camcarlson

miscellaneous commentary

Are you saving enough?

with 3 comments

For anyone investing in a 401(k), please take an hour to watch this video. It’s a real eye-opener. I’m happy to report my portfolio is already composed of low-fee funds, and I contribute 12% of each paycheck into my account. While that’s higher than most people I know, I feel I should raise it a bit more. Anyway, watch and learn —

http://www.pbs.org/wgbh/pages/frontline/retirement-gamble/

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Written by camcarlson

May 23, 2013 at 9:05 PM

Posted in Finance, video

3 Responses

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  1. Thanks for sharing this. I highly recommend reading the following two books:

    Million Teacher by Andrew Hallam
    Common Sense on Mutual Funds by Jack Bogle

    When I was hired at Del Mar and had to choose a 403(b) account, and I made several very uninformed decisions. After reading those books, I transferred my account to Vanguard and feel like I have made much more informed decisions. The Bogle book is very dense, but filled to the brim with helpful information. The Hallam book is much easier read, and presents mostly the same information but in a more helpful way. This documentary covers a lot of the same stuff in those two books as well.

    trumpethustra

    May 24, 2013 at 1:10 PM

    • Thanks for the book recs. I read “Your Money or Your Life” a couple years ago and felt it was a very informative book about finance and debt. Its premise of financial security through ownership of treasury bonds is outdated (and wholly unsuited for this decade) but I agree with many of its basic point regarding getting out of debt, saving money, living frugally, et cetera.
      GMAC/Ocwen provide me with a 401(k) but neither they nor the account servicer (currently John Hancock) offer any meaningful assistance on *what* to invest in. We’re basically left to our own devices. I’ve taken the time to sit down with a long spreadsheet of my fund options and reviewed their various fees and RORs, and I agree that Vanguard offers some of the best funds to invest in. The peace of mind alone is worth it.
      …on that note, if I were a financial planner worth my weight in salt, I’d probably have a different job, earning more than I do now!

      camcarlson

      May 28, 2013 at 7:48 PM

      • And that’s just it. If you follow Bogle’s advice, everyone would be investing in un-managed index funds, and then you don’t even have to worry or know anything about mutual funds to invest wisely. When 79% of all mutual funds under perform compared to the indexes, and when the funds that do over perform are unable to maintain it (and are impossible to predict)…it just doesn’t make sense to even try to gamble with various funds to beat the indexes.

        Furthermore, by the time you identify the funds that are over performing and buy them, they are more likely to begin to decline, at which point you’ll want to ditch them and go for the next big fund. But if you do it that way, then you’re buying high and selling low, which is the opposite of what you want! But anything else is just gambling on a 29% chance that the funds you pick will beat the indexes. It doesn’t make sense, but the fund managers will be happy to take your money and try anyway.

        I just go with un-managed index funds and don’t worry about a thing. The rate of return is still decent, and fees are insanely low. While it’s a little fishy to me that Bogle is the one pushing this agenda so strongly and his company happens to be Vanguard at the same time, his reasoning and logic is sound, and I trust him. The evidence is all there in Common Sense. Anyway, saving for retirement and investing is an interesting topic to me.

        trumpethustra

        May 29, 2013 at 8:32 AM


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