Grouping Americans by saving/investing habits

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yobria
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Grouping Americans by saving/investing habits

Post by yobria » Sat Feb 11, 2012 2:43 pm

I was trying to group the American adult population according to its saving and investing behaviors. I came up with the following groups. The percentages are just wild guesses.

Non-Savers (80% of adults) - Unable or unwilling to delay gratification, live below their means, and accumulate significant financial wealth. The median family had about $30K in financial assets according to a 2007 study by the Federal Reserve.

Delegators (10%) - Uninterested in investing. Either trusted their wealth to a financial advisor or were sold annuities. Couldbe invested in anything.

Non-Investors (2%) - Most assets in savings accounts and other banking products.

Gamblers (3%) - Most assets in individual stocks.

Bogleheads (5%) - Follow the principles on this site.

My main conclusion: Generating wealth, living below your means, and investing effectively is hard. Few people can do it, even in a country as wealthy and educated as the US. Not hard to see why forced saving schemes like Social Security are in place in all developed countries.

What does this mean for the Boglehead Mission, if there is such a thing? First, to understand the nature of the problem. Maybe those 80% don't need saving beyond Social Security? Second, where things should be improved, to maybe target different groups with different strategies. Just some Saturday morning food for thought.

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Re: Grouping Americans by saving/investing habits

Post by livesoft » Sat Feb 11, 2012 2:45 pm

Maybe we should legislate boglehead behavior to force people to be like the folks around here?
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Re: Grouping Americans by saving/investing habits

Post by Liquid » Sat Feb 11, 2012 2:58 pm

yobria wrote: a 2007 study by the Federal Reserve.
PDF?

The statistics you mention are truly shocking 80% of the US with only 30k saved!! I hope home equity is not included. Home equity is the other, well not forced, but strongly encouraged and federally subsidized retirement vehicle.

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Re: Grouping Americans by saving/investing habits

Post by market timer » Sat Feb 11, 2012 3:15 pm

livesoft wrote:Maybe we should legislate boglehead behavior to force people to be like the folks around here?
Social Security already does. The trust doesn't yet buy on RBDs.

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Re: Grouping Americans by saving/investing habits

Post by momar » Sat Feb 11, 2012 3:24 pm

Liquid wrote:
yobria wrote: a 2007 study by the Federal Reserve.
PDF?

The statistics you mention are truly shocking 80% of the US with only 30k saved!! I hope home equity is not included. Home equity is the other, well not forced, but strongly encouraged and federally subsidized retirement vehicle.
It must not. http://www.moneyrelationship.com/retire ... you-stand/
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Re: Grouping Americans by saving/investing habits

Post by grap0013 » Sat Feb 11, 2012 3:25 pm

I think you are overshooting the number of people who follow Boglehead investing principles. I saw a great article in Smart Money (hey I was getting a free copy because I refinanced a while back) recently about the demographics of people who visit this site as well as seekingalpha.com, and a few other investing websites. Bogleheads had the lowest number of the big 4 or 5. I seem to vaguely recall about 20-40K regular people on here monthly. There are roughly 225 million adults in the U.S. I think Bogleheads(or people who believe in or apply similar principles) are <1% of the general population.

Sometimes when I hang around this website too much I start thinking everyone is saving 30% and paying cash for cars. Then I am reminded on a break at lunch by a coworker making 6 figures living paycheck to paycheck, that Bogleheads are indeed, a rare breed. I can think of no other group of OCD, pedantic, intelligent, or bunch of weirdos, that I would rather be associated with. :beer
Last edited by grap0013 on Sat Feb 11, 2012 3:45 pm, edited 1 time in total.
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Re: Grouping Americans by saving/investing habits

Post by Index Fan » Sat Feb 11, 2012 3:33 pm

grap0013 wrote: Sometimes when I hang around this website too much I start thinking everyone is saving 30% and paying cash for cars. Then I am reminded on a break at lunch by a coworker making 6 figures living paycheck to paycheck, that Bogleheads are indeed, a rare breed. I can think of no other group of OCD, pendatic, intelligent, or bunch of weirdos, that I would rather be associated with. :beer

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Re: Grouping Americans by saving/investing habits

Post by Barry Barnitz » Sat Feb 11, 2012 3:51 pm

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Re: Grouping Americans by saving/investing habits

Post by frose2 » Sat Feb 11, 2012 4:26 pm

The 80% you give includes many well-to-do people, your friends and neighbors if you live in SF or in the Bay Area (as I recall, apologies if I misremember). Actually, I believe that a very large proportion of Americans have their entire net worth leveraged into real estate, and don't see the sense of any financial services sector consumer products other than checking accounts and mortgages. This seems to be the predominant belief in the Bay Area and perhaps many other places. I often felt when I was renting an apartment there that real estate is a religion, renters are heretics, and we're lucky we don't get burned at the stake :) . At any rate, it's not a matter of not delaying gratification; it's a matter of wanting an asset allocation that does not include financial services sector consumer products other than checking accounts and mortgages. They view the other products with at least the same disdain that Bogleheads feel for managed mutual funds.

You've also left out non-publicly traded interests in businesses. Lots of well-to-do people have their net worth predominantly there, and those people too, like the real estate holders, will often refuse to drink the Kool-Aid that the financial services sector offers to consumers. I would guess that if you don't count non-publicly traded interests as "financial wealth," then a large proportion of wealthy people technically fall into your 80%, since their financial wealth (bank accounts, bonds, publicly traded equities, mutual funds) is not "significant" in comparison to their total net worth. There are of course many exceptions: wealthy people who after an IPO or other exit hang on to their pre-IPO stock, or the acquiror's stock that they got in exchange, for a while. Steve Jobs died holding $4 billion of Disney stock from the sale of Pixar if I correctly remember.

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Re: Grouping Americans by saving/investing habits

Post by Grt2bOutdoors » Sat Feb 11, 2012 5:05 pm

grap0013 wrote: I think Bogleheads(or people who believe in or apply similar principles) are <1% of the general population.

Sometimes when I hang around this website too much I start thinking everyone is saving 30% and paying cash for cars. Then I am reminded on a break at lunch by a coworker making 6 figures living paycheck to paycheck, that Bogleheads are indeed, a rare breed. I can think of no other group of OCD, pedantic, intelligent, or bunch of weirdos, that I would rather be associated with. :beer
I thought it was just me. :sharebeer
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Re: Grouping Americans by saving/investing habits

Post by FireProof » Sat Feb 11, 2012 5:11 pm

Yeah, my dad's from the Bay Area. Never had a high salary, never believed in the stock market (and when he did invest, it was in individual stock hot tips). But still managed to accumulate millions just from real estate. Although I'd call him more of a non-investor, since he certainly doesn't waste his money.

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Re: Grouping Americans by saving/investing habits

Post by trico » Sat Feb 11, 2012 5:14 pm

You forgot the 5% Lawrence Welk crowd. They are Christians and give all their money to the Church. No need to invest.

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Re: Grouping Americans by saving/investing habits

Post by trico » Sat Feb 11, 2012 5:14 pm

You forgot the 5% Lawrence Welk crowd. They are Christians and give all their money to the Church. No need to invest.

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Re: Grouping Americans by saving/investing habits

Post by Fallible » Sat Feb 11, 2012 6:49 pm

[quote="grap0013"]I think you are overshooting the number of people who follow Boglehead investing principles. I saw a great article in Smart Money (hey I was getting a free copy because I refinanced a while back) recently about the demographics of people who visit this site as well as seekingalpha.com, and a few other investing websites. Bogleheads had the lowest number of the big 4 or 5. I seem to vaguely recall about 20-40K regular people on here monthly. There are roughly 225 million adults in the U.S. I think Bogleheads(or people who believe in or apply similar principles) are <1% of the general population.

This could be, but it has to be almost impossible to know who is a Boglehead in this sense because I'd bet if you asked a lot of them if they're Bogleheads, they'd say "No," or "Never heard of them." I mean it's possible to be a Boglehead and not know it for a long time, even if you invest in index funds and like John Bogle's philosophy.
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Re: Grouping Americans by saving/investing habits

Post by VictoriaF » Sat Feb 11, 2012 7:14 pm

yobria wrote:Gamblers (3%) - Most assets in individual stocks.
Bogleheads (5%) - Follow the principles on this site.
Based on the water-cooler, family-gathering, and cocktail-party discussions frequently brought up in this Forum, the percentage of gamblers is higher than that of Bogleheads.

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Re: Grouping Americans by saving/investing habits

Post by Mudpuppy » Sat Feb 11, 2012 7:29 pm

VictoriaF wrote:Based on the water-cooler, family-gathering, and cocktail-party discussions frequently brought up in this Forum, the percentage of gamblers is higher than that of Bogleheads.
I'd agree with that and add that most of the gamblers don't even realize how much they're gambling because of perception bias. They remember the big wins, but not all the losses that might easily add up to cancel out the big wins. I once made the mistake of getting into a conversation with a day trader which was promptly stopped by my query if he could tell me his overall return. He was absolutely clueless as to how to even begin to calculate that.

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Re: Grouping Americans by saving/investing habits

Post by peppers » Sat Feb 11, 2012 7:30 pm

VictoriaF wrote:
yobria wrote:Gamblers (3%) - Most assets in individual stocks.
Bogleheads (5%) - Follow the principles on this site.
Based on the water-cooler, family-gathering, and cocktail-party discussions frequently brought up in this Forum, the percentage of gamblers is higher than that of Bogleheads.

Victoria
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Re: Grouping Americans by saving/investing habits

Post by Fallible » Sat Feb 11, 2012 7:49 pm

VictoriaF wrote:
yobria wrote:Gamblers (3%) - Most assets in individual stocks.
Bogleheads (5%) - Follow the principles on this site.
Based on the water-cooler, family-gathering, and cocktail-party discussions frequently brought up in this Forum, the percentage of gamblers is higher than that of Bogleheads.

Victoria
There are (gasp) gamblers in our midst?! :shock: Let's hope they're really Bogleheads using only their "play" money.
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Re: Grouping Americans by saving/investing habits

Post by baw703916 » Sat Feb 11, 2012 7:55 pm

Fallible wrote:
VictoriaF wrote:
yobria wrote:Gamblers (3%) - Most assets in individual stocks.
Bogleheads (5%) - Follow the principles on this site.
Based on the water-cooler, family-gathering, and cocktail-party discussions frequently brought up in this Forum, the percentage of gamblers is higher than that of Bogleheads.

Victoria
There are (gasp) gamblers in our midst?! :shock: Let's hope they're really Bogleheads using only their "play" money.
One of the Bogleheads annual meetings (Bogleheads V if I remember correctly) was held in Las Vegas. Just saying...
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Re: Grouping Americans by saving/investing habits

Post by Fallible » Sat Feb 11, 2012 8:07 pm

Mudpuppy wrote:
VictoriaF wrote:Based on the water-cooler, family-gathering, and cocktail-party discussions frequently brought up in this Forum, the percentage of gamblers is higher than that of Bogleheads.
I'd agree with that and add that most of the gamblers don't even realize how much they're gambling because of perception bias. They remember the big wins, but not all the losses that might easily add up to cancel out the big wins. I once made the mistake of getting into a conversation with a day trader which was promptly stopped by my query if he could tell me his overall return. He was absolutely clueless as to how to even begin to calculate that.
Deleted my off-topic reply.
Last edited by Fallible on Sat Feb 11, 2012 8:22 pm, edited 1 time in total.
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Re: Grouping Americans by saving/investing habits

Post by yobria » Sat Feb 11, 2012 8:14 pm

Liquid wrote:
yobria wrote: a 2007 study by the Federal Reserve.
PDF?

The statistics you mention are truly shocking 80% of the US with only 30k saved!! I hope home equity is not included. Home equity is the other, well not forced, but strongly encouraged and federally subsidized retirement vehicle.
Thanks to Barry for providing the links above. The median household financial assets were $30K, which obviously excludes home equity.

Nick
Last edited by yobria on Sat Feb 11, 2012 8:21 pm, edited 1 time in total.

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Re: Grouping Americans by saving/investing habits

Post by yobria » Sat Feb 11, 2012 8:21 pm

grap0013 wrote:I think you are overshooting the number of people who follow Boglehead investing principles. I saw a great article in Smart Money (hey I was getting a free copy because I refinanced a while back) recently about the demographics of people who visit this site as well as seekingalpha.com, and a few other investing websites. Bogleheads had the lowest number of the big 4 or 5. I seem to vaguely recall about 20-40K regular people on here monthly. There are roughly 225 million adults in the U.S. I think Bogleheads(or people who believe in or apply similar principles) are <1% of the general population.
Maybe, I wish there were some way to quantify these things accurately. Of course, not all index investors (eg my mother) hang out on this site. We do know Vanguard has $1.7T in mostly indexed assets.
grap0013 wrote:Sometimes when I hang around this website too much I start thinking everyone is saving 30% and paying cash for cars. Then I am reminded on a break at lunch by a coworker making 6 figures living paycheck to paycheck, that Bogleheads are indeed, a rare breed. I can think of no other group of OCD, pedantic, intelligent, or bunch of weirdos, that I would rather be associated with. :beer
Yeah, reminds me of a conversation I had a couple of years ago:

High earning friend: I love Pen Fed. Great rates!
Me: Yeah, me too, big fan of their CDs!
Friend: I was talking about the car loans.

Nick

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Re: Grouping Americans by saving/investing habits

Post by sschullo » Sat Feb 11, 2012 8:34 pm

I dream of .1% of the adult population acting like Bogleheads.
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Re: Grouping Americans by saving/investing habits

Post by Saving$ » Sat Feb 11, 2012 11:01 pm

grap0013 wrote:I can think of no other group of OCD, pedantic, intelligent, or bunch of weirdos, that I would rather be associated with. :beer
Well said.

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Re: Grouping Americans by saving/investing habits

Post by baw703916 » Sat Feb 11, 2012 11:19 pm

This quote from William Bernstein seems appropriate:
Having emailed and spoken to thousands of investors over the years, I’ve come to the sad conclusion that only a tiny minority, at most one percent, are capable of pulling it off.
...
There are exceptions. Come to a Vanguard Diehards meeting and you’ll think there is hope. Then travel a few feet down the hall where the gurus of the month are holding forth and you’re quickly brought back to reality.
Most of my posts assume no behavioral errors.

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Re: Grouping Americans by saving/investing habits

Post by lawman3966 » Sat Feb 11, 2012 11:43 pm

I wonder whether a sixth category could be added entitled "Deccumulators" (DCMs)

DCMs are people with lofty intellectual tastes who can't be bothered with the mundane and materialistic task of saving and investing money, let alone, ugh, looking for bargains on common items of human consumption. This group, in addition to disdaining money, tends to also disdain Boglehead-type people for their shallow, narrow-minded obsession with money, investing, and tax policy.

There are, however, time periods, during which the DCMs alter their priorities. This condition arises when the particular DCM in question, having disregarded financial common sense over an extended period, finds himself broke and in need of help. Sometimes, groups of DCMs will congregate to express their shared frustration over (a) their condition, (b) with people who don't share their condition, and of course (c) with "the system." It is at this time that the DCMs start looking for someone in a position to help with advice, empathy, and quite possibly a "loan" to tide them over for a while until a condition of prosperity (which, as we know, is a birthright of all registered DCMs) returns.

It is at this time that the Boglehead will find suddenly enjoy heightened popularity.

While I have heard of this happening, I mention it in case anyone else on the forum has noticed or personally experienced this phenomenon.

Comments and and reports of actual experiences welcome.

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Re: Grouping Americans by saving/investing habits

Post by second-guesser » Sat Feb 11, 2012 11:59 pm

sschullo wrote - I dream of .1% of the adult population acting like Bogleheads----- Funny
grap0113 wrote-
I can think of no other group of OCD, pedantic, intelligent, or bunch of weirdos, that I would rather be associated with.

How could anyone ever consider Munchkin Man weird ?

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Re: Grouping Americans by saving/investing habits

Post by ObliviousInvestor » Sun Feb 12, 2012 12:29 am

grap0013 wrote:I saw a great article in Smart Money (hey I was getting a free copy because I refinanced a while back) recently about the demographics of people who visit this site as well as seekingalpha.com, and a few other investing websites. Bogleheads had the lowest number of the big 4 or 5. I seem to vaguely recall about 20-40K regular people on here monthly.
I wonder where they got their traffic figures.
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Re: Grouping Americans by saving/investing habits

Post by staythecourse » Sun Feb 12, 2012 1:32 am

Interesting topic and would agree with most.

I think there should be one more category of educated with job, but financially illiterate. I find a lot of folks who try to save and invest in employee plans, but don't have the slightest clue how to invest. They are the folks who have all their 401k money in MM or are 100% equities a year before then retire not understanding the risk they are taking on.

I definetly think Bogleheads are way less then 5%.

Gamblers, i.e. active management, i.e. market timers and security selection (random holdings of individual stocks) is much more then 1%.

Good luck.
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Re: Grouping Americans by saving/investing habits

Post by yobria » Sun Feb 12, 2012 3:12 am

baw703916 wrote:This quote from William Bernstein seems appropriate:
Having emailed and spoken to thousands of investors over the years, I’ve come to the sad conclusion that only a tiny minority, at most one percent, are capable of pulling it off.
...
There are exceptions. Come to a Vanguard Diehards meeting and you’ll think there is hope. Then travel a few feet down the hall where the gurus of the month are holding forth and you’re quickly brought back to reality.
Thanks for the link. I'd been thinking of Bernstein's various comments about few people being competent to invest effectively, but had never seen that article. As usual the great wbern analyzes and summarizes the problem with an acuity only he possesses. I wish his conclusions weren't so depressing, but I guess, as they say, "It is what it is".

Nick

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Re: Grouping Americans by saving/investing habits

Post by lawman3966 » Sun Feb 12, 2012 3:22 am

staythecourse wrote:Interesting topic and would agree with most.

I think there should be one more category of educated with job, but financially illiterate. I find a lot of folks who try to save and invest in employee plans, but don't have the slightest clue how to invest. They are the folks who have all their 401k money in MM or are 100% equities a year before then retire not understanding the risk they are taking on.

I definetly think Bogleheads are way less then 5%.
If the well-paid but financially illiterate are X % of the population, you'd have to divide that number twice to reach Boglehead status:

1) once to teach basic asset allocation between stocks and bonds as a function of age; and
2) twice to teach the importance of fees. Part (2) here is particularly difficult in 401K accounts because of the efforts by the 401K providers to actively conceal this information.

And the above divisions leave aside issues like allocation of assets between taxable and retirement accounts, and TLH. Taking that into account would reduce the number still further.

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Re: Grouping Americans by saving/investing habits

Post by mwm158 » Sun Feb 12, 2012 4:13 am

deleted
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Re: Grouping Americans by saving/investing habits

Post by 555 » Sun Feb 12, 2012 8:50 am

Target Retirement Funds were invented so that people can invest like Bogleheads (assuming costs are low). So now, investing is as easy as saving.

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Re: Grouping Americans by saving/investing habits

Post by Cut-Throat » Sun Feb 12, 2012 8:53 am

I'm down here in South Florida for the winter and there are so many rich people here they don't have to care how to invest their money......They made Millions upon Millions up North as CEOs, and now are just happily spend their money. There are so many Bentleys and Yachts down here, that they rarely turn heads.

They really don't need to care whether their mutual fund is costing them .14 percent expenses or 4%....The only thing they're short of is time, so why waste it worrying about money. They'll never run out.

In fact the CEO of the company I worked for, sold the company to the competition and put everyone out of a job, came down here with the $20 Million and bought a $2 Million House. I know he doesn't know beans about investing, because he selected the most worthless 401K plan for our small company, despite my lobbying efforts. He just doesn't care....But that doesn't mean he's poor and destitute. Quite the opposite.
Last edited by Cut-Throat on Sun Feb 12, 2012 9:00 am, edited 2 times in total.

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Re: Grouping Americans by saving/investing habits

Post by sschullo » Sun Feb 12, 2012 8:58 am

yobria wrote:
baw703916 wrote:This quote from William Bernstein seems appropriate:
Having emailed and spoken to thousands of investors over the years, I’ve come to the sad conclusion that only a tiny minority, at most one percent, are capable of pulling it off.
...
There are exceptions. Come to a Vanguard Diehards meeting and you’ll think there is hope. Then travel a few feet down the hall where the gurus of the month are holding forth and you’re quickly brought back to reality.
Thanks for the link. I'd been thinking of Bernstein's various comments about few people being competent to invest effectively, but had never seen that article. As usual the great wbern analyzes and summarizes the problem with an acuity only he possesses. I wish his conclusions weren't so depressing, but I guess, as they say, "It is what it is".

Nick
Has anybody listened to Bill's presentations, not counting his reunion meetings? I have seen him on the agenda for an EFT conference in Florida, those folks are hardly from the "general population." His first two books are for advanced people, hands down. He admits that in the intro of his second book. I doubt that he would talk about shares and how the stock market is set up. If you don't start at that basic level, you will lose people. Even then people are not interested because it's dry, impersonal, meaningless, no heart, at whatever level.
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Re: Grouping Americans by saving/investing habits

Post by The Wizard » Sun Feb 12, 2012 9:09 am

Where do the percentages in the OP come from?
Are we making them up so we can look at "other people" as outsiders or heathens to make us feel better?
My employer requires everyone to put 5% in their 403b and matches that with 10% more.
99% of them are not "bogleheads" but are still in good financial shape and many retire early.
Better to focus on one's own goals and less on categorizing others...
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Re: Grouping Americans by saving/investing habits

Post by Pennstateclj1 » Sun Feb 12, 2012 9:21 am

grap0013 wrote: I think Bogleheads(or people who believe in or apply similar principles) are <1% of the general population.
New group idea- "We are the <1%!" T-shirt order forms forthcoming.

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Re: Grouping Americans by saving/investing habits

Post by JW-Retired » Sun Feb 12, 2012 9:36 am

Where do the percentages in the OP come from?
In the very first line, OP stated "The percentages are just wild guesses."
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Re: Grouping Americans by saving/investing habits

Post by burt » Sun Feb 12, 2012 9:39 am

mwm158 wrote: Most of the people I know are completely ignorant when it comes to investing. They're not dumb, they just don't know. I'd probably still be lost if I didn't find this forum.
From what I see at work, many people just don't care. I'm flabbergasted that people don't take more interest in how to manage 30-40 years of lifetime savings.
When asked for advise, I'll point them to the Coffeehouse Investor. I tell them it costs about $6. It is a short book with large font, and pictures and games. A few weeks later...no response.

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Re: Grouping Americans by saving/investing habits

Post by schwarm » Sun Feb 12, 2012 9:43 am

I'm guessing the number of Bogleheads is far less than 5%, but there is some fraction of people who could be "converted" - people who have some decent fraction of net worth in a 401K and/or IRA, have read some basics on asset allocation, but don't understand the loser's game of active investing.

Also, some people might understand Boglehead principles but do not want to be bothered with the details. Particularly If they are wealthy enough, they could be both Bogleheads and Delegators (Larry and Rick's clients).

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Re: Grouping Americans by saving/investing habits

Post by FinanceFun » Sun Feb 12, 2012 9:46 am

There are 2 types of "bogleheads" - voluntary and accidental

Depending on how your company sets up its 401k defaults will likely have a huge impact on the number of employee's following a boglehead philosophy (i.e. do they default to a Target retirement fund?)

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Re: Grouping Americans by saving/investing habits

Post by schwarm » Sun Feb 12, 2012 9:47 am

Pennstateclj1 wrote:
grap0013 wrote: I think Bogleheads(or people who believe in or apply similar principles) are <1% of the general population.
New group idea- "We are the <1%!" T-shirt order forms forthcoming.
A suggestion: don't wear it near an occupy protest.

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Re: Grouping Americans by saving/investing habits

Post by yobria » Sun Feb 12, 2012 12:47 pm

mwm158 wrote:How are people supposed to come to learn the Boglehead way? I grew up with my dad charting graphs of stock prices, talking about how risky the stock market is, but that if you use just the right combination of puts and calls you will be guaranteed to make money. Gladly, despite being brainwashed at a young age, I was smart enough to figure out it didn't make any freakin' sense. I was still left wondering how I was supposed to invest my money. I didn't have anyone to guide me or to learn from. Trying to find real information in a sea of fraud that is the financial industry is difficult. Gladly I found this forum and concepts that actually made some sense. I'm a pretty smart guy, and if it was as difficult as it was for me to find my way, the average person stands absolutely no chance.

These statistics are depressing because it shows the effect of the misinformation, marketing, and fraud on the population. Most of the people I know are completely ignorant when it comes to investing. They're not dumb, they just don't know. I'd probably still be lost if I didn't find this forum.
I think that's a two part question. 1) How do people "go Boglehead"? We know the answer, because hundreds of people have told us. Some popular responses: "I was Googling Raymond James [or Vanguard] and...", "I happened across the Bogleheads Guide on Amazon, and...". So the answer seems to be luck. That's certainly how I wandered into these concepts many years ago.

Hoping for dumb luck is not optimal educational scheme. So how should people learn the importance of saving and investing? Should a class be required in public school? A national education campaign? We have plenty of financial incentives for people to save, but the education component is missing. Not 1 in 100 people can explain the financial advantage of a 401k, for example.

Nick

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Re: Grouping Americans by saving/investing habits

Post by yobria » Sun Feb 12, 2012 12:56 pm

FinanceFun wrote:There are 2 types of "bogleheads" - voluntary and accidental. Depending on how your company sets up its 401k defaults will likely have a huge impact on the number of employee's following a boglehead philosophy (i.e. do they default to a Target retirement fund?)
Yes, I think a majority of people follow our strategy are uneducated 401k'ers. And kudos to them - remaining gainfully employed, LBYM, and putting your money in a few mutual funds puts you ahead of most. The problem is you can't stick your head in the sand forever. You will eventually be changing employers, retiring and drawing down, and handling money outside your retirement plan.

Nick

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Re: Grouping Americans by saving/investing habits

Post by VictoriaF » Sun Feb 12, 2012 1:00 pm

schwarm wrote:
Pennstateclj1 wrote:
grap0013 wrote: I think Bogleheads(or people who believe in or apply similar principles) are <1% of the general population.
New group idea- "We are the <1%!" T-shirt order forms forthcoming.
A suggestion: don't wear it near an occupy protest.
Why not?

Victoria
WINNER of the 2015 Boglehead Contest. | Every joke has a bit of a joke. ... The rest is the truth. (Marat F)

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Re: Grouping Americans by saving/investing habits

Post by momar » Sun Feb 12, 2012 1:05 pm

mwm158 wrote:How are people supposed to come to learn the Boglehead way?
Give your kids a book when they get their first job.

My dad gave me a worn copy (I believe he had previously given it to my older sister) of "Bogle on Mutual Funds". It's the only investment book I've ever read.
"Index funds have a place in your portfolio, but you'll never beat the index with them." - Words of wisdom from a Fidelity rep

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Re: Grouping Americans by saving/investing habits

Post by yobria » Sun Feb 12, 2012 1:11 pm

The Wizard wrote:Where do the percentages in the OP come from?
Are we making them up so we can look at "other people" as outsiders or heathens to make us feel better?
My employer requires everyone to put 5% in their 403b and matches that with 10% more.
99% of them are not "bogleheads" but are still in good financial shape and many retire early.
Better to focus on one's own goals and less on categorizing others...
You seem to be confusing an elite subset of people, whose employer dumps 10% of their gross salary in a 403b every year, with the general population. As cited above the median household financial assets were $30K in 2007. A couple maxing out their 403bs, even with no employer match, can beat that in just a few months.

If 99% of them aren't investing in the low fee, diversified Boglehead way, what are they doing with that 403b money?

And in any branch of scientific inquiry, it's necessary to look outside one's self and categorize the external world. I wouldn't let it bother you.

Nick

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Re: Grouping Americans by saving/investing habits

Post by yobria » Sun Feb 12, 2012 1:13 pm

schwarm wrote:Also, some people might understand Boglehead principles but do not want to be bothered with the details. Particularly If they are wealthy enough, they could be both Bogleheads and Delegators (Larry and Rick's clients).
Unfortunately (note the size of Larry's or Rick's company vs, say, Merrill Lynch), this is rarely the case in my experience. The problem is, if you can't understand the concepts, you're destined to pick a lousy advisor, unless you just get lucky.

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Re: Grouping Americans by saving/investing habits

Post by yobria » Sun Feb 12, 2012 1:19 pm

Cut-Throat wrote:I'm down here in South Florida for the winter and there are so many rich people here they don't have to care how to invest their money......They made Millions upon Millions up North as CEOs, and now are just happily spend their money. There are so many Bentleys and Yachts down here, that they rarely turn heads.

They really don't need to care whether their mutual fund is costing them .14 percent expenses or 4%....The only thing they're short of is time, so why waste it worrying about money. They'll never run out.

In fact the CEO of the company I worked for, sold the company to the competition and put everyone out of a job, came down here with the $20 Million and bought a $2 Million House. I know he doesn't know beans about investing, because he selected the most worthless 401K plan for our small company, despite my lobbying efforts. He just doesn't care....But that doesn't mean he's poor and destitute. Quite the opposite.
Right, the rich don't matter. 100% stocks, 100% bonds, high fee, low fee, short of outright fraud they'll be fine. It's the folks with financial constraints that need to know not to pay 2%/year to an advisor, or gamble in the stock market, or waste money. But that's still 90%+ of the population.

Nick

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Re: Grouping Americans by saving/investing habits

Post by baw703916 » Sun Feb 12, 2012 1:24 pm

VictoriaF wrote:
schwarm wrote:
Pennstateclj1 wrote:
grap0013 wrote: I think Bogleheads(or people who believe in or apply similar principles) are <1% of the general population.
New group idea- "We are the <1%!" T-shirt order forms forthcoming.
A suggestion: don't wear it near an occupy protest.
Why not?

Victoria
There might be confusion as to which 1% was being referenced. But once that issue got resolved, there might be agreement that too much "financial engineering" can be problematic.

Brad
Most of my posts assume no behavioral errors.

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