Gaston wrote: ↑Wed Jun 09, 2021 1:52 pm
CyclingDuo wrote: ↑Wed Jun 09, 2021 3:54 am
For those who might want to know, after lagging for the majority of the three years, Merriman's Ultimate Buy & Hold has caught up to the Vanguard Three Fund performance and is now just about dead even.
Thx. AIl else being equal, if two investment strategies drive similar results, the Boglehead rule of thumb is to pick the simpler one.
Understood. I have nothing against the tilt towards simplicity. We use it throughout all of our retirement accounts.
Not sure I would consider it to be a must follow rule of thumb
regarding being a Boglehead to be a successful investor, but we could find many examples of Lazy Portfolios that have a variety of more complex strategies than a target date or three fund portfolio (see the nearly 200 Lazy Portfolios here: https://www.whitecoatinvestor.com/150-p ... han-yours/
The version of Merriman's Ultimate Buy & Hold Portfolio certainly goes beyond the number of funds held in the simple three fund portfolio. If we need to use the word complexity for an investment strategy that uses more funds than the simple three fund portfolio, or even the wrapper packed version of those funds that are packaged as the target date retirement fund, then so be it. In the Ultimate B&H portfolio that I am using that Merriman chose, the number of funds in the portfolio numbers 13 which qualifies as being much more complex than the three fund portfolio. Other threads covering the Ultimate B&H over the years I have been reading Bogleheads had versions of the fund that numbered down to only 4 funds, but I just clicked on Merriman's link to set up the portfolio at M1 using his construction at the time three years ago.
The management of those 13 funds, at least in the case of the M1 pies that Merriman put together for M1 (see this link for his pies: https://paulmerriman.com/m1-finance/
), as described above in my previous post has been about as simple as it gets on my part. All new contributions go to the underweighted asset class(es) to keep the portfolio balanced and a non-taxable event for rebalancing in that manner. It would be much more complex if assembling the portfolio on one's own and constantly figuring out where each new contribution was to be invested to keep the AA balance in line. Not out of the realm to do it on one's own with ease, but I will say it is nice to have the robo figure all of that out for me and have everything on automatic pilot week in and week out. I guess what I am saying is that the platform (M1) removes the complexity these days and turns what was formerly a complex process to track everything into a very simple way to do it. Automation, in this case, is good because it employs a hands off, no emotion way of accumulating. Now, that is a different element than talking about slice and dice compared to three big index funds to cover it all (total US, total International, total US Bond). However, the robo helps with all Lazy Portfolios to remove elements of complexity and execution.
Along the lines of complexity vs. simplicity, there is a good article today that addresses the subject in Barron's by Allan Roth entitled "Why My Support for Robo-Advisors is Waning". Link is here: https://www.barrons.com/articles/why-my ... eid=yhoof2
In my experiment, I am more interested in the returns over the long haul to personally compare the simple three funder vs. the slice and dice Merriman Ultimate B&H as well as a passively managed stock portfolio. I probably agree more with the premise that the amount one is saving being more important than whether or not it is invested in a simple or more complex group of asset classes in a Lazy Portfolio. The Robo-Advisors such as M1, Acorns, etc... helps one mitigate the complexity down to the level of things being simple. The complexity of rebalancing has been removed from my involvement and the weekly contributions are on automatic pilot. All I have to do is download the tax statement into TurboTax each year during tax season which involves the click of a button or two, but the management on my part from the head to head comparison of the Three Fund Portfolio, the Ultimate Buy & Hold Portfolio, and the Passively Managed Individual Stock Portfolio is simple.
Net-net, these platforms have changed the investing process to make things simple for Lazy Portfolio investors. I see that as a good thing. I also enjoy that the majority of our portfolio (all retirement accounts) and a good portion of our taxable accounts are allocated to simplicity (although I have to approximate the US total stock market using the S&P 500, Mid-Cap, and Small-Cap in our retirement accounts 403b/457b/401k). Bogleheads advice really helped me iron that out 4-5 years ago.