Which boglehead rule do you break--and are ok with

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jmk
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Which boglehead rule do you break--and are ok with

Post by jmk » Fri Jun 15, 2018 9:12 am

I'm a pretty strict boglehead. The one guide I don't do is a written out directive Investment Plan Statement. I have some guiding heuristics I stick to religiously (segregating buckets according to desired risk and timeline, rebalancing) but I personally have never felt the need to write out anything to keep me on track. That just wouldn't motivate me. But I don't feel I'm irrational because the IPS is just a means to an end: essentially one of dozens of ways to manipulate incentives so as to stay the coarse when the going gets rough. In my case I've thoroughly thought (and felt) through my AA so carefully (of what x loss would be like) that I haven't waivered even in e.g. 2008.

You? What boglehead rules do you feel you can break rationally in your particular case?
Last edited by jmk on Fri Jun 15, 2018 11:12 am, edited 2 times in total.

AlohaJoe
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Re: Which boglehead rule do you break--and are ok with

Post by AlohaJoe » Fri Jun 15, 2018 9:17 am

jmk wrote:
Fri Jun 15, 2018 9:12 am
I'm a pretty strict boglehead. The one guide I don't do is a written out directive Investment Plan Statement.
There's no Boglehead rule saying you have to have a written out IPS.

There aren't really any Boglehead rules. The closest things are the Bogleheads principles: https://www.bogleheads.org/wiki/Boglehe ... philosophy

For those who don't want to click:

1 Develop a workable plan
2 Invest early and often
3 Never bear too much or too little risk
4 Diversify
5 Never try to time the market
6 Use index funds when possible
7 Keep costs low
8 Minimize taxes
9 Invest with simplicity
10 Stay the course

The only one I would kinda sorta disagree with is "Never try to time the market", just because .... never say never. If P/E got to 90 in the US you can bet I'd be market timing! 8-) (But I understand why the principle says "never" because so many people are tempted so often....)

Jack FFR1846
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Re: Which boglehead rule do you break--and are ok with

Post by Jack FFR1846 » Fri Jun 15, 2018 9:20 am

Cars.

I actually bought a replacement car for my wife yesterday. We were going to buy either a Subaru Impreza or Crosstrek because they're cheap, AWD and cheap on gas. After a couple recent trips with both our kids (17 and 21), in our Crosstrek and my Wrangler, I made the executive decision that it wasn't worth making everyone miserable with a cramped car. We upped to a Subaru Legacy and went with a limited version. I dropped to a 1 year old car to save on first year depreciation.

We traded an 04 outback that had a bunch of things known wrong and one impending disaster if the timing belt did fail. It was my son's "keep at the internship" and "keep at college" car. He's now been upped to the Crosstrek limited. In MMM speak, "aren't we all Mr. Fancypants?". Well, yes. And even worse, my daily driver is a Jeep Wrangler Unlimited!...which should make MMM people hunch over in pain.

I don't have a written IPS either....

I own some BRKB as a test. 0.22% of invested assets.
Bogle: Smart Beta is stupid

Glockenspiel
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Re: Which boglehead rule do you break--and are ok with

Post by Glockenspiel » Fri Jun 15, 2018 9:22 am

I have 6.9% of my total portfolio in individual stocks (AMZN, AAPL, and CSCO) :|

I'm okay with it. I'm not buying anymore individual stock, but I'm that keen on selling these (and paying capital gains taxes on them). I figure by not buying anymore, this percentage will keep decreasing from here.

dbr
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Re: Which boglehead rule do you break--and are ok with

Post by dbr » Fri Jun 15, 2018 9:22 am

AlohaJoe wrote:
Fri Jun 15, 2018 9:17 am
jmk wrote:
Fri Jun 15, 2018 9:12 am
I'm a pretty strict boglehead. The one guide I don't do is a written out directive Investment Plan Statement.
There's no Boglehead rule saying you have to have a written out IPS.

There aren't really any Boglehead rules. The closest things are the Bogleheads principles: https://www.bogleheads.org/wiki/Boglehe ... philosophy

For those who don't want to click:

1 Develop a workable plan
2 Invest early and often
3 Never bear too much or too little risk
4 Diversify
5 Never try to time the market
6 Use index funds when possible
7 Keep costs low
8 Minimize taxes
9 Invest with simplicity
10 Stay the course

The only one I would kinda sorta disagree with is "Never try to time the market", just because .... never say never. If P/E got to 90 in the US you can bet I'd be market timing! 8-) (But I understand why the principle says "never" because so many people are tempted so often....)
That's right. It isn't rules. I guess I have been pretty faithful to those principles.

dbr
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Re: Which boglehead rule do you break--and are ok with

Post by dbr » Fri Jun 15, 2018 9:24 am

Jack FFR1846 wrote:
Fri Jun 15, 2018 9:20 am
Cars.

I actually bought a replacement car for my wife yesterday. We were going to buy either a Subaru Impreza or Crosstrek because they're cheap, AWD and cheap on gas. After a couple recent trips with both our kids (17 and 21), in our Crosstrek and my Wrangler, I made the executive decision that it wasn't worth making everyone miserable with a cramped car. We upped to a Subaru Legacy and went with a limited version. I dropped to a 1 year old car to save on first year depreciation.

We traded an 04 outback that had a bunch of things known wrong and one impending disaster if the timing belt did fail. It was my son's "keep at the internship" and "keep at college" car. He's now been upped to the Crosstrek limited. In MMM speak, "aren't we all Mr. Fancypants?". Well, yes. And even worse, my daily driver is a Jeep Wrangler Unlimited!...which should make MMM people hunch over in pain.

I don't have a written IPS either....

I own some BRKB as a test. 0.22% of invested assets.
Bogleheads have neither rules nor principles about cars . . . or about whiskey . . . or about whisky . . . or about a lot of other things . . .

barnaclebob
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Re: Which boglehead rule do you break--and are ok with

Post by barnaclebob » Fri Jun 15, 2018 9:31 am

No written IPS, just a spreadsheet showing what my preferred allocations are and how I compare. Maybe that counts as a written IPS.

I have plenty of bonds in taxable (tax exempt though)

I have 7% of my 401k in company stock. I has done way better than the SP500 knock on wood. It did also loose like 75% of its value at one point though. Luckily I only had like $10k in my 401k at the time so only held a small amount of company stock. The 401k auto rebalances once a quarter so it has been feeding my other allocations nicely.
Last edited by barnaclebob on Fri Jun 15, 2018 9:35 am, edited 2 times in total.

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backofbeyond
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Re: Which boglehead rule do you break--and are ok with

Post by backofbeyond » Fri Jun 15, 2018 9:34 am

Guilty of timing the market. I'm a Civil Servant and in Nov 2016 I moved my entire TSP (over $700k) in to G. I assumed the market would plummet due to the unexpected nomination of Trump and then the eventual unpredictability a non gov't entity would have. Plainly I was wrong. Should have stayed the course. Got back into in it 1 Jan 2018 to see it increase over $50k in one month and then, crash back down, and then stall out more or less.

I also dilly with individual stocks, but keep it to less than 10% of my portfolio. I have been lucky (yes, I know it's luck and not skill) as I'm in the black. I realize it's more or less gambling but have to admit its' rather fun. And yes, I'm ashamed of myself for having fun with my portfolio.

Those are the extent of my transgressions.
The question isn't at what age I want to retire, it is at what income. - George Foreman

LiterallyIronic
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Re: Which boglehead rule do you break--and are ok with

Post by LiterallyIronic » Fri Jun 15, 2018 9:34 am

I pay extra on my mortgage even though I haven't maxed out my 401k. Does that count as breaking a Boglehead rule?

We also don't have life insurance, despite having a one-year-old. It's been on my to-do list, but who has the time?
Last edited by LiterallyIronic on Fri Jun 15, 2018 10:10 am, edited 2 times in total.

mcblum
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Re: Which boglehead rule do you break--and are ok with

Post by mcblum » Fri Jun 15, 2018 9:39 am

For almost 30 years, I have followed the principles of the BHers with astounding results. Having retired last fall, I wonder if my fellow BH retirees have made any changes in their investment theories. Thanks, marty

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triceratop
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Re: Which boglehead rule do you break--and are ok with

Post by triceratop » Fri Jun 15, 2018 9:40 am

AlohaJoe wrote:
Fri Jun 15, 2018 9:17 am
jmk wrote:
Fri Jun 15, 2018 9:12 am
I'm a pretty strict boglehead. The one guide I don't do is a written out directive Investment Plan Statement.
There's no Boglehead rule saying you have to have a written out IPS.

There aren't really any Boglehead rules. The closest things are the Bogleheads principles: https://www.bogleheads.org/wiki/Boglehe ... philosophy

For those who don't want to click:

1 Develop a workable plan
2 Invest early and often
3 Never bear too much or too little risk
4 Diversify
5 Never try to time the market
6 Use index funds when possible
7 Keep costs low
8 Minimize taxes
9 Invest with simplicity
10 Stay the course

The only one I would kinda sorta disagree with is "Never try to time the market", just because .... never say never. If P/E got to 90 in the US you can bet I'd be market timing! 8-) (But I understand why the principle says "never" because so many people are tempted so often....)
Market timing which way? S&P500 PE hit 123 in May 2009.
"To play the stock market is to play musical chairs under the chord progression of a bid-ask spread."

AlohaJoe
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Re: Which boglehead rule do you break--and are ok with

Post by AlohaJoe » Fri Jun 15, 2018 9:41 am

triceratop wrote:
Fri Jun 15, 2018 9:40 am
AlohaJoe wrote:
Fri Jun 15, 2018 9:17 am
jmk wrote:
Fri Jun 15, 2018 9:12 am
I'm a pretty strict boglehead. The one guide I don't do is a written out directive Investment Plan Statement.
The only one I would kinda sorta disagree with is "Never try to time the market", just because .... never say never. If P/E got to 90 in the US you can bet I'd be market timing! 8-) (But I understand why the principle says "never" because so many people are tempted so often....)
Market timing which way? S&P500 PE hit 123 in May 2009.
In all 8 directions! Plus up & down!

SrGrumpy
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Re: Which boglehead rule do you break--and are ok with

Post by SrGrumpy » Fri Jun 15, 2018 9:42 am

Hmm, I avoid Vanguard and index funds, and I don't care if an ER is closing in on 1.00%. I have some individual stocks. I'm probably living a little above my means, but only because I want to travel as much as possible before it's too late. No idea what an IPS is, some sort of beer? Apart from that ...
Last edited by SrGrumpy on Fri Jun 15, 2018 5:44 pm, edited 1 time in total.

JakeyLee
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Re: Which boglehead rule do you break--and are ok with

Post by JakeyLee » Fri Jun 15, 2018 9:45 am

Oh boy... This thread was made for me. Where do I start? I've never had an international fund/stock. I've never owned a bond. 100% S&P 500. However, sometime ago I decided I would allocate what would have been a bond allocation, and pay off a 5% mortgage. The garunteed returns seemed like a no brainer at the time for a simpleton (me) with no stability/safety net in his portfolio. 13 years later I own my house, and finally achieved a 50% savings rate. It' wasn't optimal, and I can't go back in time to change anything anyway. But it works for me.

asif408
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Re: Which boglehead rule do you break--and are ok with

Post by asif408 » Fri Jun 15, 2018 9:49 am

Among the Bogleheads general principles, I pretty much follow all except #5. I mostly do not try to time the market, but in 2016 I shifted a significant portion of my stocks into foreign and emerging markets based on valuation disparities with US stocks. Still holding it, so it's a multi-year market timer move, I'll revisit in a few more years, but so far so good.

I foresee doing this in the future as well, at least among my stocks, but it likely won't be but every 5 or 10 years, possibly longer. As far as timing by shifting from stocks to bonds, I don't have much confidence in that so plan to stick with my chosen allocation there. I guess if things got crazy like the late 90s I might hold 10 or 20% more in bonds, but there are too many examples of crazy valuations lasting for longer than expected to try to time that.

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TheTimeLord
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Re: Which boglehead rule do you break--and are ok with

Post by TheTimeLord » Fri Jun 15, 2018 9:50 am

I use actually dollar amounts and years of expenses in calculating how much to put in equities versus fixed income instead of percentage based AA now that I have achieved FI and can see retirement on the horizon.
IMHO, Investing should be about living the life you want, not avoiding the life you fear. | Run, You Clever Boy! [9085]

dbr
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Re: Which boglehead rule do you break--and are ok with

Post by dbr » Fri Jun 15, 2018 9:53 am

TheTimeLord wrote:
Fri Jun 15, 2018 9:50 am
I use actually dollar amounts and years of expenses in calculating how much to put in equities versus fixed income instead of percentage based AA now that I have achieved FI and can see retirement on the horizon.
That isn't a violation of any Boglehead rule or principle at all. It is in accord with 1, 3, and 4.

There are lots of strongly held opinions on this forum one way or the other that actually amount to nothing more than different roads to Dublin.

dknightd
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Re: Which boglehead rule do you break--and are ok with

Post by dknightd » Fri Jun 15, 2018 9:56 am

I never considered them rules, just suggestions.

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Kenkat
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Re: Which boglehead rule do you break--and are ok with

Post by Kenkat » Fri Jun 15, 2018 9:57 am

I sometimes select active funds even though there are alternative index funds available. I do still keep an eye to costs as that is what I think is most important.

LawyersGunsAndMoney
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Re: Which boglehead rule do you break--and are ok with

Post by LawyersGunsAndMoney » Fri Jun 15, 2018 9:59 am

Most of ours are what I'd call "strategic lifestyle creep" - living in Manhattan in our 30s, combined income of just under $700k (which has nearly doubled in last 3 years), with plans to try for kids in near future and sowing some wild oats with travel prior to that.

Namely:

1. I pay to have my car parked in a garage near my apartment in downtown Manhattan. $350/month. It is a complete luxury that makes it moderately easier than the train for getting out of town to visit friends' beach houses or my parents with our dog.

2. Over the past few years wife and I (I'm 36 she's 31) have spent a lot of $ on travel and will continue to do so this year. We are planning on trying for kids soon, and so view this as the last hurrah. DW gets to travel to LA/Miami/Paris/London frequently for work - and so I tag along for long weekends with her flight and hotels generally paid for by employer.

3. DW works in fashion marketing and was spending more than we'd like on clothes/bags/shoes. She still spends a lot - but gets a sizable employee discount plus clothing allowance and sells most of last season's stuff on eBay on a regular basis - which makes it all more manageable.

Texanbybirth
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Re: Which boglehead rule do you break--and are ok with

Post by Texanbybirth » Fri Jun 15, 2018 10:00 am

We probably break #3 above because our 30-year mortgage (PITI) is 35% of take home pay: after taxes, 401k, and HSA/FSA (which is spent).

I also tried #5 with cryptocurrencies (Litecoin->Ethereum->broke) and got burned. Thankfully only lost ~$400.

:beer

DetroitRick
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Re: Which boglehead rule do you break--and are ok with

Post by DetroitRick » Fri Jun 15, 2018 10:03 am

My deviations from BH principles:

Taxable account is entirely individual stocks
I prefer actively-managed funds to indexed in international equity and fixed income
I supplement my core indexed US equity positions with some degree of active management
I severely limit my market timing, but I"ll do it on occasion when I deem it to be prudent
Simplicity is not an over-riding concern with me

All these things have worked out well for me, or I wouldn't do them. But my basic principles OVERALL are quite similar - minimize costs, stick to allocation strategy over the long term, maintain a well-diversified portfolio, ignore the noise, lots of financial planning, etc.
Last edited by DetroitRick on Fri Jun 15, 2018 10:05 am, edited 1 time in total.

dbr
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Re: Which boglehead rule do you break--and are ok with

Post by dbr » Fri Jun 15, 2018 10:03 am

LawyersGunsAndMoney wrote:
Fri Jun 15, 2018 9:59 am
Most of ours are what I'd call "strategic lifestyle creep" - living in Manhattan in our 30s, combined income of just under $700k (which has nearly doubled in last 3 years), with plans to try for kids in near future and sowing some wild oats with travel prior to that.

Namely:

1. I pay to have my car parked in a garage near my apartment in downtown Manhattan. $350/month. It is a complete luxury that makes it moderately easier than the train for getting out of town to visit friends' beach houses or my parents with our dog.

2. Over the past few years wife and I (I'm 36 she's 31) have spent a lot of $ on travel and will continue to do so this year. We are planning on trying for kids soon, and so view this as the last hurrah. DW gets to travel to LA/Miami/Paris/London frequently for work - and so I tag along for long weekends with her flight and hotels generally paid for by employer.

3. DW works in fashion marketing and was spending more than we'd like on clothes/bags/shoes. She still spends a lot - but gets a sizable employee discount plus clothing allowance and sells most of last season's stuff on eBay on a regular basis - which makes it all more manageable.
There is no BH rule or principal that says you can't spend money if you have it. Maybe if this prevents you from investing early and often it violates principle 2. Maybe it violates 1 if you are giving up your plan to do those things. But you are not saying either of those things.

There is a gross and pernicious miss-perception that to be a Boglehead you have to be a skinflint.

VinhoVerde
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Re: Which boglehead rule do you break--and are ok with

Post by VinhoVerde » Fri Jun 15, 2018 10:06 am

Where to begin?
(1)-Own 10% of my portfolio in gold.
(2)-I prefer owning individual bonds (TIPs and CD ladders) to Total Bond fund.
(3)-Will occasionally market time. Received a large inheritance in the spring of 2017, invested 2/3 in a CD ladder, according to my investment plan. However, I decided to wait to invest the other 1/3 until the US market became more "reasonable". After a year of waiting and watching the market go up further, I had decided to invest in a short term treasury to "wait things out."
Just before purchasing in mid April, I found a cheap US equity asset to invest in. MLP stocks have been beaten up, shot, and thrown in a ditch over the last 2 years. Invested in Alps Alerian MLP index fund instead. Throws an 8% yield, which has stabilized over the last 6 months.Showing a small capital gain so far and received my first 2% quarterly distribution in May. This investment represents 7% of my investable assets and 17% of my yearly income. Now that's what I call leverage!
Plan to sell in 5 years when I reach 70 and begin taking required IRA distributions.
VinhoVerde

dbr
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Re: Which boglehead rule do you break--and are ok with

Post by dbr » Fri Jun 15, 2018 10:06 am

Texanbybirth wrote:
Fri Jun 15, 2018 10:00 am
We probably break #3 above because our 30-year mortgage (PITI) is 35% of take home pay: after taxes, 401k, and HSA/FSA (which is spent).

No, that is #2 if the consequence is that you are not saving and investing, but you aren't saying that. Anyway, contrary to some people's opinion, building equity in a property is still saving.

I also tried #5 with cryptocurrencies (Litecoin->Ethereum->broke) and got burned. Thankfully only lost ~$400.

That was #5 and also #3, too risky.

:beer

dcabler
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Re: Which boglehead rule do you break--and are ok with

Post by dcabler » Fri Jun 15, 2018 10:06 am

AlohaJoe wrote:
Fri Jun 15, 2018 9:17 am
jmk wrote:
Fri Jun 15, 2018 9:12 am
I'm a pretty strict boglehead. The one guide I don't do is a written out directive Investment Plan Statement.
There's no Boglehead rule saying you have to have a written out IPS.

There aren't really any Boglehead rules. The closest things are the Bogleheads principles: https://www.bogleheads.org/wiki/Boglehe ... philosophy

For those who don't want to click:

1 Develop a workable plan
2 Invest early and often
3 Never bear too much or too little risk
4 Diversify
5 Never try to time the market
6 Use index funds when possible
7 Keep costs low
8 Minimize taxes
9 Invest with simplicity
10 Stay the course

The only one I would kinda sorta disagree with is "Never try to time the market", just because .... never say never. If P/E got to 90 in the US you can bet I'd be market timing! 8-) (But I understand why the principle says "never" because so many people are tempted so often....)
Yup - it doesn't say you have to have a written IPS. It also doesn't say that one must use the 3-fund portfolio, either, to be a BH'er.
And some of the 10 listed are in the eye of the beholder. For example, sure, "Stay the course", but not if you've done something stupid. This board is full of people getting advice for changing from something they have to something more Bogle-ish... Maybe it should be more like "Don't flit from one thing to another in order to chase returns". :D

dbr
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Re: Which boglehead rule do you break--and are ok with

Post by dbr » Fri Jun 15, 2018 10:08 am

VinhoVerde wrote:
Fri Jun 15, 2018 10:06 am
Where to begin?
(1)-Own 10% of my portfolio in gold.
(2)-I prefer owning individual bonds (TIPs and CD ladders) to Total Bond fund.

Clearly individual Treasuries and CDs are an exception to the index fund rule.

(3)-Will occasionally market time. Received a large inheritance in the spring of 2017, invested 2/3 in a CD ladder, according to my investment plan. However, I decided to wait to invest the other 1/3 until the US market became more "reasonable". After a year of waiting and watching the market go up further, I had decided to invest in a short term treasury to "wait things out."
Just before purchasing in mid April, I found a cheap US equity asset to invest in. MLP stocks have been beaten up, shot, and thrown in a ditch over the last 2 years. Invested in Alps Alerian MLP index fund instead. Throws an 8% yield, which has stabilized over the last 6 months.Showing a small capital gain so far and received my first 2% quarterly distribution in May. This investment represents 7% of my investable assets and 17% of my yearly income. Now that's what I call leverage!
Plan to sell in 5 years when I reach 70 and begin taking required IRA distributions.
VinhoVerde

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goingup
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Re: Which boglehead rule do you break--and are ok with

Post by goingup » Fri Jun 15, 2018 10:10 am

I like to think I've gotten the big things right. Save a lot. Use (mostly) broad index funds. Don't tinker. Don't panic.

My behavioral foibles are not tucking all bonds into 401Ks and IRAs. I use blended funds in tax-deferred like Wellington and American Balanced fund. And use muni's in taxable. We also hold too much cash--5-10%. Suboptimal behavior, but rather minor sins.

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Re: Which boglehead rule do you break--and are ok with

Post by Texanbybirth » Fri Jun 15, 2018 10:12 am

dbr wrote:
Fri Jun 15, 2018 10:06 am
Texanbybirth wrote:
Fri Jun 15, 2018 10:00 am
We probably break #3 above because our 30-year mortgage (PITI) is 35% of take home pay: after taxes, 401k, and HSA/FSA (which is spent).

No, that is #2 if the consequence is that you are not saving and investing, but you aren't saying that. Anyway, contrary to some people's opinion, building equity in a property is still saving.

I also tried #5 with cryptocurrencies (Litecoin->Ethereum->broke) and got burned. Thankfully only lost ~$400.

That was #5 and also #3, too risky.

:beer
Thank you, may I have my penance now so I can move along?

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Re: Which boglehead rule do you break--and are ok with

Post by Grt2bOutdoors » Fri Jun 15, 2018 10:13 am

I own individual equities. The percentage of portfolio is minority and coming down every paycheck, most of my new investments are indexed only.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

staythecourse
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Re: Which boglehead rule do you break--and are ok with

Post by staythecourse » Fri Jun 15, 2018 10:16 am

The principle I have the biggest problem with is the "never bear too much or too little risk". That is a fortune cookie answer and is not really specific enough to be actionable. What is "too much" or "too little"? It is WAY too vague to be usable. How about a general rule of thumb like the one I use often when giving advice is expect to lose in percentages of 1/2 of the amount dedicated to equities in any given year. That seems more concrete.

And yes I do break that one as I take on more equity risk then I need. I want the highest, probability return for every dollar I choose to invest in the capital markets so I am much heavier in equities then I need.

Good luck.
"The stock market [fluctuation], therefore, is noise. A giant distraction from the business of investing.” | -Jack Bogle

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Ice-9
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Re: Which boglehead rule do you break--and are ok with

Post by Ice-9 » Fri Jun 15, 2018 10:17 am

barnaclebob wrote:
Fri Jun 15, 2018 9:31 am
No written IPS, just a spreadsheet showing what my preferred allocations are and how I compare. Maybe that counts as a written IPS.
Barnaclebob beat me to it. Same story. The spreadsheet has been my IPS for more than a decade, served me well through the depths of the 2008-9 crash. I don't need sentences in my IPS. :)

Some other things I do that my fellow Bogleheads might wave their fingers at:

* While I avoid all market timing with equity, I do allow myself to allocate new money within my fixed income allocation according to what I feel is a good deal at the time, as long as whatever I'm investing in is no riskier than Total Bond Market. I figure there's little harm done if I buy a brokered CD yielding higher than the SEC yield of TBM at the time with shorter maturity. Or I-Bonds, or whatever. It satisfies a desire to tinker that might do harm elsewhere in my portfolio.

* I didn't put 20% when I bought a house back in 2010 and had to pay mortgage insurance. Just a few months ago, however, thanks to a lot of additional principal payments, I got below the threshold to be off the MIP, so I guess this one is moot now. But I don't regret it as much as my Boglehead instincts say I should, as I got a pretty good price in 2010. Feels good to be MIP-free now.

* We live in an area with a lot of great restaurants and eat out WAY more than most Bogleheads would approve of.
Last edited by Ice-9 on Fri Jun 15, 2018 10:23 am, edited 2 times in total.

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Re: Which boglehead rule do you break--and are ok with

Post by Abe » Fri Jun 15, 2018 10:19 am

I only have about a third of my stock investments in index funds (roughly $741k). The remaining two thirds of my stock investments are in individual stocks and managed funds. With the managed funds, I'm paying higher expense ratios and some of them have higher turnover. With the individual stocks, I am taking on more risk. The problem is that I would get hit with a high capital gain tax if I converted them to index funds at this point.
Edited to add: Oh, I almost forgot, I took social security at age 62. :happy
Last edited by Abe on Fri Jun 15, 2018 10:26 am, edited 1 time in total.
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Bulgogi Head
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Re: Which boglehead rule do you break--and are ok with

Post by Bulgogi Head » Fri Jun 15, 2018 10:20 am

I have two active funds in my 403b. I own DEMSX (DFA Emerging Market Small Cap) because that’s really the only decent international fund in there. I also own ITRIX in my 403b which is a clone fund of PRWCX (T. Rowe Price Capital Appreciation). Why? I suppose because I like the fund... I suppose that’s against BH principals too.

md&pharmacist
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Re: Which boglehead rule do you break--and are ok with

Post by md&pharmacist » Fri Jun 15, 2018 10:20 am

all of them

Jiu Jitsu Fighter
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Re: Which boglehead rule do you break--and are ok with

Post by Jiu Jitsu Fighter » Fri Jun 15, 2018 11:47 am

1. Tilt to small value
2. Own gold (physical and ETF) ~5%
3. Eschew corporate bonds of any grade
4. "Sin a little" IPS has 50% US / 50% international. I am intentionally 45% US / 55% international
5. Believe that the 3-fund portfolio is not the optimal portfolio for anyone unless it's the only way that one will "stay the course"
6. Believe that Warren Buffett is a charlatan

Nate79
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Re: Which boglehead rule do you break--and are ok with

Post by Nate79 » Fri Jun 15, 2018 11:58 am

LiterallyIronic wrote:
Fri Jun 15, 2018 9:34 am
I pay extra on my mortgage even though I haven't maxed out my 401k. Does that count as breaking a Boglehead rule?

We also don't have life insurance, despite having a one-year-old. It's been on my to-do list, but who has the time?
While not a BH rule I think this is one I wouldn't delay and I would make time.

Nate79
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Re: Which boglehead rule do you break--and are ok with

Post by Nate79 » Fri Jun 15, 2018 12:00 pm

I own 2 active funds where low cost index funds are available:
American Funds EuroPac in 401k where a low cost international index fund is available.
JPMorgan Large cap growth in HSA where some low cost index funds are available.

MathWizard
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Re: Which boglehead rule do you break--and are ok with

Post by MathWizard » Fri Jun 15, 2018 12:10 pm

The only "rule" that I know of is to chose a diversified market index and keep fees low, that I do.

Some have said that I was wrong to be 100% equities for a long time, (Rule something like age in bonds,
or a variant thereof), so I may have "broken" that one.

I prefer invest according to your need and ability to take risk. (Reference Nispirius I think.)

And yes, no written IPS.

JoeRetire
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Re: Which boglehead rule do you break--and are ok with

Post by JoeRetire » Fri Jun 15, 2018 12:27 pm

jmk wrote:
Fri Jun 15, 2018 9:12 am
You? What boglehead rules do you feel you can break rationally in your particular case?
There are rules?

In that case, I guess I break the Boglehead rule that says you must follow the rules.

JoeRetire
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Re: Which boglehead rule do you break--and are ok with

Post by JoeRetire » Fri Jun 15, 2018 12:30 pm

LiterallyIronic wrote:
Fri Jun 15, 2018 9:34 am
We also don't have life insurance, despite having a one-year-old. It's been on my to-do list, but who has the time?
We all make time for the things we consider important.

CountOnIt
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Re: Which boglehead rule do you break--and are ok with

Post by CountOnIt » Fri Jun 15, 2018 12:34 pm

Nate79 wrote:
Fri Jun 15, 2018 11:58 am
LiterallyIronic wrote:
Fri Jun 15, 2018 9:34 am
We also don't have life insurance, despite having a one-year-old. It's been on my to-do list, but who has the time?
While not a BH rule I think this is one I wouldn't delay and I would make time.
I'll second that life insurance should be a priority once children are in the picture. FWIW, I would recommend going to ssa.gov and checking out what benefits your children/spouse would receive if you were to expire. I think many people (unintentionally) dismiss these benefits and over purchase insurance. I don't have any evidence to support this claim, but since many people I talk to are surprised at the death benefits SSA can offer dependents, I think it is a problem for some individuals. I understand people may intentionally dismiss the benefits if they are skeptical that SSA will actually pay out these benefits when they expire, but that is a different story.

That said, don't let this give you paralysis by analysis. Go ahead and get something...over/under purchasing is generally better than failing to make any purchase of life insurance.

rgs92
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Re: Which boglehead rule do you break--and are ok with

Post by rgs92 » Fri Jun 15, 2018 12:40 pm

I actually don't think I have ever heard John Bogle talk about spending or extreme LBYM.
(I suppose it is implied by his focus on investing in the S&P500 and bond market indexes and "the correct holding period is forever" advice, but he doesn't seem to stress a save-till-it-hurts philosophy of life.)

I think Mr. Bogle figures you are mature enough to make spending decisions on your own without any moralizing from him.
I sense that Bogleism revolves around how to invest alone and does not delve into lifestyle.
That's more in the realm of radio/TV commentators.
Last edited by rgs92 on Fri Jun 15, 2018 12:47 pm, edited 2 times in total.

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Artful Dodger
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Re: Which boglehead rule do you break--and are ok with

Post by Artful Dodger » Fri Jun 15, 2018 12:42 pm

Ice-9 wrote:
Fri Jun 15, 2018 10:17 am

* We live in an area with a lot of great restaurants and eat out WAY more than most Bogleheads would approve of.
I don't know, when you read the what are you doing now you're retired thread, there are plenty of folks eating out. Maybe you're supposed to suffer in the accumulation phase. I've cut back on wine buying, but still spend north of $4k annually.

I think I follow most of the principals, but could simplify some. I also own some individual stocks, but less than 5% of total assets. I mostly own individual CDs and bonds, as well as having an actively managed bond fund. I do pay attention to my AA, and that's one thing I learned mostly from Bogleheads.

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Re: Which boglehead rule do you break--and are ok with

Post by bgf » Fri Jun 15, 2018 12:44 pm

a substantial portion of my Total US allocation is overweight in Berkshire, Markel, and Ebix. These stocks are held by VTI, but then I also own them individually.

Other than that, im pretty bogleheady.

oh yea, and with a super tiny portion of my portfolio value, i have been known to buy call options.
“TE OCCIDERE POSSUNT SED TE EDERE NON POSSUNT NEFAS EST"

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Re: Which boglehead rule do you break--and are ok with

Post by Texanbybirth » Fri Jun 15, 2018 12:58 pm

CountOnIt wrote:
Fri Jun 15, 2018 12:34 pm
Nate79 wrote:
Fri Jun 15, 2018 11:58 am
LiterallyIronic wrote:
Fri Jun 15, 2018 9:34 am
We also don't have life insurance, despite having a one-year-old. It's been on my to-do list, but who has the time?
While not a BH rule I think this is one I wouldn't delay and I would make time.
I'll second that life insurance should be a priority once children are in the picture. FWIW, I would recommend going to ssa.gov and checking out what benefits your children/spouse would receive if you were to expire. I think many people (unintentionally) dismiss these benefits and over purchase insurance. I don't have any evidence to support this claim, but since many people I talk to are surprised at the death benefits SSA can offer dependents, I think it is a problem for some individuals. I understand people may intentionally dismiss the benefits if they are skeptical that SSA will actually pay out these benefits when they expire, but that is a different story.

That said, don't let this give you paralysis by analysis. Go ahead and get something...over/under purchasing is generally better than failing to make any purchase of life insurance.
This is great advice.

LiterallyIronic, once children are in the picture I don't think appropriate life insurance is restricted to a "boglehead rule". I really think it's common sense. From your previous posts, I think your wife stays home with the kiddo and you guys spend sparingly, are looking to save hard, and get out of the working game early. Sounds good to me, but if you're relatively healthy you can still get a 20 year policy for $500k for both of y'all for dirt cheap. My bet is that y'all could be finished with the process by the week of July 4th if you started today.

https://www.term4sale.com/

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Re: Which boglehead rule do you break--and are ok with

Post by CascadiaSoonish » Fri Jun 15, 2018 1:03 pm

There are a few things we're doing that fall outside the consensus here.
  • Have bond funds in taxable
  • Have an HSA option available but am not using it
  • Am sticking with a low-cost SIMPLE IRA rather than moving my company to a 401k
  • Have a small position in individual stocks and a larger position in special focus funds
  • Spend generously on travel and food
  • Regularly throw cash against principal on our 3.5% mortgage
But I look at our overall position and the trends and I'm OK with what we're doing.
Last edited by CascadiaSoonish on Fri Jun 15, 2018 1:13 pm, edited 1 time in total.

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Re: Which boglehead rule do you break--and are ok with

Post by ReformedSpender » Fri Jun 15, 2018 1:12 pm

Interesting thread topic.

Remember, while saving is an essential aspect, YOLO! Enjoy what you can, when you can. You can't take the :moneybag with you and tomorrow is never guaranteed. I feel like this is lost at times with some of the more extreme Bogle-diehard threads I read here from time to time.


:beer
Market history shows that when there's economic blue sky, future returns are low, and when the economy is on the skids, future returns are high. The best fishing is done in the most stormy waters.

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Re: Which boglehead rule do you break--and are ok with

Post by LiterallyIronic » Fri Jun 15, 2018 1:21 pm

Texanbybirth wrote:
Fri Jun 15, 2018 12:58 pm
CountOnIt wrote:
Fri Jun 15, 2018 12:34 pm
Nate79 wrote:
Fri Jun 15, 2018 11:58 am
LiterallyIronic wrote:
Fri Jun 15, 2018 9:34 am
We also don't have life insurance, despite having a one-year-old. It's been on my to-do list, but who has the time?
While not a BH rule I think this is one I wouldn't delay and I would make time.
I'll second that life insurance should be a priority once children are in the picture. FWIW, I would recommend going to ssa.gov and checking out what benefits your children/spouse would receive if you were to expire. I think many people (unintentionally) dismiss these benefits and over purchase insurance. I don't have any evidence to support this claim, but since many people I talk to are surprised at the death benefits SSA can offer dependents, I think it is a problem for some individuals. I understand people may intentionally dismiss the benefits if they are skeptical that SSA will actually pay out these benefits when they expire, but that is a different story.

That said, don't let this give you paralysis by analysis. Go ahead and get something...over/under purchasing is generally better than failing to make any purchase of life insurance.
This is great advice.

LiterallyIronic, once children are in the picture I don't think appropriate life insurance is restricted to a "boglehead rule". I really think it's common sense. From your previous posts, I think your wife stays home with the kiddo and you guys spend sparingly, are looking to save hard, and get out of the working game early. Sounds good to me, but if you're relatively healthy you can still get a 20 year policy for $500k for both of y'all for dirt cheap. My bet is that y'all could be finished with the process by the week of July 4th if you started today.

https://www.term4sale.com/
I have no idea how to rate my health of that site. I went with "Excellent", but how am I supposed to know? I came up with $21.07 for 15-year term for me and $24.08 for my wife (given "Above Average" health). I wouldn't call $45/month "dirt cheap." For my wife, she needs to drop 50 pounds to get into normal BMI, so I don't think it would go so well for her. So she'd need a company that doesn't consider weight and I'm not willing to allow someone to draw my blood so I'd need a company that doesn't do that. Maybe AAA?
JoeRetire wrote:
Fri Jun 15, 2018 12:30 pm
LiterallyIronic wrote:
Fri Jun 15, 2018 9:34 am
We also don't have life insurance, despite having a one-year-old. It's been on my to-do list, but who has the time?
We all make time for the things we consider important.
I'm extraordinarily lazy. It's not that my time is all booked with everything else I'm running around doing, my time is booked up with me doing nothing. You know how often I go to bed hungry because I was too lazy to even pour myself a bowl of cereal for dinner? On the plus side, it's going to make for a cheap retirement filled with just sitting on the couch or surfing the Internet.

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JoMoney
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Re: Which boglehead rule do you break--and are ok with

Post by JoMoney » Fri Jun 15, 2018 1:45 pm

I think my style is still advice inspired by Jack Bogle, but there are things I do that seem to raise disagreement here:
My "International" allocation is 0%
I quarrel with tilters, while at the same time tilting myself- but away from small-caps and complex portfolios.
I think owning a S&P 500 index fund is an acceptable option, in some cases preferable to, the various Total Market index funds.
I have a much larger equity allocation then most Bogleheads seem to think is prudent.
To the extent that I have fixed income, I don't like bond funds (especially intermediate or longer duration). I prefer FI that doesn't necessarily require an orderly functioning market (i.e. Savings Bonds, CDs, Money market account)
I like Dave Ramsey's radio show (despite his investment advice)
I don't mind some mental accounting of my fixed income into liability-matching "buckets" that don't get rebalanced in % terms
I like "buy and hold" to the extent that I have an aversion to mean-reversion trading strategies (i.e. expecting a "rebalancing bonus", and equal weighted funds), and sympathetic to trend-following, momentum, and 'let your winners run'
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham

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