Dave Ramsey on Bonds

[boxcarwilly]

Hello Bogleheads..

Many or most of you are probably at least familiar with Dave Ramsey, the radio personality and founder of Financial Peace company who has helped many people, including myself, maintain a lifestyle that avoids debt. I am a big fan of his strategies and although I don't follow his advice to the "T", I try to listen often and learn from other folks' stories.
On one of his recent broadcasts, he told a listener/caller that owning bond funds is a waste of resources, and that the only way to go is to own stock funds in one's retirement portfolio. He further state that this is because interest rates affect bond fund returns and with the current climate of low interest rates, bond funds are highly likely to go down in value for the foreseeable future. I was a bit shocked to hear that, as it seems most wisdom suggests owning a percentage of bond funds (based on time till retirement/ risk tolerance). What is your take on that?

Thank you,

Willy

[AlohaJoe]

Rates have been going up for two years.

How much have bond funds gone down?

[boxcarwilly]

Rates have been going up for two years.

How much have bond funds gone down?

VBTIX (the one bond fund I own), has gone up, ever so slightly, for a 3 year period. For the one year period, it has gone down.

[mhalley]

Dave has a few areas of his investment philosophy that bogleheads disagree with. In addition to havin a 100% stock portfolio, he has unrealistic expectations of future returns, and also believes it is possible to outperform the market consistently by using an advisor that charges fees and puts you in high cost loaded mutual funds.
Certainly it is possible that bond funds will lose value in the short term as interest rates rise, but the purpose of bond funds is not to achieve high returns but to provide ballast for the inevitable large drops in stock markets.
In summary, follow some of his debt reduction advise and totally ignore his investment advise.

[AlohaJoe]

Rates have been going up for two years.

How much have bond funds gone down?

VBTIX (the one bond fund I own), has gone up, ever so slightly, for a 3 year period. For the one year period, it has gone down.

So...hardly seems like the cataclysmic disaster Ramsey suggested?

[mega317]

Rates have been going up for two years.

How much have bond funds gone down?

VBTIX (the one bond fund I own), has gone up, ever so slightly, for a 3 year period. For the one year period, it has gone down.

By my reading of the charts you're slightly up in the last 365 days.

[B. Wellington]

Willy, Dave and his company also owns A LOT of Real estate which produces some major cash flow. This is something the small investor is probably not able to do, at least not on a large scale unless you are into real estate. That leaves (most) of us to rely on our bond allocation to not only produce some income, but also to give some balance and smooth out the ride for our stock allocation to grow. Bonds will help keep (most) invested for the long haul.

[Easman61]

I often question the role bonds have played in my portfolio. I am mid 50's with 40% bonds. I don't think that I, along with most Bogelheads, need bonds to keep me invested and "steady at the wheel". I do sometimes question this investing philosophy given how so many times bonds seem to move down in concert with equities. Then I really question why I'm giving up so much upside potential in my portfolio.

[djpeteski]

Baby step 4 and 7 is where I too depart from some of Dave's teachings. Heck in that matter I am not a true Boglehead either!

While we still use cash for groceries and restaurants, do a budget meeting each month, and eschew debt. There are somethings that we are not 100% Dave on.

For one, we have a CC. We use the fidelity card, and the cash back goes into our investment account each month.

We don't really like debit cards. For whatever reason we get hit by identity theft three or four times a year and it is a lot easier to stomach on a CC. So we use cash or credit; hardly ever debit.

My wife has a checking account, and so do I. I would say that our finances are still together, it is just that we self organize differently.

I buy bond funds, bonds, cds, and even treasury notes. For some things that is the right choice. For example, I have college expenses coming up for my son for the next three years. I have the money saved now, so why not build a cd/t-bill ladder for those expenses? I can earn a bit more interest then just a savings account or "money market".

I don't need to pay an investment adviser as he indicates. For some it is the right choice, but I got this.

Contrary to BH advice, my portfolio consists of a couple of individual stock and some actively managed funds. A lot is in cheap indexes, but not all. I think that is okay, we can find our own path.

It is very easy to nitpick someone, but for me Dave has been a God send. For whatever reason I need to be told it was okay not to borrow money. I needed a process to help me get out of debt. I needed someone to tell me that playing with debt is playing with fire. The wife and I did it extremely fast. The first year we did the Dave Ramsey program we improved our net worthy by more than the previous 20 years of working.

The math may say to keep things like a mortgage and low interest car payments so you can have more money to invest, but for me it never worked out. I was far better off paying off all debt then investing with impunity.

[magneto]

This is, and has been, a common refrain for some time.

Reminder :-

"As a general rule, for every 1% change in interest rates (increase or decrease), a bond’s price will change approximately 1% in the opposite direction, for every year of duration. If a bond has a duration of five years and interest rates increase 1%, the bond’s price will drop by approximately 5% (1% X 5 years). Likewise, if interest rates fall by 1%, the same bond’s price will increase by about 5% (1% X 5 years)."
Investopedia

Frank Armstrong and Tim Hale both advocate keeping Bond exposures to short-duration.
I.E. Not to take uneccesary risk on the supposedly defensive side.

And don't forget the benign Bond environment (falling yields) since the 80s, which made it almost impossible to lose money on Bonds, must end eventually.
"If something cannot go on forever, it will stop,"
http://www.multpl.com/10-year-treasury-rate
But just don't ask when!

[oldcomputerguy]

I often question the role bonds have played in my portfolio. I am mid 50's with 40% bonds. I don't think that I, along with most Bogelheads, need bonds to keep me invested and "steady at the wheel". I do sometimes question this investing philosophy given how so many times bonds seem to move down in concert with equities. Then I really question why I'm giving up so much upside potential in my portfolio.

Not meaning to sound snarky, just genuinely curious: did you feel this way back in 2008-2009?

[rkhusky]

Then I really question why I'm giving up so much upside potential in my portfolio.

To protect against the downside, such as occurred in 2008. If you are far from retirement and can wait until the market returns (not that that is guaranteed) or can choose to work for a few years longer or find a new job that pays more, then you don't need as much in bonds.

[Jack FFR1846]

Dave and Suze are great at taking people whose motto is "money ain't gonna spend itself" and helping them understand that when you spend a dollar, you no longer have that dollar. Once you get beyond that point, Dave's advice is below average. Worse than that, he is heavily compensated for giving bad investing advice that would have his listeners use his high priced adviser network.

[Glockenspiel]

I think some of Dave Ramsey’s principles are fine, and even good for people that are generally not good and disciplined with their money.

He is very debt-averse. However, for truly increasing net worth, it is worthwhile to buy a home with a 15 year 3.5% mortgage if that means you also have that money to invest in the market.

He’s also against credit cards, but I spend $2k/month on mine, earn 2% cash back, and pay the balance in full every month. That’s an extra $480 in earnings that I wouldn’t have if I followed Ramsey’s guidelines.

[juliewongferra]

I think some of Dave Ramsey’s principles are fine, and even good for people that are generally not good and disciplined with their money.

He is very debt-averse. However, for truly increasing net worth, it is worthwhile to buy a home with a 15 year 3.5% mortgage if that means you also have that money to invest in the market.

He’s also against credit cards, but I spend $2k/month on mine, earn 2% cash back, and pay the balance in full every month. That’s an extra $480 in earnings that I wouldn’t have if I followed Ramsey’s guidelines.

But that's not his entire argument. His full argument is that spending with credit cards makes it feel *easier* to spend as compared to cash. This is backed up by behavioral finance that I have read in my classes, like Thaler's work! If people don't use credit cards, maybe they spend less. In your case (not picking on you, but you provide a good example with math), maybe if you paid cash for everything, you spend only $1,900 a month by spending more efficiently or on less unnecessarry luxuries, and not spending $1,200 is better than $480 in "earnings" each year.

cheers,
jwf

[Grt2bOutdoors]

Dave Ramsey provides good practical personal finance advice. If you follow his principles so far as it applies to budgeting, spending and saving money - you should be okay. That said, it is the rare individual who has so much excess cash flow that they can place 100 percent of their investable assets in risk (equity only) assets. Monies you can not afford to lose belongs in bank savings account, cds, bonds, bond funds holding highly rated securities. No, a high yield junk bond fund is not investment quality - it’s speculative.

[ruralavalon]

Rates have been going up for two years.

How much have bond funds gone down?

VBTIX (the one bond fund I own), has gone up, ever so slightly, for a 3 year period. For the one year period, it has gone down.

Vanguard Total Bond Market Fund Institutional (VBTIX) currently has a SEC Yield of 3.00%.

In my opinion Dave Ramsey's investing advice is often dangerous.

[GoldenFinch]

Dave does not like bonds because to him they are a form of debt (the bond holder is lending money) and he is against all debt except for 15 year mortgages.

[R. ANDERSON]

It pays to read widely and keep an open mind. Your own comfort zone is very important. Your age and obligations to others are important. Your experience is important as is your past outcomes in your decision-making thought process. One suggestion you might consider is to read articles by Christine Benz on Morningstar.com. (And one thing that seems to be tried and true for everybody is don't overspend.) The so-called "masters of the universe" in the financial industry are extremely fond of "leverage" - which is a euphemism for "debt."

[3CT_Paddler]

Warren Buffett has a similar take on bonds.

Bonds can and have outperformed stocks over longer time periods (20 years), although these instances are rare. The reason to own bonds is to reduce speculative risk and sleep soundly at night knowing that if the market tanks, you are still going to be paid the principle and interest on your bonds.

[Dottie57]

I often question the role bonds have played in my portfolio. I am mid 50's with 40% bonds. I don't think that I, along with most Bogelheads, need bonds to keep me invested and "steady at the wheel". I do sometimes question this investing philosophy given how so many times bonds seem to move down in concert with equities. Then I really question why I'm giving up so much upside potential in my portfolio.

Not meaning to sound snarky, just genuinely curious: did you feel this way back in 2008-2009?

I was thrilled to have bonds in that time frame . I was in early 50's and had much larger balances than ever before.

[jazman12]

Dave has a few areas of his investment philosophy that bogleheads disagree with. In addition to havin a 100% stock portfolio, he has unrealistic expectations of future returns, and also believes it is possible to outperform the market consistently by using an advisor that charges fees and puts you in high cost loaded mutual funds.
Certainly it is possible that bond funds will lose value in the short term as interest rates rise, but the purpose of bond funds is not to achieve high returns but to provide ballast for the inevitable large drops in stock markets.
In summary, follow some of his debt reduction advise and totally ignore his investment advise.

+++ ---

[deltaneutral83]

I was thrilled to have bonds in that time frame . I was in early 50's and had much larger balances than ever before.

Bonds in a portfolio have little mathematical use to me before you are about 15 years from not earning/accumulating. Everyone points out that life happens and you want bonds to provide the cushion (again, I'm referring to early accumulators). I see posts here about not needing an adviser but advisers for some bring the SWAN factor, which is what bonds do for someone who is early in the accumulating phase. It seems like whatever it takes to SWAN should be given proper consideration on BH. If you're Ramsey, and you have 500x annual expenses, well then it just doesn't matter. For regular people though, bonds early in the accumulation phase don't make much sense to me. If you're planning to work to 60 and have a situation where it comes down to having a 70/30 portfolio and using some of the 30% to get out of a jam at age 35-40, I have a feeling you have bigger problems financially than your asset allocation, but again, to each his own. I of course plan on gliding into 60/40 the day I hang it up and I think most on here who aren't at 100x expenses or something high enough will have something similar upon retirement.

[Nate79]

You can search many many threads on BH and find "100% stock" topics. Many many posters on here say they are 100% stock and plan to be thru retirement. While certainly not the normal opinion around here it is certainly not new.

For DR advice you have to look at the entire picture. First, being debt free including the house reduces overall portfolio leverage, reduces risk, and increases cash flow. If a mortgage is a negative bond the "actual" stock allocation of many BH are higher than they think. He is also very pro real estate if you are willing to be a landlord. And to do this with no debt - again reducing risk. He also advocates having an advisor who will walk you thru the downturn to not sell out. He is advocating buy and hold for the long term and not worry about the up and downs. He has in the past said that a balanced fund which may hold some bonds is ok if someone is risk adverse but he would recommend that as a small part.

While certainly DR advice is not kosher with BH concerning advisors, fees, and active funds (though he recommends no load S&P500 for investing outside your retirement accounts) I don't think the 100% stock is horrible.

[livesoft]

I wonder if Mr Ramsey is working on the minds of his clients: They probably hate losing money, so, much like a Whole Life Insurance sales person, if he gets them to be 100% equities and equities drop, then they won't sell them. A bond fund sitting out there with no loss would be something to cash in and spend.

[greg24]

Dave is pretty good with personal finance.

Dave is poor as an investment advisor.

[eye.surgeon]

Advice for a preschooler, like never cross the street without holding an adult's hand, doesn't always apply to a college graduate. Dave's advice is directed at financial preschoolers. Nothing wrong with that, it describes at least half the population.

[Admiral]

Everyone hates bonds during a 9 (or is it 10?) year bull market. Come back when stocks are falling day after day, month after month.

Bonds are for safety and to counter stock volatility, not for (excessive) return.

If you don't like them or want them, buy CDs or hold cash. Or hold 100% stocks and buckle up.

[stocknoob4111]

Vanguard Total Bond Market Fund Institutional (VBTIX) currently has a SEC Yield of 3.00%.

No other fixed income option is generating 3% returns while providing the flexibility of a bond fund which is what I like. We have CDs but if you break a CD your interest is essentially gone in penalties. Infact, depending on when you break it you could lose money as well. The aspect I like is that with a bond fund I can withdraw (sell) just the amount I need in an emergency while not exposing all my capital to penalties like I would with a CD. In addition I can also TLH the losses so that's a way to recoup some money.

I guess you could open a bunch of CDs but if you want to invest say $100k of your portfolio in CDs are you going to open 10 CDs of $10k each? That is unrealistic.

In addition, whether long term rates are going up drastically is just speculation. Interest rates in Europe and Japan are much lower than the US. Together with very tame inflation readings that came out I think at least for the next few years it will not go up much, that is my guess. Yes, the government debt is crazy but supposedly there was very strong demand at the last Treasury bond auction. Short term can go up but Long term may not go up much, the yield curve may just flatten.

[3funder]

Dave Ramsey's work helping people avoid and/or reduce debt is both admirable and effective. Having said that, I highly disagree with his take on bonds/bond funds. His general advice on investing is, at best, decent and, at worst (as in this case), worth tuning out entirely.

[BeneIRA]

Dave does not like bonds because to him they are a form of debt (the bond holder is lending money) and he is against all debt except for 15 year mortgages.

This is the reason he doesn't like bonds, all of the other reasons given are justifications, but this is the real reason. It is very black and white. Debt is bad, bonds are debt, so don't buy bonds.

I see it both ways because bonds are just there for safety, over a 40 to 50 year period, people make their money off of stocks, not bonds. So, theoretically, the best allocation is 100% stocks and just hold it forever and never sell. Unfortunately, that isn't reality and if the market does crash when you are 63 and in 100% stocks, well, it is a much different conversation. I wouldn't be mad, though, if someone didn't want bonds in their portfolio and replaced it with, say, a 5-year CD ladder for their bond portion. It probably isn't the different between early retirement and working another 10 years.

[Admiral]

I would also add that as a general rule you should ignore financial advice that you read on the Internet or watch on television.

Except, you know, from here.

[drg02b]

I kind of agree with him about no bonds (though I am young with a long time-horizon). It is surprising, given his strong focus on understanding and properly mitigating bad psychological behavior, that he would recommend an allocation that most people would not be able to stomach in a downturn. I'm too rational for his model (cash leaves no trace for me when spent, unlike a CC statement). Everyone knows 100% stocks will return more over a long time horizon, but most people need the psychological stability of bonds, just like they need their envelope system.

[eye.surgeon]

I think some of Dave Ramsey’s principles are fine, and even good for people that are generally not good and disciplined with their money.

He is very debt-averse. However, for truly increasing net worth, it is worthwhile to buy a home with a 15 year 3.5% mortgage if that means you also have that money to invest in the market.

He’s also against credit cards, but I spend $2k/month on mine, earn 2% cash back, and pay the balance in full every month. That’s an extra $480 in earnings that I wouldn’t have if I followed Ramsey’s guidelines.

But that's not his entire argument. His full argument is that spending with credit cards makes it feel *easier* to spend as compared to cash. This is backed up by behavioral finance that I have read in my classes, like Thaler's work! If people don't use credit cards, maybe they spend less. In your case (not picking on you, but you provide a good example with math), maybe if you paid cash for everything, you spend only $1,900 a month by spending more efficiently or on less unnecessarry luxuries, and not spending $1,200 is better than $480 in "earnings" each year.

cheers,
jwf

This is very true for a financial beginner that needs artificial constraints to control their spending. Once you reach a certain level of financial discipline and resources, you can turn the game against the CC companies and extract benefits with no impact on your spending habits.

[stocknoob4111]

Dave does not like bonds because to him they are a form of debt (the bond holder is lending money) and he is against all debt except for 15 year mortgages.

This is the reason he doesn't like bonds, all of the other reasons given are justifications, but this is the real reason. It is very black and white. Debt is bad, bonds are debt, so don't buy bonds.

You could stretch the argument to say that equities are debt as well, you are loaning your capital to financially support some company. In the end your capital is being loaned out and there is a risk may not get everything back. So by Dave's purist philosophy you should be putting your money under the mattress

[Glockenspiel]

Advice for a preschooler, like never cross the street without holding an adult's hand, doesn't always apply to a college graduate. Dave's advice is directed at financial preschoolers. Nothing wrong with that, it describes at least half the population.

I totally agree with this. I feel Ramsey's advice is best for people who never graduated college, work lower paid jobs, and either never had the earnings or the discipline to save a portion of their money. His advice is pretty good for people that are living paycheck to paycheck. And we've all heard the stats about how half the population couldn't afford a sudden $500 car expense, etc.

He knows this and has tailored his advice to the largest portion of the population, to maximize the market share for his product.

[2015]

My take is I never listen to "Dave". Then again I never read all the ads here for "Larry", either. In the long run, complexity will always do you more harm than simplicity.

[Clever_Username]

Dave and Suze are great at taking people whose motto is "money ain't gonna spend itself" and helping them understand that when you spend a dollar, you no longer have that dollar. Once you get beyond that point, Dave's advice is below average. Worse than that, he is heavily compensated for giving bad investing advice that would have his listeners use his high priced adviser network.

Agreed. I think his advice for getting out of debt, while mathematically sub-optimal, is probably pretty good for people who need the psychological boost of incremental victories that his method provides.

His investing advice is, at best, poor. It's better than leaving money sitting in a checking account, probably, but that's about it. Once one is able to avoid toxic debt, getting past Dave Ramsey and onto stronger investing principles is the right way to go.

Dave's inability to use debt responsibly when he was younger bleeds into his advice that everyone must avoid debt, including (it seems) owning the debt of others.

[knpstr]

The math may say to keep things like a mortgage and low interest car payments so you can have more money to invest, but for me it never worked out. I was far better off paying off all debt then investing with impunity.

Great comment.

I think that is a wise statement that holds water for a lot of people. It is easy to say: "take on low interest rate debt and invest the difference." No doubt, some people do that and are very successful doing it. But I think for many it is too tempting to take on the low interest rate debt and simply spend the difference.

I think that is where Dave's motto is right on, that when it comes to finances (and debt pay down) it is really about behavior (low balance first), not about the math (low rate first). Behavior carries the majority of the freight when it comes to personal finances.

[DanMahowny]

There was a time when Dave's advice made sense to me. Back then, I was paid by the hour, had mullet haircut, and drank Mountain Dew all day long.

Glad that version of myself is long gone.

[3CT_Paddler]

I totally agree with this. I feel Ramsey's advice is best for people who never graduated college, work lower paid jobs, and either never had the earnings or the discipline to save a portion of their money. His advice is pretty good for people that are living paycheck to paycheck. And we've all heard the stats about how half the population couldn't afford a sudden $500 car expense, etc.

He knows this and has tailored his advice to the largest portion of the population, to maximize the market share for his product.

Plenty of highly educated and highly compensated people struggle with spending more than they make.

If you listen to his show there are lots of callers who are paying off large sums of debt (>$100k) in a matter of a year or two... you don't do that on a low income.

[cjg]

Rising interest rates seems like a bad reason to not own bonds. It is slightly less obvious but stocks have the exact same problem - valuations can and do move up or down. Stock valuations are a high right now. Should we all go 100% bonds to avoid potential lowering valuations?

[JBTX]

You can search many many threads on BH and find "100% stock" topics. Many many posters on here say they are 100% stock and plan to be thru retirement. While certainly not the normal opinion around here it is certainly not new.

For DR advice you have to look at the entire picture. First, being debt free including the house reduces overall portfolio leverage, reduces risk, and increases cash flow. If a mortgage is a negative bond the "actual" stock allocation of many BH are higher than they think. He is also very pro real estate if you are willing to be a landlord. And to do this with no debt - again reducing risk. He also advocates having an advisor who will walk you thru the downturn to not sell out. He is advocating buy and hold for the long term and not worry about the up and downs. He has in the past said that a balanced fund which may hold some bonds is ok if someone is risk adverse but he would recommend that as a small part.

While certainly DR advice is not kosher with BH concerning advisors, fees, and active funds (though he recommends no load S&P500 for investing outside your retirement accounts) I don't think the 100% stock is horrible.

When the stock market goes on long bull runs and sits at near record highs you can always find people who will lecture you on the merits of 100% equities. If we ever hit a protracted bear market I suspect they will fade into the background.

[DesertDiva]

It pays to read widely and keep an open mind. Your own comfort zone is very important. Your age and obligations to others are important. Your experience is important as is your past outcomes in your decision-making thought process. One suggestion you might consider is to read articles by Christine Benz on Morningstar.com. (And one thing that seems to be tried and true for everybody is don't overspend.) The so-called "masters of the universe" in the financial industry are extremely fond of "leverage" - which is a euphemism for "debt."

Another great read (ahem...) is "The Boglehead's Guide to Investing". I frequently re-read the chapters on Asset Allocation, Diversification, and Market Timing. I need the reminders

[Devil's Advocate]

There was a time when Dave's advice made sense to me. Back then, I was paid by the hour, had mullet haircut, and drank Mountain Dew all day long.

Glad that version of myself is long gone.

That's hilarious Dan
Love it!

DA

[Toons]

Advice for a preschooler, like never cross the street without holding an adult's hand, doesn't always apply to a college graduate. Dave's advice is directed at financial preschoolers. Nothing wrong with that, it describes at least half the population.

+1

[Grt2bOutdoors]

I totally agree with this. I feel Ramsey's advice is best for people who never graduated college, work lower paid jobs, and either never had the earnings or the discipline to save a portion of their money. His advice is pretty good for people that are living paycheck to paycheck. And we've all heard the stats about how half the population couldn't afford a sudden $500 car expense, etc.

He knows this and has tailored his advice to the largest portion of the population, to maximize the market share for his product.

Plenty of highly educated and highly compensated people struggle with spending more than they make.


If you listen to his show there are lots of callers who are paying off large sums of debt (>$100k) in a matter of a year or two... you don't do that on a low income.

+1. People need to open their eyes and ears, the fellow making a lot of money, also spends a ton of money - keeping up appearances or because they feel they “deserve it”. Don’t be the Jones’s! Dave Ramsey is running a business, no doubt about it, but also is very helpful for folks who lack direction.

[jdb]

Hello Bogleheads..

Many or most of you are probably at least familiar with Dave Ramsey, the radio personality and founder of Financial Peace company who has helped many people, including myself, maintain a lifestyle that avoids debt. I am a big fan of his strategies and although I don't follow his advice to the "T", I try to listen often and learn from other folks' stories.
On one of his recent broadcasts, he told a listener/caller that owning bond funds is a waste of resources

Thank you,

Willy

Thanks for the update. Have never listened to him and can guarantee will not break that streak. But sounds like getting closer to a buying opportunity for longer term bond funds. He may not be a Meredith Whitney but more comments from so called market prognosticators dissing bond funds makes it more likely to be buying opportunity by ignoring their ridiculous advice. Good luck.

[finite_difference]

As long as long-term I get >=0% REAL return, the bond fund is doing its job perfectly. Don’t worry about the short term. Vanguard Total Bond and Vanguard Intermediate-Term Tax-Exempt are both great funds in my opinion.

I agree that bonds are not there to make money, that’s what stocks are for, but they help prevent erosion due to inflation and serve to dampen your portfolio’s response to stock market volatility.

[R. ANDERSON]

I'm a new member of "bogleheads" but a believer in John Bogle and Warren Buffet because I have tested their methodology. I am not smug or arrogant or using this site for entertainment or as a proponent of ultra-caution or casino-type risk. But I do think after a few short days that there are people on it who may have an agenda which may be inimical to the best interests of the average person. Don't count on gurus. Count on yourself and common sense and ask for advice from those you trust. Have a long time horizon if you are in stocks ( 10 to 20 years if you believe in the U.S. business model). Set money aside for emergencies like health, job loss, helping others etc NO MATTER how indispensable or smart you think you are or how much money you make or think you have. And please make that off-limits reserve enough to at least last you a year or more - you can be disabled physically or mentally in the blink of an eye and the AFLAC duck may not support your former standard of living. Don't overspend. All that said, I am absolutely amazed by the people on this site who will take their time to share their experiences with others with the apparent goal of helping others rather than helping themselves. Of course helping others has been shown, scientifically and neurologically, to promote longevity and happiness. Maybe it's an innate trait of people who use Vanguard? More likely it's a characteristic of people who are considerate and who think. Critical thinking, the other national deficit. Thanks again for the caliber of people who populate this site.