Bogleheads is great, and one of the more wholesome things on the Web nowadays.
When my consulting business was finally doing well (after way too many years of school, debt, and turning down better-paying opportunities), it took me a few tries of asking around and Googling, to find what people were supposed to do with excess money. I ended up wasting some of it on naive sector investing, and on funds/stock-picking, before I stumbled upon Bogleheads.
Then I quickly settled into a simple your-age-in-bonds mix of ITOT and AGG (was already at Fidelity), and followed the Bogleheads advice of not touching it, not even looking at it. I also do the solo 401K, maxed contributions, and the HSA bonus (though the HSA was more headache than it was worth).
One of the odd things about Bogleheads, however, is that, once you're up to speed, have your accounts set up, no unusual events, and you take the "index on autopilot" to heart... frequenting the forum then seems counterproductive, like it becomes temptation to tinker with financial arrangements, or just a distraction from better things to be doing.
> One of the odd things about Bogleheads, however, is that, once you're up to speed, have your accounts set up, no unusual events, and you take the "index on autopilot" to heart... frequenting the forum then seems counterproductive, like it becomes temptation to tinker with financial arrangements, or just a distraction from better things to be doing.
That's what I've recently discovered. Dumping everything into VTSAX is the best thing you can do to your investments, but then... where's the excitement? So I've allowed myself a "fun money" brokerage account that I initially deposited $5k into, and just play with options trading. I've already paid myself back the initial investment, so any profit/loss from now on is irrelevant. This way I can still geek out over investing, but not gamble my life savings.
I do exactly this! VTSAX,VBTLX, and have a fun account.
My fun account has made me much more aware of global scientific news and research as I see my stocks jump up or level off; really neat understanding why.
Brokerages can front you the money to buy while your ACH transfer is being processed. Robinhood calls it Instant Deposits, but I believe others offer the service too for free.
What's the relationship here between EFI, mutual funds, and "margin account/higher expense ratio"? Would anyone be willing to explain this comment thread to a newbie?
In this thread, one person is saying they prefer MFs because they don't have to wait for an ACH transfer to complete, the other person is telling them to buy ETFs with a margin account (that is, using credit), because — as I interpret them — the cheaper ETF would be worth the interest on the margin.
But in this case, it's nonsensical if you're comparing VTSAX (0.04%/year expense ratio) and VTI (0.03%). If you have $10m in your account, the difference is $1k per year.
Often, ETFs have lower expense ratios because they are cheaper to manage; historically, mutual funds have had high fees, even for passively managed funds, and Vanguard is one of the companies that have worked to bring the fees down. But it's not always true that MFs are more expensive. VTSAX's ER is 0.04%; its ETF equivalent, VTI, is 0.03%. The difference is effectively zero.
I mean, many brokerages will extend margin for free during ACH transfer (or any settlement event for that matter). So using a margin account and buying the ETF will save you one basis point in fees every year. If you have a 30 year horizon it becomes ~20-30 basis points depending on contribution+return schedule. 20-30k on 10mm is not super much but not negligible either since it takes no effort.
TDAmeritrade will extend no interest margin for transfers iirc. I haven’t looked at robinhood in a while, but I believe they will extend instant deposit beyond $1k. I remember I had maybe 70k with them a year ago and my instant deposit was 50k. It still has to be no greater than max marginable value (so you can’t do it on a fresh account).
In Jason Zweig's commentary accompanying Benjamin Graham's book "The Intelligent Investor", he points out something similar:
> There are two ways to be an intelligent investor:
-by continually researching, selecting, and monitoring a dynamic mix of stocks, bonds, or mutual funds;
-or by creating a permanent portfolio that runs on autopilot and requires no further effort (but generates very little excitement).
> Graham calls the first approach "active" or "enterprising"; it takes lots of time and loads of energy. The "passive" or "defensive" strategy takes little time or effort but requires an almost scientific detachment from the alluring hullabaloo of the market. As the investment thinker Charles Ellis has explained, the enterprising approach is physically and intellectually taxing, while the defensive approach is emotionally demanding.
Later, Zweig goes on to say that if you must, restrict yourself to speculation with at most 10% of your assets.
> For better or worse, the gambling instinct is part of human nature--so it's futile for most people even to try suppressing it. But you must confine and restrain it. That's the single best way to make sure you will never fool yourself into confusing speculation with investment.
I suspect a lot of folks get tripped up during "the boring middle". It can be hard to resist the temptation to do something, anything.
I check my account balances and financial planning spreadsheet several times a week. But instead of mess with money, I try to channel that energy into modeling. "What would happen if I increase my savings rate by 5%? What if we took a year sabbatical?" Most of it goes nowhere, but I'd rather be futzing with a spreadsheet than gambling on Robinhood.
I've found the same thing. I joined the forum about a decade ago, and then went dark for several years. I'll go back to the forum whenever there are changes in my financial picture, or tax law changes. I highly appreciate the users on there with 10s of thousands of posts, always helping out the new people.
The moderators over there are excellent. Perhaps a bit overzealous at times, but probably better to err on the side of conserving the "wholesome" nature of the forum.
Tax law does occasionally change, and it can influence your most optimal financial path. For example, with the 2017 federal tax cuts capping SALT deductions at $10k, mortgage interest deduction went away for high-income earners in high-income states. The loss of a tax benefit makes home-ownership a slightly less attractive option.
In California, a single person pays $10k in state income tax on an income of about $142,510.
It's good to pay attention somewhat regularly, as it could impact planning. Annually, limits for 401(k)'s and IRA's are re-assessed, as well. When possible, you should take full advantage of completely filling tax-advantaged accounts (and not relying on last year's numbers).
I was active on the board back when it was on Morningstar. It helped me a lot, I contributed for a few years, and then I literally forgot about my investments for the next 15 years. Didn’t even look in 2008 and 2009. Highly recommended.
When my consulting business was finally doing well (after way too many years of school, debt, and turning down better-paying opportunities), it took me a few tries of asking around and Googling, to find what people were supposed to do with excess money. I ended up wasting some of it on naive sector investing, and on funds/stock-picking, before I stumbled upon Bogleheads.
Then I quickly settled into a simple your-age-in-bonds mix of ITOT and AGG (was already at Fidelity), and followed the Bogleheads advice of not touching it, not even looking at it. I also do the solo 401K, maxed contributions, and the HSA bonus (though the HSA was more headache than it was worth).
One of the odd things about Bogleheads, however, is that, once you're up to speed, have your accounts set up, no unusual events, and you take the "index on autopilot" to heart... frequenting the forum then seems counterproductive, like it becomes temptation to tinker with financial arrangements, or just a distraction from better things to be doing.