
Bogleheads - simonebrunozzi
https://www.bogleheads.org/
======
neilv
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.

~~~
rewtraw
> 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.

~~~
potiuper
VTI is the ETF version of VTSAX; has lower expense ratio

~~~
ed25519FUUU
I prefer the mutuals because I can invest money _that day_. With a broker
account, there’s the ACH waiting period, so you miss out buying dips.

~~~
ivalm
Use a margin account if that matters to you, still cheaper than paying higher
expense ratio.

~~~
jasonv
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?

~~~
atombender
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.

~~~
ivalm
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.

~~~
ed25519FUUU
Which brokerage offers free trades and also extends margin during the ACH
period? Robinhood only extends $1k at a time.

~~~
ivalm
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).

------
stevep001
It only takes about 30 seconds to show that the BH site is anything but
dogmatic. For example, check out the Hedgefundie thread on risk parity
investing using leveraged ETFs (now at 9000 posts):

[https://www.bogleheads.org/forum/viewtopic.php?f=10&t=288192](https://www.bogleheads.org/forum/viewtopic.php?f=10&t=288192)

or this recent post on factor investing:

[https://www.bogleheads.org/forum/viewtopic.php?f=10&t=257223](https://www.bogleheads.org/forum/viewtopic.php?f=10&t=257223)
as proof of the board's openmindedness.

The bread and butter for BH is the unsophisticated investor who is paying
their Edward Jones advisor 1-2% for an overly complicated, underperforming
portfolio. These folks are better served by a simple plan (like the three fund
portfolio) that they administer themselves. Their success in investing is
mostly driven by advice to save and maintain long term exposure to the market.
Saving that 1-2% makes a meaningful difference in their retirement lifestyle.
Ordinary people can come with their portfolios and get free, unbiased
financial advice that saves them thousands of dollars a year.

Investing discussions are the tip of the iceberg, though. Anything related to
personal finance is germane. Discussions of tax planning, estate planning,
withdrawal strategies, with participants who are experts in the field, are
invaluable. For example, this long running thread with monthly posts that
tracks a forward test of a mechanistic Variable Percentage Withdrawal strategy
(as an alternative to the 4% rule):

[https://www.bogleheads.org/forum/viewtopic.php?f=10&t=284519](https://www.bogleheads.org/forum/viewtopic.php?f=10&t=284519)

Personal Consumer Issues section is golden for advice on purchases.

It's real secret, though, is the heavy moderation. It is very strongly curated
around its subject matter, and in particular its "no politics" and "posts must
be actionable" policies work to ensure that it has a very high signal-to-noise
ratio.

~~~
throw0101a
> _Saving that 1-2% makes a meaningful difference in their retirement
> lifestyle._

If you _really_ want to see how much a few fractions of a percentage point can
effect things a fellow named Larry Bates has a really good interactive page
where you can enter various numbers:

* [https://larrybates.ca/t-rex-score/](https://larrybates.ca/t-rex-score/)

Starting with $100K, with returns of 5%, over 25 years:

* a 2% fee will net you $209K at the end

* a 1% fee wil net $266K

* a 0.50% fee will result in $300K

1.5% eaten away in annual fees, compounded over 25 years, sure adds up.

~~~
simonebrunozzi
I keep telling this to a friend of mine with a net worth in the single digit
million $.

He pays (I think) 1.5%/year for a personal financial advisor, he says he's
happy with it, but when I ask him what's the "alpha" [0] compared to, say, the
S&P 500, he doesn't know. Ten years of huge growth in the stock market surely
doesn't provide an incentive for him to investigate.

[0]:
[https://en.wikipedia.org/wiki/Alpha_(finance)](https://en.wikipedia.org/wiki/Alpha_\(finance\))

~~~
nabla9
Investing style and method must match the temperament of the investor.

Your fried may not have the temperament that is suitable for managing
investment decisions, even passively Bogglehead style. He may get better
return by just paying 1.5% and staying completely ignorant and intentionally
avoiding any knowledge. Paying 1.5% fee for the luxury of staying ignorant is
still better than putting all money into inflation protected treasury bonds.
Never try to push investment advice to your friends.

Burton Malkiel (author of A Random Walk Down Wall Street) has a great story:
[https://youtu.be/wnCxlIQjT-s?t=3949](https://youtu.be/wnCxlIQjT-s?t=3949)

~~~
NordSteve
Paying an advisor doesn't solve the problem - how do you pick the advisor?
That is actually a harder problem than implementing a three fund portfolio,
and has even more emotional burden because successful advisors are good at
making it emotionally difficult to quit.

~~~
nabla9
It should not matter. You just pick the most boring and average no-name
advisor from a firm or a bank.

------
pixelmonkey
I found this Wikipedia-style page on personal finance advice for "managing a
windfall" so well-written, that I was really startled (by the quality!). I
came across it earlier today on HN in an "Ask HN" thread:

[https://www.bogleheads.org/wiki/Managing_a_windfall](https://www.bogleheads.org/wiki/Managing_a_windfall)

I had to help my Mom with personal finance. She is a first-generation
immigrant who entered her late 60s with no stock or cash retirement savings,
but with a lot of home equity value built up by sheer luck of buying a house
in a booming suburb right before it really boomed, and holding it for 40
years. She lived paycheck-to-paycheck her whole life, and, because she fled
communist Romania when she was in high school, she had a real distrust of the
US financial system. (Perhaps warranted at times!)

So, I had to help her manage the windfall from the sale of her primary
residence as she downsized her living space and needed to tap the newly-liquid
cash as a kind of pension and healthcare issue rainy-day fund. She wanted to
stick all the money under the mattress (quite literally).

I was in my mid-20s at the time (and a college-educated programmer, so savvy
enough to wade through the systems), so I tried to wise up to the situation to
help her out. I dealt with all the issues outlined in this page (on her
behalf) via a lot of haphazard ad-hoc research and through expensive advice
from personal lawyers and accountants.

I am impressed with the way in which the page tackles not just the pragmatic
issues, but also the psychological ones -- e.g. that someone facing a windfall
will feel temporarily "rich" because they are newly in the money, and thus
won't manage smartly toward a long-term future, and may also be more prone to
frivolous purchases.

Financial literacy is a really hard thing and so much of the information you
find is biased and is selling you one thing or another.

I wish I had known about this page -- and the wiki overall -- years ago. The
"Bogleheads" philosophy aligns a lot with my personal outlook, which has a a
lot of trust for the power of markets and financial management, but a whole
lot of distrust for financial advisors and money managers. Now that I've been
on this side of the table, representing my Mom's interests in retirement, it
became really clear to me why fraud against the elderly is so common, and why
it's a very legitimate interest to ensure they are well-protected if they
don't have savvy family members who can guide them through it.

~~~
refurb
I did something similar with my mom. After she got divorced, she ended up with
a pile of money and no idea on what to do. I basically walked her through the
a simple portfolio - equity/bond mix (30/70 as she was close to retirement),
and a mix of domestic and international broad index funds.

She was able to go into her bank, setup a brokerage account, and basically
tell them what she wanted. 20 years later, her money will outlast her. And it
wasn't a ton of money to start with - if she had taken even a 20% loss, I
would have worried if she'd have enough.

------
atombender
The Bogleheads site is fantastic. Both the wiki and the discussion board are
of high quality; the board is one of those rare niche "Web 1.0" boards with
super-knowledgeable posters that almost doesn't exist anymore. The book (The
Bogleheads' Guide to Imvesting), written by the website creators, is also one
of the best introduction to passive investing. A must for anyone starting out
needing to figure out the ins and outs of IRAs, ETFs etc.

~~~
dehrmann
Obviously these old Web 1.0 sites are still relevant because they ~always had
high-quality content. I wonder if not jumping on the latest design bandwagon
helped cement them in that place. And how much does the design turn off the
average Robinhood investor (and I do mean investor, not speculator)?

------
kanobo
For those who are new to boglehead history, John Bogle was the CEO of Vanguard
and is credited with creating the first index fund. Maybe it's just the
branding and history, but Vanguard is the only financial institute I think of
as a friend.

~~~
jjeaff
That might be be because it is one of the few financial institutions that are
owned by their members.

~~~
nerfhammer
the technical term for this is "mutual" or "mutualized"

~~~
zrail
The Vanguard ownership and revenue structure is very weird and the subject of
multiple IRS and SEC private rulings. It’s not a mutualized organization like
a mutual insurance company.

Each mutual fund is a separate corporation and contracts with a management
company. This is standard across the industry. The Vanguard “twist” is that
all Vanguard funds contract with the same central management company. Each
fund also owns a share of this company. The management company charges the
funds for its services at cost. This has been the subject of at least one
lawsuit, alleging that Vanguard is engaging in anti-competitive behavior by
not charging funds for management services at an arms length level.

------
baxtr
The passive investment strategy was very good for me. I was quite active
before, lost a lot of money, was occupied with the topic daily. Now I have
peace of mind and a great return on my money.

The book that made me rethink everything is “The simple path to wealth” by JL
Collins. It’s basically a round up of his blog posts. Although the title is a
bit cheesy I can’t over recommend the blog/his book. It’s eye opening and
straight forward to implement. He only recommends funds of Vanguard, John
Bogle’s fund.

------
smabie
A lot of the stuff on the wiki and site is massively simplified and not
strictly true. If you don't know much about finance, stuff like "return is
always associated with risk, there is no free-lunch" is a good place to start,
but more knowledgeable and quantitative investors know that this isn't true
(according to CAPM, only systematic risk generates return, not specific risk).

If you haven't thought much about what kind of volatility you are okay with
and aren't really interested in managing your money, a boglehead kind of
portfolio is good place to start. It's something, for example, that I might
recommend my mom, if I wasn't willing to put in the work to manage her
investments for her.

But for a technical crowd, like HN, the stuff on the site misrepresents modern
financial theory and perpetuates people saying stuff that doesn't even make
any sense, like, "you can't beat the market", "don't hold a leveraged index
fund", "active management is a scam", etc. Like all things people say, these
have a kernel of truth, but the specifics and context are so far removed that
these statements become meaningless, or even flat out wrong.

Even by just holding simple, automated ETFs (I don't call this passive
investing, because passive investing doesn't exist), there's tons of room for
really interesting optimizations that increase return and decrease risk.
Things like risk parity portfolios, minimum variance optimizations, persistent
factor portfolios, etc.

And best of all, with zero commissions, super tight bid-ask spreads, and easy
to access APIs, "quant-lite" investing is more accessible than every before.

In conclusion, every portfolio is an active portfolio, from deciding a
equity/bond ratio, to investing in real estate, to deciding to buy some TSLA.
It's all the same, so stay away from any dogmatic approaches to investing (I
would say the bogleheads are pretty dogmatic). By becoming familiar with the
biggest and most important advances in quantitative finance, along with
understanding your own risk tolerance, you can construct a portfolio that is
perfect for _you_ , and that will give you so much more than a one-size-fits-
all boglehead portfolio could ever hope to.

~~~
300bps
I don’t know your background. But I’ve worked at an investment bank the past
15 years and have traded every kind of stock, bond and derivative there is.

With respect, you sound a little bit like every new programmer that I’ve
worked with. They get a taste of learning about finance and suddenly become
day traders. They make some money and then suddenly they give it all back and
more because they really weren’t understanding what they were doing.

In general, anyone with a full time job that thinks they can out-compete full
time traders that specialize in the exact instrument that you are trying to
trade will have a very expensive lesson some day.

If you really want to pursue it at least take the level 1 CFA exam. If you
can’t pass that you don’t have much of a chance and if you can pass that
you’ll probably realize you don’t want to do it.

~~~
chunky1994
Could someone with your experience help me on where to get started if I want
an in depth knowledge of the kind of stuff you use on a day to day basis?
Would preparing for and writing the level 1 CFA be a good start? (I'm a
mathematical physics graduate who's done quite a bit of software in finance
but not specifically in trading).

I've read quite a bit of quant material, but I would also like to know what to
learn from someone who is steeped in the industry as I'm sure my knowledge is
quite a rough approximation of what I should actually know if I were to claim
any expertise.

~~~
akg_67
CFA Level 1 official prep material is very good. IIRC, these are set of 6
books. You can get second hand older prep material from eBay/Craigslist/FB for
cheap.

------
simonebrunozzi
> The Bogleheads® emphasize starting early, living below one's means, regular
> saving, broad diversification, simplicity, and sticking to one's investment
> plan regardless of market conditions.

I've heard about Bogleheads for the first time today. Twice! I thought it
would be interesting for HN readers to know about it too.

------
jchook
Gonna conjecture you submitted this link because of the discussion around Ask
HN: I have $450K cash, what should I do to maximize my return?[1]

[https://news.ycombinator.com/item?id=24020899](https://news.ycombinator.com/item?id=24020899)

Edit: Not trying to rag, just noting that I also found this forum today
through that discussion.

~~~
snazz
Yes, see this comment by the OP of this story:
[https://news.ycombinator.com/item?id=24023607](https://news.ycombinator.com/item?id=24023607)

~~~
simonebrunozzi
Exactly correct.

------
mherdeg
With the demise of FatWallet Finance (which I read daily) I haven't really had
a good source for the kind of content that used to live there.

The Bogleheads forums live in kind of a parallel universe, with sometimes very
similar content but a very different outlook. I try to read weekly but a lot
of it is kind of "interesting but not useful".

Another interesting resource, although not my niche, is the Whitecoatinvestor
forums, which offer a neat view at a very specific profession's finances at
every stage of their career.

------
throwaway50ish
Requesting recommendations and resources:

Almost 50, after a few boom and bust years, I’m finally debt free, but have
zero savings or retirement, and make north of $200K. I have a partner to think
about in my plans (so, retirement for two).

Job will let me work from home permanently, so I’m moving to Nevada.

I can aim to max out 401k contributions, and then what? I consider things like
side hustles (with my partner) that could generate additional incomes which
would go straight to retirement. I considered investing in a B&M business that
would generate modest income that could go to retirement but that’s a weird
option given pandemic circumstances.

I may be generating more income at some point that would let me pivot to self
employment with non-salaried caps on income, but I won’t know for about a year
(side hustle generating money isn’t past that “it’ll be stable now” maturity
level yet).

~~~
sigstoat
the bogleheads wiki and forum is of course, a great resource, better than HN
for this.

> I can aim to max out 401k contributions, and then what?

unless your 401k has extremely good expense ratios (<0.1%), i'd: put enough
into the 401k to get the full employer match, then max
vanguard/fidelity/schwab IRAs for yourself and your partner. then go back and
max the 401k.

(i think you'll want to do a backdoor roth on that IRA, but i'm not familiar
with that, as my income isn't quite there yet.)

at 200k i expect you can pull all of that off easily enough.

> I consider things like side hustles...

at this point you're already generating more funds than you can squeeze into
tax advantaged status. so... make as much as you can, save as much of it as
you can, and aim towards investments that produce fewer dividends, so that you
can reduce your tax burden.

~~~
throwaway50ish
Thanks, will dig into researching this.

------
ve55
Reminds me so starkly of how much of the Internet has moved into single
websites like Reddit. I definitely enjoyed browsing a huge variety of
interesting forums in the past, but the amount I go to nowadays is much
smaller. Convenience is nice, but it still feels like something has been lost.

------
refurb
The Boglehead wiki is a real asset. If you want to start doing index
investing, there is a ton of information to get started. And it's very
readable.

I love the lazy portfolios. You can pick 3 funds (they give you the symbols
for Vanguard, Fidelity, etc funds) and just go.

------
vagab0nd
This forum is a treasure trove of financial information but it's too much for
me to read. Hmmm.. if only a computer program can read all that and tell me
what to do. Does GPT3's training set include this? I want it to be my
financial advisor.

------
roenxi
I like Bogleheads and their philosophy, but I do worry about the risks of
advertising doing things on autopilot.

If index funds become big enough the equilibrium for active traders shifts
from trying to own great companies to trying to game the index fund algorithm.
Investors have to pay at least a little attention to the market to make sure
that they are still sane.

~~~
xapata
Part of the funds' expenses (thus the expense ratio) are investment in
techniques/technologies to avoid getting fleeced by hedge funds as they
rebalance.

------
palcu
In the same category, if you live in the UK then
[http://monevator.com](http://monevator.com) is the go to source for passive
investing advice. The comments section is a gold mine as well.

~~~
dan1234
I’d second Monevator, but also add the UKPersonalFinance subreddit as a great
source of UK specific info (they have a great flowchart[0]).

[0]
[https://flowchart.ukpersonal.finance/](https://flowchart.ukpersonal.finance/)

------
surajs
funny how you never find gems like these on any other site, go HN!

------
Spooky23
Boglehead stuff is safe and easy. It’s too dogmatic for me in 2020. Following
their advice Is good for a 401k, but means holding a lot of garbage. Owning
the whole market was smart in 1990. We do not live in 1990.

My portfolio of 5-6 stocks + cash has beat any Boglehead portfolio, and has
for decades now with a minimum investment in time. No bonds except for GNMA
15-20 years ago.

It’s not that hard. AAPL and AMZN have outperformed the market for 15-20
years.

~~~
triceratops
20 years ago AAPL was an absolute dog of a stock. It had underperformed the
market for years. For the layperson AMZN was hard to distinguish from WebVan
or pets.com.

Good on you for identifying their value at the time and getting rich, but it's
not something everyone can do.

~~~
quickthrower2
Yea Amazon was an easy bet back in the 90's clearly that bookshop would move
into selling everything, optimizing warehousing and start the biggest cloud
computing service. Oh hold on...

~~~
Spooky23
It was an easy bet in the early 2000s when the markets accepted that AMZN
didn’t have to make money and would reinvest in the business instead.

That combined with their world class ability to execute made magic.

