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

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

Post by H-Town » Fri Jun 15, 2018 1:55 pm

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. 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?
You talked about boglehead rules, but I don't see those as rules. Those are boglehead principles and values that I share. Since I've never followed any set of rules on here, I didn't have a chance to break any rules.

What I hate the most are rules and people who make rules.

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

Post by Artful Dodger » Fri Jun 15, 2018 1:57 pm

LiterallyIronic wrote:
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.
You might get $500k for you and $250k for her. Seeing as how she's not generating income, $250k would give you enough to pay for in home care, then daycare with school, etc. I'd consider a 25 year term limit. That way, you'll have coverage past normal college age and plus extra time for possible child 2. If you're real lazy, just call an independent agent, and ask them to do the work. They'll usually go to a wholesaler and have three or four companies, and they can tell you the trade offs (exams, blood work, weight, etc.). Being 50 lbs over weight won't have too much impact for a younger woman. If it was me, I'd just try to get a highly rated company and do whatever they require to get the best rate. You might as well get used to getting poked and prodded; it gets pretty regular the older you get.

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

Post by oldcomputerguy » Fri Jun 15, 2018 2:05 pm

I confess that we are not completely innocent of transgression.
9 Invest with simplicity
I'm afraid that our portfolio (taking my holdings and DW's together) is more complicated than I would prefer. While I am straight Boglehead, with Three-Fund in my IRA and VTSAX and VTIAX in taxable, DW has (IMHO, please nobody here tell her I said this) a horrible mix, including:
  • a 401k consisting of a mix of Target Date 2025, Target Date Retirement, S&P500 index, Russell 2500 index, ACWI ex-US, and Barclays Aggregate funds;
  • shares of Cracker Barrel and Sun Trust stock, inherited from her mother's estate and held for sentimental reasons;
  • shares of VEA (FTSE Developed Markets), VYM (High Dividend Yield), VOT (mid-cap growth), VBR (small-cap value), and SLYG (S&P600 small-cap growth) ETFs that are a legacy of her "fun money in Scottrade" days (these are all in taxable).
DW sees this as "diversification"; I invest according to the Bogleheads philosophy, while she invests according to her own "philosophy".

Happy wife, happy life.

P.S. I have done a deep dig into the underlying holdings in her 401k, and found that the AA hits very close to where it would be under a 60/40 Three-Fund scenario, so I figure it's not worth starting a war over. :wink:
Last edited by oldcomputerguy on Fri Jun 15, 2018 2:15 pm, edited 1 time in total.
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Re: Which boglehead rule do you break--and are ok with

Post by mancich » Fri Jun 15, 2018 2:12 pm

I own an actively managed fund (T. Rowe Price Blue Chip Growth) in addition to my index funds inside my 401k. It is an excellent fund, despite the .70% ER.

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

Post by Fallible » Fri Jun 15, 2018 2:21 pm

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. 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. ...
The Bogleheads' principles are basically about self-discipline, and an Investment Policy Statement is intended to help maintain that discipline by reminding you, especially during market downturns, of your overall plan and why you chose it. You can rely on "heuristics" and memory, but I think investment plans are best remembered fully and correctly when written down (which also takes self-discipline). Memories are well known to play tricks on us. And if we misremember why we invested a certain way, we'll be less certain to know where and why we've gone off track.

Also, if, as you say, an IPS is "just a means to an end," what's wrong with that?

And watch out for those heuristics! From Investopedia:

"Heuristics are a problem-solving method that uses shortcuts to produce good-enough solutions given a limited time frame or deadline. Heuristics are a flexibility technique for quick decisions, particularly when working with complex data. Decisions made using an heuristic approach may not necessarily be optimal."

https://www.investopedia.com/terms/h/heuristics.asp
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Re: Which boglehead rule do you break--and are ok with

Post by zaboomafoozarg » Fri Jun 15, 2018 3:00 pm

Unlike other Bogleheads, I don't have a $5,000 wristwatch. :D

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

Post by Exafchick » Fri Jun 15, 2018 3:00 pm

I have my bonds in my Roth IRA (100% Vanguard Star fund). My 401k is 80% Total Stock Market and 20% Total International Stock Market. I'm ok with that because I really like the Star fund (it was my first fund!) and it is easier to ensure my allocation is 80/20 this way.

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

Post by delamer » Fri Jun 15, 2018 3:25 pm

dbr wrote:
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.
I completely agree with the above.

It is appropriate to give advice to people about ways to cut expenses if they ask for such advice — either indirectly or directly — in a post.

But my spending priorities are inevitably going to be different than those of others, and especially than those of strangers on the internet.

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

Post by LiterallyIronic » Fri Jun 15, 2018 3:38 pm

Artful Dodger wrote:
Fri Jun 15, 2018 1:57 pm
You might get $500k for you and $250k for her. Seeing as how she's not generating income, $250k would give you enough to pay for in home care, then daycare with school, etc. I'd consider a 25 year term limit. That way, you'll have coverage past normal college age and plus extra time for possible child 2. If you're real lazy, just call an independent agent, and ask them to do the work. They'll usually go to a wholesaler and have three or four companies, and they can tell you the trade offs (exams, blood work, weight, etc.). Being 50 lbs over weight won't have too much impact for a younger woman. If it was me, I'd just try to get a highly rated company and do whatever they require to get the best rate. You might as well get used to getting poked and prodded; it gets pretty regular the older you get.
Heh, I don't know if 29 counts as "a younger woman." Don't tell her I said that. :wink:

Nah, if she were to die, then I stay home with the kid - so we need just as much on her as on me. I'm not going to say, "Well, your mom just died, but I'm off to work!" Heck, $500k is probably too much for either of us, anyway. And we won't be financially supporting our kid(s) once they get past 18, so there's no reason to have life insurance past normal college age. Frankly, I see no point to having life insurance beyond when the first kid reaches 13 or so. After that, the oldest kid can take care of themselves and a younger sibling while the one surviving parent works.
Artful Dodger wrote:
Fri Jun 15, 2018 1:57 pm
If it was me
But since it's me (and I've lived with me a long time), I can tell you what will probably happen.

Me: "Hello, I want life insurance."
Agent: "It's $X per month."
Me: "But I don't want a medical examination."
Agent: "Oh, then it's $X+Y per month."
Me: "That's too expensive, never mind."

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

Post by sschullo » Fri Jun 15, 2018 3:41 pm

Skipped a couple of principles:
As a consumer:
1. Bought two new cars in the last 6 years and one was expensive. However, my behavior is still boglehead as I still own them and plan on keeping them. BTW I lend out the Nissan Leaf on http://turo.com/ and so I make a little money on the side.
2. Have a swimming pool

As an investor:
1. Own international bonds, and have stock allocation overlap between the total stock market ETF and extended market index, and I tilt using the extended market index.
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Re: Which boglehead rule do you break--and are ok with

Post by dbr » Fri Jun 15, 2018 3:45 pm

sschullo wrote:
Fri Jun 15, 2018 3:41 pm
Skipped a couple of principles:
As a consumer:
1. Bought two new cars in the last 6 years and one was expensive. However, my behavior is still boglehead as I still own them and plan on keeping them. BTW I lend out the Nissan Leaf on http://turo.com/ and so I make a little money on the side.
2. Have a swimming pool

As an investor:
1. Own international bonds, and have stock allocation overlap between the total stock market ETF and extended market index, and I tilt using the extended market index.
How are any of those things related to "breaking a Boglehead rule."

I am not asking as some sort of personal issue but I am concerned someone coming across this forum could get some very odd ideas concerning what we are about here from reading some of the responses.

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

Post by CountOnIt » Fri Jun 15, 2018 4:01 pm

LiterallyIronic wrote:
Fri Jun 15, 2018 3:38 pm
But since it's me (and I've lived with me a long time), I can tell you what will probably happen.

Me: "Hello, I want life insurance."
Agent: "It's $X per month."
Me: "But I don't want a medical examination."
Agent: "Oh, then it's $X+Y per month."
Me: "That's too expensive, never mind."
I guess the name of the thread is "and [you] are ok with" and not "and you want to be publicly shamed for" so I'll have to just bite my tongue...

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

Post by Fallible » Fri Jun 15, 2018 4:05 pm

staythecourse wrote:
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. ...
When trying to determine how much risk one should take, I agree it would be nice to have a hard-and-fast rule(s)
to turn to, if that's what you mean. But determining how much risk to take is so individual and personal, and ultimately depends on knowing oneself, in my case on knowing what's "too much or too little" for me.

Part of the BH advice behind the risk principle is to know how much money one can afford to lose; other advice centers on an individual's need, ability, and willingness to take risk. For me, that's sufficient advice to help determine what's too little or too much.
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Re: Which boglehead rule do you break--and are ok with

Post by Sandtrap » Fri Jun 15, 2018 4:06 pm

#9. Simplicity.
I have a hybrid LMP and 10% of total in a "Tier 2" that I call "working capital".
Otherwise, all "Bogle" principles and concepts intact.

Not a rule breaker.
No pink slip.
No visits to the "principles office".

j

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

Post by stemikger » Fri Jun 15, 2018 4:32 pm

In the past I had a terrible time staying the course when it came to my AA. I was coming to these forums saying how much I loved the Balanced Index 60/40 model, but would constantly second guess this great advice by John Bogle.

I have been on a good road for a nice amount of time and I don't even look at my account that much. It feels good to live more and not tinker. I also did some market timing that actually worked out pretty good, but no more, I'm so much better off ignoring my investments. My new goal is not ot Peek for the rest of 2018 and 2019.
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Re: Which boglehead rule do you break--and are ok with

Post by FoolMeOnce » Fri Jun 15, 2018 4:38 pm

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. 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?
I'm guilty of this. I started, have about half of a draft, and have not finished. I don't think I need it for myself, but if something were to happen to me, my wife would not know what to do with our investments. So I really should finish this for her.

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

Post by gmaynardkrebs » Fri Jun 15, 2018 4:54 pm

I check my Vanguard portfolio almost every day, breaking John Bogle's sage "get a life" advice. Can't help it.

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

Post by JoeRetire » Fri Jun 15, 2018 5:24 pm

LiterallyIronic wrote:
Fri Jun 15, 2018 1:21 pm
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.
Everyone has their own idea of a good life, I guess.

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

Post by fujiters » Fri Jun 15, 2018 6:15 pm

gmaynardkrebs wrote:
Fri Jun 15, 2018 4:54 pm
I check my Vanguard portfolio almost every day, breaking John Bogle's sage "get a life" advice. Can't help it.
I do the same with this forum :beer
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Re: Which boglehead rule do you break--and are ok with

Post by FIREchief » Fri Jun 15, 2018 6:26 pm

Is "don't peek" a rule? If so, I've been a huge violator. I've always believed that for some of us, it is character building and educational to stare directly into the beast of a bear market. I was 100% equities throughout my accumulation phase (probably another "rule violation") and I survived both big crashes without wavering.
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Re: Which boglehead rule do you break--and are ok with

Post by Dandy » Fri Jun 15, 2018 6:28 pm

1 :happy Develop a workable plan
2 :happy Invest early and often
3 :happy Never bear too much or too little risk
4 :happy Diversify
5 ?Never try to time the market (will on occasion buy on really bad days within my equity target range)
6 :happy Use index funds when possible
7 :happy Keep costs low
8 :happy Minimize taxes
9 ?Invest with simplicity (Fixed income side is not simple)
10 ?Stay the course ( course changes happen near, early in and often later in retirement - can't chart a multi decade
course without changes -- too many variables many of which can't be anticipated -- need to have
wisdom to know when change is needed vs being influenced by fear, greed, hype etc. Hoping i have
enough.)

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

Post by UpperNwGuy » Fri Jun 15, 2018 6:31 pm

The only two rules I break are:
— I hold the Vanguard Total Bond Index Fund in taxable.
— I check my portfolio every evening (except weekends).

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

Post by Monster99 » Fri Jun 15, 2018 9:01 pm

I own Dodge and Cox Stock Fund and International Fund (in taxable)
I also have both Wellesley and Wellington funds.

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

Post by guyesmith » Fri Jun 15, 2018 9:20 pm

I have an actively managed fund in one of my IRAs. It's a PRIMECAP fund and PRIMECAP has slaughtered the market over the last 30 years.

And as soon as I have enough saved up I'll have a balanced fund in my taxable brokerage account. This is for future car purchases and needs to be 60/40 rather than 100 stocks.

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

Post by warner25 » Fri Jun 15, 2018 9:34 pm

We don't "minimize taxes," but it's for the sake of that other Boglehead principle: simplicity. Namely, we use balanced funds (even in taxable), and we invest some money in taxable and a 529 instead of maximizing retirement accounts right now in order to save towards various goals.

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

Post by Chrono Triggered » Fri Jun 15, 2018 9:39 pm

staythecourse wrote:
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.
+1.

I think that suggestion is meant towards the newer investor that might be spooked if the market were to start tanking and then he/she would sell at the bottom. If you know the risks involved and are willing to stick with it, bearing risk for the reward nets the higher returns (so far, of course). Personally, I'm 31, and 100% in stocks. I'll increase my exposure to bonds once I get closer to retirement but for right now, at my age, I'm pounding equities as much as I can.
FIREchief wrote:
Fri Jun 15, 2018 6:26 pm
Is "don't peek" a rule? If so, I've been a huge violator. I've always believed that for some of us, it is character building and educational to stare directly into the beast of a bear market. I was 100% equities throughout my accumulation phase (probably another "rule violation") and I survived both big crashes without wavering.
Agreed. Like my previous statement above, this "rule" (guideline might be more applicable) seems more geared towards the beginner investor who might panic and do something drastic. As long as you know the risks of your allocation, looking at your portfolio on a somewhat frequent basis gives you financial toughness and lets you better weather the impending storms that are bound to arise. Or you can ignore it completely; as long as your plan stays the course.

As for me, I plunked down $5,500 in my Roth IRA for POGRX (Primecap Odyssey Growth Fund) on 02/04/2016 which was excellent timing, as it's been great for me. Everything else of mine is comprised of index funds.

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

Post by grabiner » Fri Jun 15, 2018 10:27 pm

AlohaJoe wrote:
Fri Jun 15, 2018 9:17 am
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
#9 is the one I violate; I am a slice-and-dicer, overweighting small-cap, value, and emerging markets. It isn't that complicated to keep track of everything with a spreadsheet, but the spreadsheet does have 11 asset classes (US LG/LV/SG/SV, foreign DevLg/EMLg/DevSm/EMSm, REIT US/foreign, and bonds).

I also don't believe in #6 for its own sake. I like index funds, but that is because they meet goals 7, 8, and 9. If an active fund is the best way to meet these goals (for example, Vanguard International Explorer in my IRA before Vanguard offered an international small-cap ETF), I will use it.
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Re: Which boglehead rule do you break--and are ok with

Post by Horsefly » Fri Jun 15, 2018 11:17 pm

When I first found this site, I thought I was probably in violation of lots of the "rules": I had 6 accounts and all had more than three investments, and nothing is in Vanguard! Then I spent more time reading and realized I already was a boglehead. I am mostly nuts about expense ratios, and during all the ups and downs of the market I just swallow hard and leave things lie.

I think the way bogleheads think in general is just a good thing. I really think that my review of the new posts on this board (and - more importantly - the responses to them) are very grounding. They make me step back from whatever confusion I have and look at things logically. Thanks to all of you!

I will say that the concept of the IPS really motivated me. What I ended up writing was not really an IPS, but a Financial Policy Statement. It allowed me to document what my wife and I agree are our goals (not just investments), how we spend money, what streams of income we have in retirement, and how to periodically re-examine what we have. I think it allowed me to finally get stuff into words that my wife can process if I die before her (I do all the financial stuff, so it has always worried me). This document is obviously a living project, but I don't know I would have figured out how to approach it without this site!

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

Post by confusedinvestor » Fri Jun 15, 2018 11:37 pm

11. I always review my own #1 'Develop Workable Plan' with one new financial adviser/year (CFA, CPAs, CFPs). Max advisor budget $250/yr (bit high for a typical boglehead including myself)
AlohaJoe wrote:
Fri Jun 15, 2018 9:17 am

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....)

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

Post by sergeant » Sat Jun 16, 2018 12:55 am

I try to keep my AA near 50/50 but let it get to 60/40 or 40/60 based on valuations. I don't treat our assets as one portfolio. We hold a bunch of fixed income in taxable. I don't like bonds and keep most of our fixed income in stable value funds.


I don't think I've really broken any rules but certainly haven't optimized everything.
Lincoln 3 EOW!

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

Post by heyyou » Sat Jun 16, 2018 1:20 am

Which boglehead rule do you break--and are ok with
Don't know and don't care. I just do what suits me.
Others are welcome to do whatever suits them.

from the internet
Dogma: a principle or set of principles laid down by an authority as incontrovertibly true.

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

Post by MrPotatoHead » Sat Jun 16, 2018 1:33 am

Like John Bogle I have no issue with holding a portfolio of individual stocks where as it seems most Bogleheads are adverse to it despite their namesake's approval. In summary costs do matter and these days you can buy for free at many institutions.

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

Post by MrPotatoHead » Sat Jun 16, 2018 1:42 am

zaboomafoozarg wrote:
Fri Jun 15, 2018 3:00 pm
Unlike other Bogleheads, I don't have a $5,000 wristwatch. :D
Huh...I don't think I have had a wrist watch in over 40 years...

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

Post by SpringMan » Sat Jun 16, 2018 3:32 am

FIREchief wrote:
Fri Jun 15, 2018 6:26 pm
Is "don't peek" a rule? If so, I've been a huge violator. I've always believed that for some of us, it is character building and educational to stare directly into the beast of a bear market. I was 100% equities throughout my accumulation phase (probably another "rule violation") and I survived both big crashes without wavering.
I think it is a bad idea to not peak. I want to know about any mistakes ASAP. There is an adage that bad news does not get better with age.
Best Wishes, SpringMan

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

Post by minimalistmarc » Sat Jun 16, 2018 3:39 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.

Thank you. Very descriptive and I love hearing about people whose lives are completely opposite to ours.

700k seems like a lot but I'm guessing it doesn't stretch very far in Manhattan?

The rule I break is I only use ETFs and never index funds, due to high cost of holding funds in the UK

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

Post by Mr.BB » Sat Jun 16, 2018 4:19 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?
Do you have time to watch SportsCenter or whatever TV shows you like during the week? Do you have time to read financial books, magazines and bulletin boards, but you DON"T have time to financially protect your spouse and kid in case anything happens to you? :annoyed
"We are what we repeatedly do. Excellence, then, is not an act, but a habit."

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

Post by hudson » Sat Jun 16, 2018 6:16 am

I don't have a written investment plan.
I don't hold at least 20% equities.
I don't rebalance.

What I really like is making a contribution and getting the varied, blunt, and expert feedback.
Many of my "trial balloons" have been popped; many times the replies have changed my strategies. I've learned to reduce my tax bill with tax loss harvesting. All of my stupid questions about the same have been answered.
My personal finance and investing ideas have been turned upside down; I never heard of paying cash for a vehicle. Before, mutual fund expenses were not important; now low expenses are critical.

I believe that anything that works is good technique.

I like livesoft's rules but don't follow them: viewtopic.php?p=3810938#p3810938
Last edited by hudson on Sat Jun 16, 2018 8:20 am, edited 3 times in total.

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corn18
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Re: Which boglehead rule do you break--and are ok with

Post by corn18 » Sat Jun 16, 2018 6:48 am

I have one share each of a bunch of companies that I like and use all the time. I am also wearing a $6k watch. :sharebeer

Image

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

Post by michaeljc70 » Sat Jun 16, 2018 7:39 am

I'm interpreting the question more loosely than some. I thought the OP meant more on the order of things you do that most Bogleheads wouldn't do - contrary to the majority of Bogleheads.

-Took 10 years off working out of 27 years since college. I enjoyed the time off (did a lot of travel), but obviously it was costly in terms of earnings over my lifetime. In retrospect, I still would take some of the time off, but maybe cut it in half.

-As I approach retirement in the next year or two, I have my AA at 75/25 and plan on keeping it there forever. That is probably much higher than most Bogleheads near/in retirement.

-I bought a new car. I kept the last one 13 years. I just didn't think that buying one a couple years old was worth the savings and frankly wanted something new after 13 years.

-I'll be retiring early (late 40s) and "cutting it close" probably by Boglehead standards. I hear some people worried about a SWR of 2.5% and thinking they need 50x-80x expenses to retire.

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

Post by Random Walker » Sat Jun 16, 2018 8:25 am

I use an advisor. Have substantial tilts and alternatives.

Dave

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

Post by stemikger » Sat Jun 16, 2018 8:39 am

Following Jack Bogle and following the Bogleheads are definitely not the same. I consider myself a Jack Bogle purist, but definitely not a Boglehead purist. Having said that, I'm good with that!!

Here are some of the things I feel strongly about that many Bogleheads probably would not.

Jack Bogle - Two fund portfolio or Balanced Index Fund for life (now known as the Bogle Model).
Jack Bogle - Don't Peek
Jack Bogle - Age in bonds (a very rough rule of thumb but don't forget to include social security as part of your fixed income). If you do, a 60/40 portfolio could be appropriate for life.
Jack Bogle - You really don't need international, but if you feel it is necessary no more than 20% The S&P and Total Stock Index Funds already has it built in.
Jack Bogle - Look no further than stocks and bonds, it doesn't need to be anything else.
Jack Bogle - Smart Beta is dumb.
Jack Bogle - Simplicity!

These are just a few examples that I 100% side with Jack on, but I know many Bogleheads seem to want a more sophisticated portfolio.
Choose Simplicity ~ Stay the Course!! ~ Press on Regardless!!!

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

Post by sschullo » Sat Jun 16, 2018 9:13 am

dbr wrote:
Fri Jun 15, 2018 3:45 pm
sschullo wrote:
Fri Jun 15, 2018 3:41 pm
Skipped a couple of principles:
As a consumer:
1. Bought two new cars in the last 6 years and one was expensive. However, my behavior is still boglehead as I still own them and plan on keeping them. BTW I lend out the Nissan Leaf on http://turo.com/ and so I make a little money on the side.
2. Have a swimming pool

As an investor:
1. Own international bonds, and have stock allocation overlap between the total stock market ETF and extended market index, and I tilt using the extended market index.
How are any of those things related to "breaking a Boglehead rule."

I am not asking as some sort of personal issue but I am concerned someone coming across this forum could get some very odd ideas concerning what we are about here from reading some of the responses.
Odd? Aren't bogleheads already "odd" in the entire field of personal finance? We have been labeled a cult by adversaries for years. But I digress.

You are right, however, and that doesn't excuse my 'odd' post. It didn't answer the OP question because personal issues are often regarded as less informative, and much of the time wrong because few can relate to them. We want hardcore accurate content. But I am surprised that you noticed because personal issues regarding finance are often ignored. And you want to warn others to not read this "odd" post.

This brings up another topic which should be a new discussion. This idea of "personal issues" IMO is very important. I answered the OP that I broke some consumer rules against frugality and some investing rules, but they were too detailed and too personal. Most of the discussion of finance, personal experiences regarding how we feel about frugality to get to financial independence, and what we do, and feel, about constructing and maintaining our diversified low-cost portfolio are regarded as less sophisticated, less informational, less scientific, and downright simplistic, emotional and tacky. Now I am really off the OP's topic!
Perhaps frugality should be part of the boglehead rules.
Public School K-12 Educators: "Ask NOT what your annuity sales person can do for you, ask what you can do to be a Do-It-Yourselfer (DIY)."

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

Post by dbr » Sat Jun 16, 2018 9:42 am

sschullo wrote:
Sat Jun 16, 2018 9:13 am
dbr wrote:
Fri Jun 15, 2018 3:45 pm
sschullo wrote:
Fri Jun 15, 2018 3:41 pm
Skipped a couple of principles:
As a consumer:
1. Bought two new cars in the last 6 years and one was expensive. However, my behavior is still boglehead as I still own them and plan on keeping them. BTW I lend out the Nissan Leaf on http://turo.com/ and so I make a little money on the side.
2. Have a swimming pool

As an investor:
1. Own international bonds, and have stock allocation overlap between the total stock market ETF and extended market index, and I tilt using the extended market index.
How are any of those things related to "breaking a Boglehead rule."

I am not asking as some sort of personal issue but I am concerned someone coming across this forum could get some very odd ideas concerning what we are about here from reading some of the responses.
Odd? Aren't bogleheads already "odd" in the entire field of personal finance? We have been labeled a cult by adversaries for years. But I digress.

You are right, however, and that doesn't excuse my 'odd' post. It didn't answer the OP question because personal issues are often regarded as less informative, and much of the time wrong because few can relate to them. We want hardcore accurate content. But I am surprised that you noticed because personal issues regarding finance are often ignored. And you want to warn others to not read this "odd" post.

This brings up another topic which should be a new discussion. This idea of "personal issues" IMO is very important. I answered the OP that I broke some consumer rules against frugality and some investing rules, but they were too detailed and too personal. Most of the discussion of finance, personal experiences regarding how we feel about frugality to get to financial independence, and what we do, and feel, about constructing and maintaining our diversified low-cost portfolio are regarded as less sophisticated, less informational, less scientific, and downright simplistic, emotional and tacky. Now I am really off the OP's topic!
Perhaps frugality should be part of the boglehead rules.
You have a point. Thanks for the comment.

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

Post by Luckywon » Sat Jun 16, 2018 9:55 am

Interesting thread.

About a third of my bond holdings (I'm 65:35) is in managed funds PIMIX and DBLTX. Another third is in my taxable account in muni funds VCAIX and PRXCX.

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

Post by 2pedals » Sat Jun 16, 2018 10:10 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....)
I find the Boglehead investment philosophy summary very important to me.
In summary, a Bogleheads investor tends to (1) save a lot, (2) select an asset allocation containing both stock and bond asset classes, (3) buy low cost, widely diversified funds, (4) allocate funds tax-efficiently, and (5) stay the course.

One of the wonderful things about Boglehead investing is that it generally only requires a part of a day to set up, and then about an hour a year of effort to rebalance. Beyond that, there is no need to watch the markets or follow financial news. Even better, it works. Although Bogleheads investing may seem strangely simple, it is based on decades of comprehensive research showing that buying and holding the whole market consistently outperforms many of the alternatives.

In addition to learning the details of Bogleheads investing from this wiki, we urge you to visit the Bogleheads forum. One may or may not enjoy some of the endless debates about vagaries such as dollar cost averaging or non-deductible IRAs. But nearly everyone appreciates the shared commitment to implementing financial plans that enable us to accomplish our life goals.
When I was younger I failed to select an asset allocation, select low cost diversified funds and to stay the course. I suffered for it dearly. After I learned the boglehead approach and matured, I save a lot, have an asset allocation, buy low cost and widely diversified index funds, allocate funds tax-efficiently and stay the course. After I retire the "save a lot" will change to an income harvesting strategy.

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

Post by linenfort » Sat Jun 16, 2018 10:19 am

I own gold and long bonds.
I have a smattering of moon shot stocks, or as some Bogleheads would call them, "suboptimal investments."
bogleheads, don't knock state lotteries. They helped defund the mafia.

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

Post by ForeverInvestorILL » Sat Jun 16, 2018 10:28 am

Very interesting thread to follow so figured why not chime in:
1. At age 24, hold way more cash than recommended (lot of big purchases upcoming - wedding, down payment, etc)
2. Hold 10% bonds in Roth IRA due to Target Date in 401K and size/growth with contributions to each respective account
3. Will eventually hold bonds (tax-exempt) in taxable as 2nd tier EF
4. Go on 3 vacations per year. Always been frugal but I love traveling and want to see as much as I can before settling down with house and kids
5. Check my portfolio probably once/week

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

Post by dbr » Sat Jun 16, 2018 10:32 am

ForeverInvestorILL wrote:
Sat Jun 16, 2018 10:28 am
Very interesting thread to follow so figured why not chime in:
1. At age 24, hold way more cash than recommended (lot of big purchases upcoming - wedding, down payment, etc)
2. Hold 10% bonds in Roth IRA due to Target Date in 401K and size/growth with contributions to each respective account
3. Will eventually hold bonds (tax-exempt) in taxable as 2nd tier EF
4. Go on 3 vacations per year. Always been frugal but I love traveling and want to see as much as I can before settling down with house and kids
5. Check my portfolio probably once/week
Nothing really wrong with any of that. In fact probably good ideas for you.

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

Post by getthatmarshmallow » Sat Jun 16, 2018 11:15 am

Mild market timing? I find myself with a decision, after meeting retirement and 529 goals, to put an extra $X per month toward the mortgage, or in the market. The market is likely at the end of a long bull run, and property values are going up about 8-10% here. If the numbers were reversed I'd probably put that extra money in the market. Plus, spouse is on board with attacking the mortgage and less so with the market. I don't know if that's timing the market or more like 'my discretionary purchase this month includes more house!"

Otherwise, pretty conventional. My IPS includes my asset allocation, and a commitment as a novice investor that I am not allowed to tinker with anything (beyond rebalancing) for two years, so as not to make Dunning-Kruger mistakes.

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

Post by michaeljc70 » Sat Jun 16, 2018 11:25 am

getthatmarshmallow wrote:
Sat Jun 16, 2018 11:15 am
Mild market timing? I find myself with a decision, after meeting retirement and 529 goals, to put an extra $X per month toward the mortgage, or in the market. The market is likely at the end of a long bull run, and property values are going up about 8-10% here. If the numbers were reversed I'd probably put that extra money in the market. Plus, spouse is on board with attacking the mortgage and less so with the market. I don't know if that's timing the market or more like 'my discretionary purchase this month includes more house!"

Otherwise, pretty conventional. My IPS includes my asset allocation, and a commitment as a novice investor that I am not allowed to tinker with anything (beyond rebalancing) for two years, so as not to make Dunning-Kruger mistakes.
Personally, I think market timing (at least the kind that should be avoided) is long term/large amount timing. Selling all your stocks because you think the market is high is the type of market timing that needs to be avoided. Making decisions like to transfer extra cash from your checking account into the market on a day when the market is down a percent or two isn't anything major. That is similar to what you are doing. If I was set to rebalance on the 1st of the month and on the 28th there was a big swing (that helped me), I'd rebalance a few days early. I'm not sure what property values have to do with paying off the mortgage early though. You still own the same thing.

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