

The farthest off the BH ranch I wandered was options. It was fun for a few months, but the stress was off scale, so I gave it up.

BTW, if you are interested in trying this, I found Schwab to be a very good place to play the game. They had a PC application (in addition to a web interface) that supported real-time action. Fun to play with, but as I said, stress-inducing. This was 10 years ago, pre-BH days.

[arcticpineapplecorp.]

My funny money is substantially outperforming my Boglehead money. That’s fine. I don’t expect it to last and I’m certainly under no illusions that I’m a brilliant stock picker.

should be "has substantially outperformed".

you know what has happened.

you don't know what will happen.

things can turn on a dime.

until and unless you lock in your wins, you're still playing what Ellis calls "The Losers Game."

[Dave55]

Failure and loss. Invested in startup's, hedge funds, managed futures and all sorts of private RE deals. Most of the private RE deals came out OK, a few went sideways. The Hedge fund was good, just illiquid and high expenses. Lost big money on a silicon valley startup, however, on the bright side I had a huge capital loss which came in handy to offset gains for years.

Dave