Stocks — Part XXXV: Investing for Seven Generations

As I have mentioned many times, we don’t discuss secret stuff at Chautauqua. There is no “special sauce” revealed for investing or life not available here on the blog or in my book.

But we do kick around ideas and I sometimes explore concepts rattling around in my brain with the exceptional attendees Chautauqua always seems to attract.

In Greece, one such concept I have been mulling over and put to the group is the idea of thinking out Seven Generations when making major decisions.

The story goes, this idea originated with the Iroquois and is based on creating sustainability over the generations. It is commonly applied to environmental stewardship today, but it occurs to me that it applies equally to matters financial.

As I discuss in the Stock Series post on asset allocation and in the book chapter on the subject, one’s choice on this is very personal.

My allocation percentage has been 75/25 stocks/bonds which, given my age, is considered very aggressive. More recently, I have increased this to 80/20. More aggressive still.

But this is a matter of perspective. Here’s mine:

  • I have long been an aggressive investor and the volatility that comes with this doesn’t bother me.
  • I am not just investing for my lifetime, but also for my wife’s. I expect her to outlive me by a couple of decades.
  • Even beyond her life expectancy, we are investing for our heirs. That adds many decades more.

Taking the next step, and thinking Seven Generations out, suddenly we are thinking not about investing for decades, but centuries. A perpetual Wealth Accumulation Stage, if you will.

At this point in the Chautauqua conversation attendee Bret, who was a returning alumni, said: “If that’s the case, shouldn’t you already be in 100% stocks?”


It was a bit of a challenge and, given my writings on this stuff in the past, he was spot on. More so even, given some additional factors I’ll get to shortly.

But first, is managing wealth across seven generations, or even a couple, a realistic goal? After all, “rags to riches to rags in three generations” is a common cliche.

I think it is, or at least it is worth attempting. While seeing fortunes squandered by irresponsible heirs makes for compelling story telling, my guess is the successes are more frequent. They are certainly more quietly achieved. This is likely especially true with the relatively modest amounts we are talking about.

After all, it worked for Benjamin Franklin. In 1794 he bequeathed an endowment of 1000 pounds to each of the cities of Boston and Philadelphia for the next 200 years. The results were spectacular.

So how would this work?

It starts with me. I no longer think of this money as mine. No longer is the objective to invest just for my lifetime. I think of myself as its custodian. Certainly, I am free to benefit from it, but only to the extent of staying well within the 4% rule. My first role is to nurture it and see it grow.

My second role is to educate my heirs in these principles:

  • This money you will inherit is not your money.
  • You are its custodian.
  • It belongs to future generations.
  • You have the benefit of it, consistent with staying well within the 4% rule.
  • You have the obligation to nurture it and pass it on to the next generation.
  • You have the obligation of educating the next generation as to their responsibilities for it and to the future generations.
  • If at some point there are no children/heirs, it will be the responsibly of the last to arrange for the charitable distribution of the money.

I am already teaching my daughter that, whatever part of it comes to her, it is not hers either. She is merely the custodian of it for the next generation. And it will be her responsibility to teach her heirs the same.

Will this be foolproof and last “forever?” Of course not.

Is it a concept and approach worth implementing? I think so.

In a practical sense, this means my family and I can enjoy the fruits of the portfolio, but we must always tending it for the future and those who come after us.

So, back to Bret’s question. If I am thinking this long-term, why do I still hold 20% in bonds?

A few reasons, none of them especially good:

  • I like having some “dry powder” for market drops. That’s how I went from 75% to 80% stocks: Selling off some VBTLX to buy more VTSAX during the December bear market.
  • By all normal measures, 80/20 is already seriously aggressive for someone my age.
  • Research shows an 80/20 allocation closely tracks the performance of 100% equities over time. Occasionally it even slightly outperforms.
  • Inertia while I continue to think this thorough.

The first is bogus for the same reason dollar cost averaging any lump sum is. The second is too, based on just my immediate family’s probable lifespans. Although, the third redeems it a bit.  So I cling to that, and to my inertia.

But, as I teased in this post above, there are still more reasons to have already gone 100% stocks.

Back in 2016, two remarkable things happened. One, I published The Simple Path to Wealth. Two, I finally got serious about monetizing the blog. So far, both have exceeded my expectations. Between the two, we no longer draw on the portfolio at all.

So why haven’t I acted? Because both the book and the blog revenue feel temporary. Book sales remain strong, but who knows for how long? Just recently, the blog lost one of its major sources of revenue. Although, we are planning to bring a new one on board.

But while those might be less than fully secure, we also have Social Security coming on board. My wife is already taking hers early and because she will in all likelihood outlive me, I’m delaying mine till age 70 for the bigger benefit. That is only a few short years away. 

Once both are on stream, and with our increasingly modest spending as we age, blog and book revenue can drop considerably and, all combined, still cover our needs without tapping the portfolio.

Clearly, if we wanted to, moving to 100% equities is a sound option. But it is not the only one. I see three:

  1. Remain at 80/20. This is still very aggressive, provides excellent long-term growth and even, in some cases, outperforms 100% equities.
  2. Move to 100% equities. This would be the soul of simplicity, as easy as transferring our VBTLX holdings to VTSAX.
  3. Move to 100% equities with the Go Curry Cracker twist: 80% VTSAX and 20% international equities.

The first two are fairly obvious in their impact. But the third is worth a closer look. It would certainly give all those who’ve questioned my take on international investing a delightfully warm surge.

In considering such a move, am I signaling a change of heart on the need for international investments? Not really. My stand is still the same as in that post: Investing solely in the US has distinct advantages. However, the world is changing and at some point a world fund will be the best choice. Indeed, this is already my suggestion for my non-US based readers.

The US is the only market in the world that allows for this investing only domestically bias, and that is simply because the US is so dominant on the world economic stage. I expect this to remain the case for sometime and very likely for the rest of my lifetime. However, I tell my daughter to be alert because in the future this may well no longer be the case.

This doesn’t mean I expect the US to decline. Rather I expect the rest of the world to continue to improve, for the overall pie to continue to grow and for the US slice, while also growing, to simply become a smaller percentage.

So that’s what makes the GCC option intriguing:

  • It moves the portfolio to 100% stocks.
  • It introduces a world stock fund to replace the bonds. More volatility, but better performance over time.
  • Vanguard’s VTWAX (the fund I’d use) is ~50% US market, so market exposure outside the US would be a very modest ~10% of the portfolio.
  • With VTWAX in the portfolio, increasing the percentage in it when the time comes is that much easier.
  • The ER for VTWAX is a modest .10% and Vanguard has been reducing it.

So that’s what’s rattling around in my brain just now.

No decisions as yet, but when I do I’ll add an addendum here.


In this post I say, “I expect the rest of the world to continue to improve…”

This, of course, runs counter to all the negativity we are constantly bombarded with in the media. Is the world perfect? Clearly, no. Is it vastly better than any other time in history? Absolutely. Given the choice, is there any other time you would chose to be born than now?

Here’s a great book for some perspective:


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  1. Mr C says


    We thoroughly enjoyed chatting about stewardship instead of ownership in Greece – and certainly aligns with our values. Really interesting to read how you’ve fleshed out the actions that this should lead you to on the investing side!

    • jlcollinsnh says

      Our Chautauqua conversations vastly helped clarify my thinking on this, not to mention the “must haves” 🙂


  2. Nick says

    Hi Jim –
    Nice to see a new addition to the Stock Series once in a while!
    I have been thinking about similar things after our first child was born, with the idea that ‘family fortunes’ could keep growing generation after generation, and that ours is just there to pass it on.
    But the question that prevents me from knowing it’s the right thing is: until when and what is all this money going to be useful for?
    Curious if you have some ideas on this. Or if the answer is simply Buffett’s “give it all away”.

    • jlcollinsnh says

      Hi Nick…

      Those of us who are first generation FI, had to spend and decade or two getting there. So that is the first of these three things I think the money is useful for:

      1. It will allow our heirs to pursue more meaningful work sooner.
      2. It is useful for that purpose across generations.
      3. It is useful in helping others thru charitable giving.

      As I understand it, Buffett is giving most of his away, but still is giveing his heirs each 10m. Same concept, different scale.

  3. Dave @ Accidental FIRE says

    Awesome post Jim, and Pinker’s book is great. If you listen to the general “voice of the country” as largely driven by social media and the news you’d think we’re one step away from slipping back into the dark ages. But the truth is that things have never been better for people in America and the world as a whole. The data prove it.

    As for allocation, I’m younger than you and have about an 80/20 allocation. I’m actually considering dialing it back a bit, mainly because I can now get rates on money market funds that beat inflation. But we’ll see how long that lasts.

    • Cubert says

      100% Stocks, baby. Oh wait, actually, 100% stocks (VTSAX) in half our savings, the other 50% is real estate.

      Curious take on 80/20 with the 20 going to international. I’d wager US corporations will take care of the global transition over time, but maybe Huawei eats Apple’s lunch in the end? Hmmm…

  4. Andy says

    VTWAX for life. VT’s ER just got reduced to .09%. I’m hoping the ER for VTWAX gets reduced also. We might add a bond fund later in life. The entire world equity in one fund. Pure simplicity. Thanks again for your book. Maybe in the future the book will be updated to VTWAX instead of VTSAX.

  5. Mitch says

    Full Disclosure: we have no children, and do not plan to leave any money behind.

    Still, isn’t one of life’s most certain truisms that if you leave your children a lot (?) of money, it pretty much ruins them (their drive at least)?

    I can see that all parents want their children to have everything their heart desires, even to the parents’ own detriment… but is leaving a large legacy really best for them?

    Just my 7 cents.

    • jlcollinsnh says

      Problem with truisms is, they are mostly not true.

      Depends on the child.

      Giving a child everything their heart desires is a dangerous practice.

      Passing on money to a responsible adult child is an entirely different thing.

      • Terri says

        Hi Jim. First comment, but long time reader (thank you!). I love this quote from the movie The Decendents: give your children enough money to do something but not enough to do nothing.

    • Amy says

      “Passing on money to a responsible adult child is an entirely different thing. ”

      Yes!!! I fall into this category. Like you, I also suspect many children quietly receive inheritances and take care of them.

      When my father died just over a year ago, I received an inheritance. He had always been very open about how much money he had and how much he planned to leave my sister and I. But in my mind that was always many, many years in the theoretical future. Unexpectedly, shockingly my sister died 4 months before my dad. After my father died, I was deeply grieving and now had to deal with this money, this inheritance. Initially there was a lot of guilt- I didn’t earn this money and it felt wrong to have my sister’s share. It was so much more than I was expecting. Not enough to quit my job yet but enough to accelerate our FIRE date by a good many years. Enough to not have to worry about paying for our children’s college. Enough that future projections look even better when you go out through getting my kids well on their way to “responsible adult child.”

      If anything, receiving the inheritance has made me more motivated and more aware of wasteful spending. Now that I have a little perspective, I realize what my father gave me is a wonderful gift. The best gift you can give anyone. He gave me Freedom and Time. A gift I plan and want to pass on to my children. And grandchildren, etc.

      What a fantastic article!

      • jlcollinsnh says

        Hi Amy…

        First, my condolences for the loss of both your father and sister. But reading your comment, I am sure both would be very proud of you and pleased that the money has passed into such responsible hands.

        Second, the world is full of people who love to throw guilt, most often in an attempt to further their pet causes. This is despicable. Don’t let them infect you.

        All the best to you and your family.

    • Ed69 says

      I think another option is to maybe set up a trust that distributes money on a set time-line. I have 4 kids. One who is 28 is completely irresponsible about money. If they got a chunk of inheritance it would be gone in less than a year to nothing good. One other would be maybe 50/50 on spending it wisely while the other two I wouldn’t hesitate to let them have a chuck.
      If we ever get to the amount that it would be a life changing amount and it was worthwhile to set up a trust, then I would have the monies doled out over time after our death.

  6. Frankie says

    Awesome post. Investing for seven generations is an interesting concept. I love the reference of using bonds as dry powder and I have allocated more of my portfolio to bonds a month ago for the same reasons. I’m about 70/30. I’m 36 years old and see plenty of opportunities to use that dry powder in the future and I’m not afraid to go 100% stocks if stocks go on sale in a big market crash.

  7. Alan says

    I can fully relate to this post. I am 61, retired last year from a well paying but by no means luxurious salary. I have been in nearly all-stocks portfolios for most of my investment time span. The investment portfolio grew from $12K in 1987, when I first started tracking it, to roughly $5.1M today; no inheritances, lottery winnings or other financial windfalls. Actually a divorce in the ’90s made earlier wealth growth efforts rather challenging.

    My current asset allocation is 63% domestic stocks, 36% international stocks and 1% money market fund (to provide about a year’s worth of spending in addition to a modest pension). Since I have way more assets that my modest lifestyle requires, I view my investment period as multi-generational and invest based on my daughter’s age. Since she in only 35 I feel that close to 100% stock allocation is prudent.

    Since I enjoy the investment process and have the time, my stock portfolio is not so simple: all index funds spread between large, small, blend, value and REIT funds with an overall 0.14% expense fee. Mostly buy-and holder, but I do have a small chunk in a market timing strategy (similar to your “dry powder” philosophy, but more mechanical and momentum based).

    At this time I have no plans to buy bonds. I may switch to a simple stock portfolio later in life, since my daughter is not interested in investment management and my rather complex portfolio may be too time consuming for her to manage. I also mange her individual portfolio using a similar strategy, currently 50%/50% domestic and international index stock funds.

    My goal is maximize overall portfolio return, and like you, I am not bothered by volatility and feel that taking this risk will result in long term reward. This has worked for me over the last 30 years and I see no reason why the next 30, 60 or 90 years should be any different.

    • jlcollinsnh says

      One of the many benefits to my simple portfolio is it makes things simple for my heirs.

      This is why I no longer fool around with stocks. You never know when the day will come and it will suddenly be your heirs chore to sort thru it all. 🙂

  8. Markola says

    Hello Jim, Like Mitch above, we don’t and won’t have kids at this point. However, philanthropy is my career and an important value to us, and it also offers a way to help succeeding generations.

    If we are fortunate to live into our late 70s or older and, as you mentioned, our spending needs are reduced, we will probably start buying annual charitable gift annuities (CGA) at our alma maters, perhaps using funds from our required minimum distributions to offset their tax bite. I have in mind building a sort of CGA ladder each year to guarantee us a tax-advantaged income for life, which will provide entirely passive income if our mental faculties slip, or if my wife outlives me and ends up with some silver fox who, shall we say, has boat payments to make. When we eventually go to our long dirt naps the remainder of the annuities’ principal would be pre-directed to create a permanently endowed scholarship fund at each school to help students trying to make something of themselves over the next seven or more generations, assuming the universities still exist that long.

    • jlcollinsnh says

      Hi Markola…

      Charitable gift annuities (CGA) are something I have been thinking about and planning to look into.

      They seem like an awesome idea, in the right circumstance, and far better than regular annuities.

  9. Eric Smith says


    Thought provoking to say the least.
    Your blog/book are wonderful and I plan to nudge my kids in their direction as the come of age.
    If I’m signed up for future posts, will I get a notice when you add an addendum?


    • jlcollinsnh says

      Thanks Eric.

      Unfortunately, there is no mechanism to send notifications when I update a post or add an addendum.

      You just have to obsessively check back 🙂

  10. J @ Wealthier Lives says

    Nice post. I also have extra bonds and cash right now just as dry powder. That would be used to add some VTIAX. As far as inheritance/legacy, it is not a priority or goal for us. Maybe I’ll think differently when I’m 60 or 70.

  11. Mr. Hobo Millionaire says

    We plan on putting most of our wealth in trusts (with specific investment rules and withdrawal rates). 75% for future generations of our family and 25% for our passion (wildlife rehabilitation). We are setting up trusts so it can’t be mishandled. We will allow for a 2%-3% draw on it.

    The 75% that’s going to family will be used as a *matching* fund to pay for either college or start-up funds for a business. This “non-ending” fund is what drives every decision I make. While my father was not wealthy, and I’m the “first generation rich” in my family, my father worked VERY hard to get out of poverty and to raise me just a hair above it. This fund for me is to honor his legacy, not mine. It will not be squandered, and family will only be able to “sip” from it if they are working. No hard work, no money.

    Oh, and for now, I believe it keeping all of it in VTI/VTSAX. If all I’ll need over my lifetime is a 2% withdrawal rate (or less), the dividends produced by VTI/VTSAX should just about cover that whether the market is up or down. As best I can estimate, it should grow to about a 20M-25M+ by the time I die in 30 years.

    • marciaB @ says

      Mr HM – what would be the administrative structure of the trust(s) after you die? Who would make the decisions, what would the “application” process for funds/funding be, etc. Are there attorneys offices who do that? Banks?

      I love the family trust idea, just trying to envision the logistics going forward through a couple of generations (who is “family” at that point and how do they prove it to a trustee?)

      • Mr. Hobo Millionaire says

        Hi Marcia.

        Honestly, we haven’t figured all of this out yet.

        a. My initial thoughts is having it be three “independent” people who sign off on it (oldest living family member, family CPA, and whoever manages the trust itself).
        b. It would initially be only for direct (my son’s children, their children, etc).
        c. There would be a 2%-3% maximum per year. If money is left from a previous year, it could be used in the next (but probably not accrue more than two years)
        d. Someone who receives money one year must wait 3-5 years before getting money again
        e. I’d like matching business funds to be investments where if business is successful, some of that could be earned/given back to trust (that’s a way for family member to show thanks and “pay-it-forward”.

        I realize this is a lot of rules, but if it works, it seems really beautiful. Imagine knowing all descendants’ college would always be paid for. Imagine being able to get matching funds to start a business.

        Mr. Collins has pointed out he doesn’t want to control people from the grave. I get that, but I also know if constraints aren’t there, the money will be fettered away at some point (even 3-4 generations down). It’s proven human nature. And I’m SO focused on making sure my father’s hard work is honored, that I’m going to make sure it lasts “forever”.

        • Jim Cutshall says

          I am in the process of establishing a trust for my daughter upon my and my wifes death and my estate attorney is recommending structuring the trust in such a way that all profits from the trust account be paid out annually to my daughter because the taxes on a trust are much higher when they accumulate in the trust. Then she will pay tax at her tax rate which will be much less than the trust. You may want to look into this as well.

          • Mr. Hobo Millionaire says

            Thanks, Jim! I appreciate it. I’ll keep an eye on this!

            I will say for my only son (who is already 27), we plan on willing his inheritance directly to him. I do not believe we will be doing that within a trust. Again, I have no expertise in trusts at all, although I’m trying to become much more educated.

    • Ed69 says

      Great idea and similar to what I would like to do with our left over monies. While we are over 1m now, I am not sure if it will be big enough to accomplish this feat. I have an image in my head that we would need >$5m to make it worthwhile to set up a trust?!?
      I guess I have a few decades to work it out.

  12. Jack The Dreamer says

    Thank you for writing this post, Jim! It reminded me that I should definitely think more long term than just my lifetime. I was thinking two generations out (my children and grandchildren) but haven’t thought out SEVEN whole generations lol.

    One of my main concerns is what you brought up, that an irresponsible heir might squander the legacy money, but isn’t that what Trusts are for? Slightly curious what your thoughts are on that because I thought with Trusts, you’re able to have certain criteria for heirs to act or do before being granted access to that money by the accountants and “board of directors” who oversee that money?

    • jlcollinsnh says

      I’ve never really looked into trusts. The idea of trying to exercise control from the grave never really resonated with me. Plus it seems there are always ways to get around them, mostly expensive.

      Better to try to instill the values into your children as best you can and then, depending on the results, leave them an inheritance or not.

  13. Kane says

    There seems to be some unnecessary overlap by using Vanguard Total World Stock Index Fund Admiral Shares (VTWAX) with Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX).

    Would it be better to use Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX) with Vanguard Total International Stock Index Fund Admiral Shares (VTIAX) giving you precise control of the US and international allocations? Lower cost too.

    I may be missing something in the post about this detail.

    Thanks for the help over the years!

  14. Phil E says

    Thank God I found your blog!
    I found the title of your article “Investing for seven grnerations” very interesting. We’ve been looking for ways to pass whatever we have to our children and the next generations.

    We came to this country almost 40 years ago, and had been blessed somewhat . Thru education, hard work and savings, we were able to send our children to college & and they are now on their way to financial independence. We are able to contribute back to our churches & community, even in small way.

    We were also able to accumulate income-producing real estate properties. We are also able to help our children purchase their first or second homes. My spouse and I are both retired. And we have investments in the stock market that shall be transferred to the Vanguard finds soon.

    We are actively looking for ways to leave most of the investments & the real estate to our children ang grand children. But so far, the solutions we found end when we cross to the other side, & our children have to pay inheritance taxes.

    We have investigated this issue, but have not found anything close to transferring wealth beyond our children or grandchildren without passing it thru the IRS grinder.

    Does your concept of investing for seven generations consider IRS implications? If so, would you be able to share it?

    Thanks a lot!


    • jlcollinsnh says

      Hi Phil…

      The Federal estate tax doesn’t kick in until the estate is worth more than 11.4 million, 22.8 million for a married couple.

      So the vast majority of estates are passed on without going thru the “IRS grinder”

      If yours is higher, congratulations! And you’ll need to seek help well beyond what I can offer. 😉

  15. Locke says

    Hello Everyone,

    Although this is a very unpopular opinion here, I think it’s worth considering that the future of the US is just as uncertain as Japan’s future was in the 1980s. At that time, Japan’s stock market was worth more than our domestic market. Since then, their market crashed and has never recovered to its previous all-time high. Like everyone here, domestic stocks make up the largest portion of my portfolio. However, I follow the advice of David Swensen’s book Unconventional Success and consider US stocks a single asset class. You might not be as diversified as you believe if you keep more than 30% of assets in any single asset class.

    This is just my two cents. I love this blog, and appreciate the wisdom Jim offers us for free on this blog!



    • Nathan says

      I agree with you Locke. I’m 100% invested in stocks. At the same time, I spend a lot of time thinking about diversification. My worry is not so much that a single US company underperforms, but that the US public equities underperform my modest expectations (5% real return).

      These worries include a “lost decade” for US equities, and/or that future equity returns are being siphoned off by private equity/private capital.

      I’ll have to check out the book, thanks!

  16. Liz says


    Thanks for updating the series as your thoughts change!

    I carry no bonds for two reasons. First, in the current interest rate environment, I don’t believe they adequately compensate me for the risk of rising rates. Second, future Social Security payments act as a big bond in my portfolio. Would love to hear your thoughts.

    • jlcollinsnh says

      Hi Liz…

      Bonds act to smooth out the volatility of stocks. How much of them you should own depends on how much you value that smoothing.

      Social Security is a good proxy for bonds and if you will collect enough from it to meet your needs on that score, you are good to go.

      As I mention in this post, I see SS in the same way.

  17. Gino says

    We began investing about 20 years ago. And for the first 20 years we invested in stock mutual funds, mainly VTSAX. Once I learned about the benefits of index funds, I shifted all our assets into VTSAX, which took about 1 year.

    Several years ago, after reaching numerous milestones, I began allocating some money to TOTAL BOND INDEX, so that I could have “dry powder” for when stocks went on sale.

    Here is the problem that I learned first hand from thinking I could buy stocks on sale, by keeping some money in bonds.

    When stocks do go on “sale”, what I did and most people do, is wait on buying them, thinking they’ll go down even further.

    In December of 2018, I did just that. And it drove me crazy. In theory it sounds great. But it is nothing more than market timing.

    And we all know that it’s a fools errand. What counts is time in the market.

    In January of this year, I began to think what will it really matter 10, 15, or 20 years from now what I bought in at !?!?

    And I concluded that it was more important to be fully invested, considering this money will be passed along to future heirs.

    I would just like to caution those with dry powder, that it’s easier said than done. A functioning crystal ball would be the only way I’d give it another shot.

    And since my crystal ball is cloudy, I’m sticking to being fully invested. Now I understand why the Bogleheads discouraged me from keeping dry powder.

    Life is a lot less stressful not watching and waiting for the right opportunity to deploy dry powder.

    I’m fully invested, could care less about the volatility, know that I’m in it for the long term, and eventually my heirs will be a lot richer.

    I don’t have an extremely high paying job. And neither does my wife. We don’t want to manage real estate because we don’t want another full time job.

    We don’t own a business and aren’t going to inherit boatloads of money.

    Therefore, we believe VTSAX is the best chance to grow our wealth.

    I like to think of being 100% VTSAX like this. They say that being in business is by far one of the best ways to become wealthy.

    IF we opened up a business, we being taking on risk and considering that most business fail, that’s a lot of risk. In addition, we’d have to put in the long hours and sacrifices.

    With VTSAX, I consider myself a business owner. And I’m taking risk in “a business” that’s extremely well diversified, has low operating costs and over the long term will most likely continue to track upwards.

    Those are the kinds of odds I really like for an investment that takes a couple clicks of the mouse to invest in.

      • Jenny says

        Yes but what if you are within 1-2 years of reaching FI? Shouldn’t we be thinking about how to preserve our wealth versus continuing to take the risk? I’m in that boat right now and not sure if I should continue to be 100% equities.

        • jlcollinsnh says

          Depends on your risk tolerance, Jenny.

          Some people wait until they retire to adjust their allocation. Others adjust it gradually over a few years before they pull the trigger.

    • NWA-non says

      I think this comment pretty much distills and encapsulates what this blog is about. You’ve done a good job, Mr. Collins, of educating us! Thank you.

  18. TNBL says

    I’ve always appreciated that you are willing to mull over your thoughts out loud on this blog and admit when your thinking is evolving. I am closer to your daughter’s age than you, but currently hold 80% total stock, 10% total international stock (VTIAX) and 10% total bonds through Vanguard.

    The reason I hold VTIAX is much more simple than trying to predict where the US economy is going over time, it’s based on the top holdings in the index, which are global companies that are competing (and sometimes winning!) against their US counterparts.

    I’ve worked for several companies in VTSAX’s top 50 holdings and know first hand that they aren’t just exposed to a global market (which has been your reasoning for not buying into VTIAX in the past), but they are in fierce competition even within in the US against companies based in other countries.

    For example, Nestle is currently the top holding in VTIAX, and they are competing (in the US, and globally) with US companies like Mars and Kraft foods. Royal Dutch Shell, Alibaba, Roche, HSBC, Toyota, etc. are also competing on a global scale against US companies. If the point of an index is to own the every company in the market rather than picking winners and losers, I want to make sure that those companies are in my portfolio. I don’t want to exclude them based solely on the location of their headquarters.

  19. Mr. Tako says

    There’s a saying that no fortune survives 3 generations. Investing for seven generations seems rather optimistic giving the propensity of the younger generation to squander wealth that they never earned. (You know… on bubblegum and disco records)

    Still, I like this idea a lot. The concept of an inheritance not being something you can spend, but you must be “steward of” is a great idea.

    Definitely something for me to think about as my kids get older.

  20. Mike says

    In the Stock Series, you once considered an 88/12 equity/cash split, not far from Warren Buffet’s oft-cited 90/10 S&P/cash allocation suggested for his wife after he passes. I’m surprised you didn’t revisit that thought.

    BTW, it makes me feel better to know that even you revisit asset allocation over time. I constantly question my own.

    • jlcollinsnh says

      Actually, our cash position has creeped up to ~4%.

      I didn’t reference it, as I have it ear market for some spending during the year, so it is temporary.

  21. Eduardo Santos says

    Hi Jim,

    Good post as always.

    How did it feel moving from 25% to 20% bonds? If it didn’t bother you, you could also consider making more of these 5% moves slowly, through market drops, until you get to 100% stocks. You mentioned market volatility doesn’t bother you – and smoothing out volatility is one reason people advocate having bonds – so that’s another reason to not own them. And, if when you reach 100% stocks, you feel that’s too aggressive, you can always adjust back again.

    Personally I’m 100% stocks, and have no problem with it. My ‘dry powder’ is in cash.

    Also, on the heirs: One quote I’ve always liked is: ”Leave them enough that they feel they can do anything, but not too much that they’ll want to do nothing.”

    All the best,

    • jlcollinsnh says

      Hi Eduardo…

      Moving to 80% felt fine and I probably would have moved more but the bear market didn’t last very long. 😉

      Great quote! 🙂

  22. Nearly Fit Mom says

    Hi Jim,
    If I’ve done the math right, your daughter is now pushing 30. I’ve read your various articles over the year – what you’re teaching her, how you failed her, the first 10 years, etc and have found great insights from them; thank you. My daughter is 14 and I find I am in that spot of doing everything I can to make her see that she has options with money. It’s obviously her choice what path she takes, but at least understand that the standard path of Jonesing and debt is not the only one as she’ll be led to believe in her early adulthood. I have two questions for you. Would you have changed anything in your teaching to her in those teenage years that I may learn from? And two, now that she’s older, are you finding what you taught made a difference and those earlier battles and eye rolls are worth it? I understand this may be more personal than you (or she) wishes to post publicly and if that’s the case, I totally understand.

    On a different note, you mentioned you put more effort into monetizing your blog and it’s paid off. I’d love to read an article about your approach there someday if you ever get the urge!

    Thank you

  23. Daniel Dugan says

    Hi Jim. I really enjoyed your post today. I have one question for you to mull over: How do you pass on the values that you gained from a lifetime of work to future generations (your daughter and 5 additional generations) that may inherit sufficient wealth to not have to work? Thanks, Daniel.

    • jlcollinsnh says

      Hi Daniel…

      That’s something I have thought about a lot.

      When I look at those people who have achieved FI, every one I have met continues to work. They just work at things they find more meaningful.

      Successful people understand that work is rewarding, satisfying and enjoyable. The trick is being able to choose the work. FI money allows for that.

      Of course, there are those who never learn to value work. But that happens regardless of inheritances. Plenty of people out there with nothing who don’t work.

      As the saying goes, money doesn’t change you. It only magnifies who you are.

      BTW, if all goes to plan we hope to visit CO sometime next winter.

      • Daniel J Dugan says

        Jen and I would love to catch up with you and Jane when you are out this way. Best wishes, Daniel.

    • Liz B says


      Your children should learn the value of work, even if they don’t have to work. They should not be given everything they want, even if you can afford it. We only give gifts at birthdays and Christmas.

      From the time my children were old enough to understand the correspondence between work and money, I have paid them small amounts for specified chores. All money they earn goes into their rudimentary budget: All told, they have two categories for giving (15%), one for personal spending (15%), Short term savings (10%, gifts for family and friends), Living expenses (15%, lost clothing, damaged property, etc.), Long Term Savings (20%, for bigger things like buying a car, furnishing an apartment, etc.) and Dowry (25%, if they get married or buy a home).

      When they want more spending money, they quickly realize that they can earn more money outside the home, working in the neighborhood. That money I have them save to pay for either independent summer travel/activities/camps, or items of particular use, like circus equipment for one of my sons.

      As they get a real job, like my 16-year old just did, we start the retirement fund and revisit the budget with college and independent living in mind. Budget for needs/absolutes first, then set goals for whatever is left over, if anything. This is an ongoing discussion.

      Also, finding alternative ways to incentivize responsibility. I planted the idea in their minds that if, after college they are committed to either saving 80% (amount to be negotiated) of their income or using that money to pay down student debt faster, if they have it, then I would allow them to live at home rent-free (food not included). Chores still required. If they can set goals their own goals for financial independence, and achieve it in a short amount of time, that is a non-monetary gift I would like to give them. If they have other ideas, they will either not be allowed to live at home, or will be charged an amount of rent that will make them question why they want to live at home in the first place, or perhaps a sliding-scale fee to be negotiated based on what percentage they are willing to save, if they have a reasonable alternative they are aiming for.

  24. Souza says

    Fantastic topics.

    On the international investing (which is currently half of my portfolio), I would add that when you buy VT (VTWAX), the fund allocation will adjust proportionally to the differential growth of US or International stocks. You miss out on the opportunity to rebalance, but the fund will be biased towards the winning Countries, constantly. I’m with you: US dominance will be here for a while, but by the time we realize it is not, intl markets have soared. And if our timing is slightly off, global mobility cures everything.

    On the subject of inheritance, scale is important in my view. Leave 1m USD to your son and educate him, he may have a very fulfilling and productive life. Leave him 100mUSD, you may be increasing his risk of blowing it all plus he may stop the family/hard-work/diligence wisdom from passing down to future generations.

    • jlcollinsnh says

      “US dominance will be here for a while, but by the time we realize it is not, intl markets have soared.”

      Great point!

  25. Scott S. says

    Hi Jim,

    Long time reader here. Thank you for your wonderful blog. Pointing people to your stock series saves me a lot of legwork in explaining my thoughts on investing 🙂

    I’m curious why you would choose VTWAX over say putting 10% into VTIAX or VXUS. This would achieve the same asset mix at a lower expense ratio.

    In other words, why pay the higher expense ratio of VTWAX to hold the same us equities that you can hold cheaper through VTSAX? I realize the difference is small but every little bit counts! Especially if the little bit requires no additional effort.

    • jlcollinsnh says

      Hi Scott…

      You are correct in your analysis, but I am looking to the day when VTWAX is the only fund in the portfolio.

      • Scott S. says

        I see what you mean now. I thought you were talking about holding 80% VTASX and 20% VTWAX. Thank you for the clarification.

          • Ross says

            Hi Jim, just to clarify. Prior to the day where WTWAX may be the only fund in your portfolio is there a reason that you would start off with (for example) 80% VTSAX & 10% VTWAX rather than 10% VTIAX instead?

            I guess just having those two funds as you transition rather than having a third in between would be a simpler strategy in a way, but as others have mentioned above it involves an overlap.

            As always thank you so much for helping me learn and question more.

          • jlcollinsnh says

            Hi Ross…

            This: “ust having those two funds as you transition rather than having a third in between would be a simpler strategy”

            The overlap doesn’t bother me.

  26. Elbow says

    This reminds me of a conversation I was having with my son last month. We were watching some documentaries on crispr, gene editing and aging. This made me wonder how the break throughs in science may effect my investment decisions.

    Maybe my sons, or even me, will be alive for 7 generations?

    • jlcollinsnh says

      I’ve done some of that same reading and the potential is truly incredible.

      Only half joking, I’ve said mine might be the last generation that has to die.

      Another reason to invest for the long-term. 😉

  27. Dr. Remoulak says

    Another great post Jim, and one that really hits home for me. I lost both of my parents a bit over a year ago, and shortly before they passed we discussed what they would be leaving behind to my brothers and I (a very hard conversation for all of us). I told them about my intention to serve as a custodian (used that exact word in fact) and would pass it on to my children and encourage them to do the same. As appreciative as I am for the countless sacrifices they made to provide an inheritance, it always been important to me to achieve financial independence “on my own” – using the quotes there because someone like me who was blessed with loving parents owes them a great deal of thanks and credit, regardless an inheritance or not.

    • jlcollinsnh says

      Well said.

      Money passed on in this way has a tremendous potential to great better lives not just for our heirs, but for those they touch.

  28. Jennifer says

    Hi, Jim. I’ve recently started investing the money we add to our HSA every year rather than using the funds for our medical expenses, which is great, but there are some limitations in terms of the funds I’m being offered. I have a fair bit of money in VITSX and recently noticed that it doesn’t have a very good Morning Star Sustainability rating– it’s ranked as “below average.” I’m unclear on what that means long-term in terms of risk. I do have to ability to invest in VFIAX, which has a better rating. I’m not sure if I should just keep putting money in the fund I have, or sell the VITSX and buy VFIAX instead. I know you can’t give advice, but I’m wondering what you would do. Any input on this is greatly appreciated.

    Additionally, I’ve been investing in a personal IRA with Betterment for the past several years and am feeling inclined to leave and transfer everything to Vanguard and begin purchasing VTSAX and some VBTLX instead of the huge range of funds that Betterment chooses and quite frankly, I’m confused by. Of course, when I transfer to Vanguard, I will have the option to keep the same existing funds that Betterment chose and then I can purchase VTSAX and VBTLX from here on out, or I could sell the following and keep only the VTSM, VTV, VOE, VBR, VEA, :
    EMB: iShares Emerging Markets USD Bond ETF
    BNDX: Vanguard Total International Bond ETF
    BNDX: Vanguard Total International Bond ETF
    VWO: Vanguard FTSE Emerging Markets
    VEA: Vanguard FTSE Developed Markets

    I know you can’t give me advice directly, but I’d love any insight you can offer would be great.

    Thank you,

    • jlcollinsnh says

      Hi Jennifer…

      First, VITSX is the institutional shares version of VTSAX. Same portfolio, with an even lower ER. So that would be my choice.

      If you decide to leave Betterment for the simpler approach with Vanguard, in my view there is no point in holding on to the funds they choose.

      Hope this helps!

      • Steven M Gonzalez says

        1) I’m sure you’ve covered this topic, so forgive me if I couldn’t find it, but now that VTI is 0.3% and VTSAX is 0.4%, would you recommend VTI over VTSAX? 2) I see that it seems you have moved your VTSAX recommendations to VITSX. Would you recommend moving all of my VTSAX to VITSX, especially considering a $5,000 minimum is required. 2) I am unsure of how the 0.4% ER is applied to my existing balance of VTSAX, but I imagine it’s ongoing so it would seem anyways that I would want to move that money out of there. Please advise.

        • Steven M Gonzalez says

          er, VTI is 0.03% and VTSAX is 0.04%…and, wow, I mistook VITSX’s 5 MILLION minimum for $5K. Ooops.
          That said, if I’ve normally been 100% VTSAX, would you recommend now buying full shares of VTI first, and whatever non-integer number is left over buy VTSAX?

  29. FIRECracker says

    This is why we love Chautauqua–being surrounded by intelligent, curious people tends to create all sorts of interesting discussions. Sometimes it goes in a direction none of us ever expect–like Cryogenics. I vote for a future stock series article on how to invest if you’re planning to freeze yourself 🙂

    • jlcollinsnh says


      Stephan’s mini-presentation on Cryogenics was an unexpected treat. 🙂

      No plans to freeze myself just yet. How about you?

  30. Robin says

    Hi Jim,
    Another great post. Thank you! Maybe you can offer some direction- We started in Betterment- very happy- but after reading your book I felt we could do it ourselves. We didn’t move the taxable account because of the profit. After reading your book, I move the IRAs to Vanguard in BND for cushion.
    After reading this article I can see we are too high on bonds. We can’t use what Betterment uses because we don’t want to create wash sales. We like to move some of our IRA to a stock ETF to boost the percentage. You seem to be speaking about different stocks now like VITSAX. We were planning on moving to VOO in the IRA because betterment doesn’t use it. Which stock ETF are you recommending now?Any help is appreciated and keep it up, your guidance is critical to us.
    Thanks so much Jim.

  31. Scott says

    I have 3 young kids and think about this often. Although, I come at it from a different perspective. With rising wealth inequality and growing evidence that the children of the top 20%ers have a distinct economic advantage over the other 80% I feel obligated. It makes me feel like part of the problem, but what choice do I have? While, I will continue to support political solutions to address this issue, I also feel like I have no choice but to play by the rules we got.

    The other thing I wonder about is with growing automation I also think for future generations it will become imperative to own stocks. It will be the best way to ensure profiting on the coming wave of automation and boom in corporate profits. Not to mention my grandchildren’s human capital will be less valuable.

    Sorry for the gloomy comment, on the other hand spring is almost here!

    • jlcollinsnh says

      No problem Scott.

      You might want to read the book I recommended in the post for both a more positive and a more realistic take on the state of the world today. 😉

      • Scott says

        It is certainly a paradox that in many respects the world has never been better, yet so many people feel it is not.

    • Scott S. says


      You are not part of the problem. You are part of the solution.

      The best way to fix wealth inequality is to teach economically illiterate people how wealth building works.

      An example:

      Take my birth year 1982. An investment of $133 a month would be worth about $1M today.

      During that time there was the crash of 87, the tech bubble, 911, 3 wars, the financial crises, and the lost decade. Despite all that, the SP500 managed to compound at $11.7%.

      Most middle-class people could have managed that level of investing. No politician or greedy rich person could have stopped them, but If they did not understand the concepts Jim discusses here, they likely would have made some terrible mistakes.

      Why aren’t the politicians concerned about wealth inequality not educating people on this? It is a question worth pondering.

      Rest assured, economic mobility is alive and well in America despite all the fear mongering.

      I believe the US taxes system should be revised to be less regressive relieving the burden on the lower and middle classes. Many wealthy people agree including Warren Buffet.

      But the fact remains, it will do little to fix wealth inequality because the lower and middle classes tend to spend all their income funneling it back up to the top.

      Keep up the good work.

      • jlcollinsnh says

        Well said, Scott.

        I would add that the US tax system is already very progressive:

        The bottom 50% of taxpayers pay ~3% of the total income tax.

        The bottom 75% of taxpayers pay ~14% of the total income tax.

        The top 10%, those above 139k, pay ~70%

        The top 5%, those above 197k, pay ~ 58%

        People get confused because of payments made to FICA for future Social Security and Medicare benefits, which are not progressive and are a very different thing from income taxes.

      • Scott says

        They are definitely getting hammered at a young age about the importance of saving and living below your means. I get some funny looks when low cost index funds are brought up, but we’ll get there eventually.

      • matthew tabor says

        scott, the vast majority of income taxes are paid by the top 10% of income-earners. Close to 50% of W2 wage earners in america pay zero dollars per year in income taxes (well, they pay them, then get them all refunded come april the following year). and for the record, buffet doesn’t agree. he says he agrees, but he’s carefully structured his comp plan to avoid w2 income (so as to avoid payroll/SS taxes entirely) and while he is a loud advocate for the death/inheritance tax, he’s carefully structured his estate plan to ensure that he pays zero of it (instead moving it to gates’ foundation). buffett is amazing at creating wealth and allocating capital, to be sure. but his true views are–like most people–on loud display if you look at what he does with his money.

        • Scott S. says

          Hi Mathew,

          I agree.

          I am aware that nearly all income taxes are paid by the top income earners.

          I should have used a different example, but taxes are a hot button when wealth inequality comes up so I ran with it.

          Tax policy is not the cause or solution to the wealth inequality ”problem”, and labeling inequality a problem is questionable. The book mentioned at the end of this post presents a good argument against it being the problem many people think it is.

          I believe hard working upper-income professionals pay too much because earned income is taxed aggressively compared to investment income.

          Buffet minimizes his W2 income because it’s the rational thing to do. Earned income is taxed aggressively. This is not incongruent with his views on the tax system. It illustrates his point. Plus, the Gates Foundation will surely do more good with the extra money than the government will.

          (Although, I’ve always wondered why Buffet never mentions his share of corporate taxes in addition to his income taxes. That has always given me pause…I guess it could be argued that corporate taxes are passed on to consumers… anyway, now I’m starting to ramble.)

          • Matthew says

            Scott, you’re absolutely correct on most points. Re the gates foundation being a better steward of buffet’s wealth than the government, on that point you’re dead-on. But it makes my earlier point. Which was that Buffett doesn’t believe in the inheritance tax really–only doentour and my estates. For those estates he’s perfectly happy allowing the admittedly inefficient Feds have at it. If a private foundation is better for his money it’d be better for ours. But he trumpets and pushes and advocates for (as does bill gates) the tax nonetheless. They advocate it, but they structure their lives to avoid it. We should follow their example (and ignore their words). In any case, always good to connect with folks on this forum. Cheers,

          • Scott S. says

            Matthew, I see what you mean now. Good point.

            And I agree governments are poor stewards of capital. We are not getting as much ROI as you would expect from the massive amount of taxes the government collects. If you get a chance check out the article I linked to above. It’s a good read on that topic.

  32. Graeme says

    Hi Jim,

    You alluded to it at the start of the article: “this idea originated with the Iroquois and is based on creating sustainability over the generations. It is commonly applied to environmental stewardship today”. I was curious if you had any thoughts on how to tie the financial side and environmental side together, as we can’t have the financial side without an environment that perpetuates along said generations.

    One can pepper these thoughts with their optimism gun and trust that the market will solve our environmental problems, but I think past performance guarantees future ecological returns.

    Teaching our future generations to ask questions and become interested in corporate governance is important. What is Vanguard doing as a shareholder of Vale SA regarding the recent dam collapse in Brazil? How can I become more engaged in the companies that I own and obtain my wealth from? These are the questions that concern me as an environmental engineer.

    Any insight on how the market accounts and corrects for these factors is always welcome!

    Thanks for the good reads!


    • jlcollinsnh says

      Hi Graeme…

      The financial and environmental sides are already tied together.

      When I was a kid, it was accepted that rivers and lakes were polluted and that smog was a feature of cities. No more, and that is only because we had the wealth to make the improvements. If you travel to the desperately poor enclaves in some countries around the world, there is a lack of basic sanitation and clean running water. As those areas become even slightly more wealthy, the improvements are dramatic and, indeed, the number of desperately poor people has fallen dramatically.

      Clearly we still face major problems, but those problems will be faced by those who have enough wealth to do so. It takes wealth to employ environmental engineers like yourself.

      Jake Bogle did more to help more people build wealth than any other person I can think of. In the process, he created legions of people with the time, energy and money to take on these challenges we face.

      As for corporate governance, you’ll find my take in the third part of this post:

      You might also want to read the book I recommended in the post.

      Glad you like the blog!

      • Graeme says

        Awesome, thanks for the reply. I’ll certainly check out the material you referenced. I’m always interested in gaining a better understanding of the financial/environmental side of things from people who have thought more about it than I!



  33. Crew Dog says

    When we were in the beginning of our personal finance journey, we thought we were supposed to use the “100 minus age” formula for asset allocation, which worked ok in our twenties, but we weren’t comfortable shifting so much into lower performing assets in our thirties and forties. Then Doug Nordman [] suggested that a military pension could fulfill the same role as a bond allocation. Once that light bulb illuminated, we switched to 100% equities except for our TSP (military 401k), which is in two lifecycle funds – we keep making it more aggressive as we become more comfortable doing so, by leapfrogging the maturity. IOW, the TSP was originally 100% invested in a lifecycle fund with a target year of when we would turn 65. As we became more comfortable that we probably would not need the money then, and less comfortable with the fund’s allocation becoming more conservative and yielding lower returns, we shifted 50% of the assets to a lifecycle fund that matured 5 years later. Then, when the original fund became too conservative, we shifted the other half of our assets in the TSP to mature when we would be 75. So, like a laddered CD, we keep shifting 50% of these assets to mature 5 years later. In this way, we keep some asset allocation, but we prevent the allocation from becoming too conservative. It is possible that we may just switch to the S&P equivalent fund in the future, but we’re comfortable with this for now.

    Just to emphasize: Our portfolio was more conservative *before* we actually started drawing the military pension. It was only *after* that revenue stream was secured that we became comfortable with a very aggressive asset allocation. I suppose it was also a result of realizing that our pension was sufficient income to meet our needs and therefore we should invest our other assets for the long-term, as Jim suggests.

  34. CORD says


    Thanks for the wealth of information. I purchased and listened to your entire book yesterday through Audible. I sincerely enjoyed it and thought you did an amazing job explaining the concepts. I am 26 years old and began investing 3 years ago. I was fortunate enough to have read Jack Bogle’s Little Book of Common Sense Investing as well as Tony Robbins’ Unshakeable right around when I began. I feel very fortunate to have enjoyed the benefits of low cost indexing from the very beginning of my investing career. Your book and this blog have served as an excellent reminder and reinforcement to me. Just wanted to say thank you.

  35. Jaime says


    Greetings from Ecuador, hope you visit again soon, know that you would have a welcoming host should you decide to do so.

    The only regret I have towards investing is that I did not start sooner; then, I would have been able to attend the 2017 Chautauqua here at home!

    I thoroughly enjoyed your book, so naturally I became a huge fan of your blog. This comment is directed mainly to thank you for your advice and the likely patience and passion you devoted towards writing the book, and this blog.

    About the article: You just keep making sense, man. One of the most brilliant things I have read: “The money you inherit is not your money; you are its custodian.” I think you just redefined the concept of inheriting.

    In terms of investing: I am not a U.S. citizen, so I am limited to purchasing ETFs only, which, as I read in one of your posts, are interchangeable with Index Funds as long you hold them for the long term, like I would with a regular Index Fund. You can correct me if I am wrong (which is likely.)

    Just two questions:
    1. Since I most likely cannot purchase U.S. bonds, what would you recommend instead, should I decide to purchase something similar?

    2. Are there any Chautauquas programmed for South America soon?

    Again, thank you for all the advice.



    P.S.: Sorry for the grammar, my English is getting a bit rusty.

    • jlcollinsnh says

      Hi Jamie…

      First, thanks for the kind words!

      Second, did we meet in Ecuador? I can’t quite place you.

      As for your questions:

      Yes, the ETF versions of funds are fine. Just hold for the long term.

      If you want to smooth the ride with bonds, yes you should purchase something similar. But I have no idea what that would be in Ecuador.

      Yes, there is a “Chautauqua” in Ecuador. But I am not involved with it and cannot vouch for it.

  36. DrHarHar says

    Hey Jim,

    I love the vision and hope the same for my descendents. However, as none of that is guaranteed, seems like I should say you’ve definitely had an impact on my life for the positive.

    After graduating with an overpriced advanced degree I was looking to understand money. Although my wife and I had been relentlessly paying down on our student debt, in excess of 100,000, we had no idea what to do afterwards.

    Luckily I stumbled onto your blog. The rest is history. We are now in our wealth accumulation stage, no where near FI, but content in the knowledge of two things. First, that we know the path forward. This is thanks to you and your willingness to answer my, at times, asinine questions. Second, in knowing that the purpose is less to retire on the beach somewhere, but more to find meaningful work. This I learned because this blog exposed me to others like the MadFientist.

    So maybe, hopefully, your dream of seven generations will come to fruition. Maybe not, but you’ve definitely had “seven degrees of separation” type of impact on me and my family. I even recently passed on my copy of TSPTW to my sister.

    Thanks again,

    • jlcollinsnh says

      Thanks DrHH!

      Nothing is guaranteed and my guess is the plan will break down somewhere in the seven generations. But I think it is worth trying and I’m pretty confident we’ll get at least a couple generations in. 🙂

  37. Gretchen says

    Hello Jim,
    Can you offer any advice for estate planning & specifically the administration of an account like you describe in this post (without an annual fee siphoning off returns?)

    • jlcollinsnh says

      Hi Gretchen…

      I’m afraid not.

      My approach is based on teaching the next generation about the concept and how to implement it and then trusting that they will.

      No trust or other outside administration will be involved. So no fees. 🙂

  38. Mahmoud Dahy says

    Hi Jim,

    I just wanted to say thank you for the great book you wrote. I’m listening to it for the second time in less than two weeks. I recommend your book often because I feel confident in doing so. I usually explain your voice as this “Nice uncle sitting next to you drinking coffee and giving you some of the world’s best advice for free”. I appreciate you being genuine and authentic Jim. You say it as it is. You don’t sugar coat your words and that says a lot about you. I know it is never too late to start but I wish I found you in my early twenties. I’m thirty now so I’m grateful for the wisdom I got from you.


    • jlcollinsnh says

      Thank you, Mahmoud…

      ..for your very kind comments, and for recommending my book. Someday maybe out paths will cross and we’ll have that coffee together.

  39. Rock says

    Hi Jim,

    What is your personal opinion on the potential “Wall Street Tax Act”? Do you think it has a chance of passing? If it passes, how will you handle your investments? A lot of investors are already infuriated by this idea. I’d like your thoughts on this subject. This is not a political type of question. Everyone is welcome to reply!

    Thanks in advance!

    • jlcollinsnh says

      Since it has little chance to pass, I see it as a non-issue, Rock.

      If it did, it wouldn’t change my investment approach.

  40. Katie says

    What about VTI for taxable accounts? Would not that allow you to identify lots for sale to manage the taxes better than VTSMX (which uses average share price)?

      • Katie says

        Thanks for the reply Jim! I have read your book four times ( I have a hard copy and one on my phone to carry with me when I travel). It should be required reading in schools! Back to VTI. As I buy lots over time to invest I will share identify lots when the distribution stage of my life is upon me. That way I can sell high cost basis shares and keep the low cost basis shares for the next 7 generations i.e. they get a step up in basis. Methinks, though, there will be so many lots to choose (each dividend/cap gain) from that, that may make things more complicated than just using average cost basis through VTSMX.

        • Alan says

          Vanguard lets you select cost basis for mutual funds, so it doesn’t make a difference if you own a mutual fund or an ETF. From their website:

          Vanguard offers the following cost basis methods for mutual funds: average cost (AvgCost), specific identification (SpecID), and first in, first out (FIFO).

          Our default method for mutual funds is average cost. Our default for all other holdings is first in, first out.

          If you use a method other than average cost for mutual funds, you’ll need records for any shares acquired prior to January 1, 2012, because Vanguard only has average cost information available for these shares.

          Fidelity is similar:
          Average cost method – This method takes the total cost of the shares and divides it by the number of shares in the fund. For example, if you own a mutual fund that has 3 shares purchased at $5, $6, and $7; using the average cost method, we’ll add up the purchase prices ($18), and divide it by the total shares in the fund (3), resulting in a cost basis of $6. We use this method to calculate cost basis for mutual funds and certain dividend reinvestment plans. To select a different cost basis method, please call us at 800-544-6666.

          Actual cost method – As the name suggests, your cost basis is the purchase price of each share. In order to use this method, you’ll need to know the actual purchase price of each share. This can be tricky, especially if you purchased shares at different prices and are not sure exactly which shares were sold.

          To help simplify this process, we use first in, first out (FIFO) when selling your shares. This means that shares that were bought first are also sold first. For example, let’s say you own 200 shares. The first 100 were purchased at $10 per share, the next 50 at $15, and the final 50 at $20 per share. You sell 125 shares. With FIFO, the first 100 shares sold will come from your first batch and the remaining 25 from your second batch.

    • Thomas says

      Hey Jim,

      Talking about money, inheritances, trust funds and the lot are pretty taboo except around close friends and family. So like you said it’s hard to know if the norm is for fortunes to be squandered or for the legacy to live on for generations.

      Just as a thought exercise compare this pot of family money to a family farm. The base money is the land, it gets passed down from one generation to the next. The crops you can harvest represent the 4%. When you hold the farm you are welcome to profit from what it can produce, but you are expected to make decisions that keep the farm healthy for generations to come.

      Now a farm is a lot more work the an account full of VTSAX and therefore family farms get sold, however, there are many people out there working hard to keep grandpas farm alive.

      I don’t think future generations will be as likely to squander the money if it is passed down with an education of how to manage it (farm the land) and that family pride that goes along with it (grandpas farm).

      Just some thoughts, I could be completely wrong.

      • jlcollinsnh says

        Interesting thoughts, Thomas.

        Passing family holdings, like farms and businesses, has been around for a long time.

        Since it is so much easier to sell VTSAX than a farm or business, maybe that low bar will make it less likely that the wealth will be held intact.

        Probably depends on the heirs and how well they are prepared for the responsibility.

  41. Damian says

    Jim – I love your teachings, and your book is what I always recommend to first time investors (I just wish I had that book much sooner).

    Question – I too plan on building my wealth through index stock investing (VTSAX). With that said, is there Cities/States you’d recommend in the USA which can help limit the local municipality tax liability of selling these long term stock holdings once I need to withdraw? Are there any foreign countries where we could live as ex-pats to also minimize tax liability? Thanks in advance!

    • jlcollinsnh says

      Thanks Damian!

      Where you choose to live can make a big difference in how much of your money you get to keep. This is a good guide:

      If you are considering moving overseas, as we are, you might want to set up residency in a state with no income tax. Then you can live where in the world you choose. Of course, no matter where you are, the Feds will expect you to pay income tax. If you are truly out of the country for most of the year, you may qualify for a nice exclusion on the first 100k or so of income. But you will want to research that beyond this blog.

      • Damian says

        Jim – Thanks for the swift reply! I hope to one day thank you in person for all your wisdom (thinking Chautauqua)! With that said, is there (or have you thought about setting the stage) for more local meetups for those of us with similar financial life goals?

        • jlcollinsnh says

          My bandwidth is full doing Chautauquas, and they are my favorites.

          But there are plenty of local FI meet-ups around the country.

          Next winter we are planning a road trip and I might do some informal ones then. Nothing planned yet though.

  42. David Rudge says

    Dear Jim,
    I enjoyed this post, but am a little confused. In your previous writings and the book you draw attention to how the introduction of VBTLX would serve to reduce volatility in a portfolio as one prepares to enter the wealth preservation stage. A central motivation for such a strategy is to guard against a sudden market downturn just as you start making withdrawals. Wouldn’t the introduction of VTWAX make the portfolio even more vulnerable to a sudden downturn?

        • David Rudge says

          One follow up question. I understand why if you decide you don’t need to draw down your portfolio, you would ideally opt to continue having a 100% equity mix. But as you point out in Chapter 20 of your book there are pesky Required Minimum Distributions to be dealt with for anyone who has a substantial amount of their wealth in a 401K, 403(b) or 457b plan when they reach age 70 1/2. Thus even if you don’t need the money, you will be forced at that time to start liquidating and paying taxes on a yearly basis, rather than a time of your choosing. So I should think you would still need to consider how to best manage your overall portfolio in light of regular divestments you will need to make in the future, regardless of whether you anticipate you will need the money. Thanks again for your patience.

          • jlcollinsnh says

            Good question, David…

            …and factoring forced divestments is a needed consideration.

            We are taking RMDs and we simply direct Vanguard to reinvest them directly into VTSAX in our taxable account. So the money seamlessly ends up in exactly the same investment.

            Of course, we do then have to come up with the money to pay the tax due and there is no way around that. 🙂

  43. Juan says

    Hi Jim,

    Do you think it’s a good idea to roll over my retirement plan from arizona state retirement system to vanguard? I’m 34 and want to start investing in VTSAX. I would roll it over to a traditional IRA, 97K, I’m 100% vested and not employed by previous employer who offered this plan.

    Thank you in advance

  44. BC Kowalski says

    Great post as always, but it got me to thinking: Can those lessons about stewardship be learned without the hardship that comes from building FI in the first place?

    I have a couple of friends who had inherited pretty sizable sums of money – definitely FI money in at least a couple of cases. To make a long story short, in both cases they blew through the money in short order, and are now living off of their parents. One of them I nearly got to in time, explaining they could invest in some safe bond or index fund and live off the interest they earned, and it would last. I got a “I’ll have to look into that” but that never happened. After a lot of short term spending, bye bye inheritance.

    I remember at one point feeling quite jealous as I was working 12 hour days while my friend squandered his freshly come by wealth. But my perspective changed, because I realized through hard work and discipline I’ve gained something far more valuable: respect for the value of money and the ability to save and not squander. I’ve built a rich life for myself by focusing on building a life of purpose. And if my account were to go to zero tomorrow, I know I have it in me to build my wealth back up.

    That being said, I leave my above question – because I don’t know. I think it depends on the person. I’ve met some very smart young FI minded folks who have done the math and probably would treat such an inheritance wisely. I also know many who probably wouldn’t. I do think there is something to doing the building yourself though.

    • jlcollinsnh says

      I agree, BC…

      …it depends on the person. In the same way some people, like star actors or athletes who suddenly earn big money, do fine but many crash on the rocks.

      As for building it yourself, there is certainly value in that. But maybe getting to start a bit further down the track just means the same effort will take you further.

      No easy or pat answers.

      If you live long enough to see your children into adulthood, the decision should be easier.

      • Bobby says

        The desire for the knowledge to know how to invest is tough to artificially create. I recommend John Bogle and Jl Collins books to a lot of peope, inheritors and self made. Very few want to take the time to learn. Its easier to answer a call from a Northwestern Mutual rep or JP Morgan rep and say, “sure take my money.”

        I like to tell people, “Narrow is the road that leads to financial independence” since so many folks don’t care to learn and thus, earn the mediocre outcomes that accompany partnering with an insurance company or bank.

        I am an inheritor (in my early 30’s) so I can understand that side of things. JL is right not to involve a trust as you limit responsibility and the experience required to build confidence in personal finances. My inheritance came accompanied with a ridiculous high priced adviser pushing high ER funds. I cleaned house and have been indexing since 2007.

  45. RAY says

    Hey jim hope all is well. your post are great. i’m a new reader to this blog. my question to you is i have rental money coming in monthly is it better to invest that money in my vtsax or vmmxx. i will not need this income this year i have money in my local bank. thank you for what you do!

    • jlcollinsnh says

      Hi Ray…

      Investing in VTSAX is for the long term. Think decades. VMMXX is fine for short term holdings.

      As you continue to read thru the blog, the reasons will become clear.

  46. moneybag89 says

    Leaving children unearned wealth is the worst thing you could ever do to them. After seven generations, your kin people will be complete jerks. The type of people that you never would have associated with in your life.

  47. Luke says

    Hi Jim,

    Love the Stock Series. Learning about the power of index investing has completely changed my perspective. I point everyone I can to the blog and/or book.

    I know this isn’t directly related to this post, but I recently came across this website:

    Their 2018 year end report shows that from 2003-2018 less than 9% of large cap funds are beating the S&P 500. That’s wild. Truly powerful stuff that I can’t believe isn’t more widely known (or accepted).

    Just wanted to give a quick thank you for this blog!

  48. Georges says

    Wow. Thats good stuff, Jim!
    Long time reader here. Got ride of our 1% advisor many years ago thanks to your series. Loved your book.
    You have made my wife and I change our long-term planning.
    We are retired. We are living off our our investments.

    One question regarding the 4% rule: Some mutual funds automatically “payout” dividends and capital gains. If you only take those out of the portfolio and not reinvest how does this affect the long-term growth of the core investments? Will the investment continue to grow? Im planning on one day not having to touch the principle. What will happen when we can live off just the dividends and capital gains from the mutual funds? We live far below our means.

    • jlcollinsnh says

      Thanks, George!

      Clearly your investments will grow more rapidly if you choose to reinvest the dividends and capital gains distributions. If you take those, your investment can still grow as the underlying value of the holdings grows.

  49. Josh says


    Thanks for the post. What you talk about really resonated me for a slightly different reason. My background is Evangelical Christian and as such it is my belief that everything I have is a gift from God and it is my duty to be a steward/faithful manager of it. This is remarkably similar to the idea that your wealth should outlive you for future generations. This concept is actually seen in Proverbs 13:22: “A good person leaves an inheritance for their children’s children”.

    I think regardless of the “why”, the mindset of long-term (where long means ‘longer than you’) is really helpful with financial planning. Needless to say it is one of my wife and I’s goals to set up a charitable foundation similar the the JL Collins Foundation 🙂

    Thanks again!

  50. Dividend Dude says

    I want to leave my kids money but I want them to only be able to use it for education, mortgages, and necessary expenses. I’m sure that’s possible I just need to ensure they can’t figure out a way around it.

  51. Derric says

    I found this Stock Series last October, and have just now finished the latest installment. In that 6-7 month period, I started by moving our $500k actively managed portfolio into an IRA with a company extremely similar to Vanguard. I chose a different Company simply because I found customer service to be superior there. The first day that I fully jumped in and made my two choices (80-20) , (still in the beginning stages of your Series) the market dropped 800 pts. I had to continually remind myself of what I had just read and leave it alone. LEAVE IT ALONE. I tried. I watched, and I didn’t do anything. And then December came…and I thought, well this is it, I have to do something. My wife is going to killll me! lol. But..I didn’t do anything. Christmas Eve, half day of trading, another massive punch to the gut. I thought for sure, I have to ignore all that I’ve read, and move EVERYTHING to bonds and cash. Gonna do it. Had it all lined up for the market open after Christmas. But at the last second…6:30am I cancelled everything and did nothing. I just kept reminding myself of all that you had said, over and over, just in the first 4-5 parts of the Series. Stay the course. Don’t be that guy that gets out at the bottom and in at the top. Just leave it alone. That day the Market moved up 1086pts. My wife and I are a believer. What a lesson we DIDN’T have to learn because I found your Series. Thank you. And thank you to all of the Commenters and posts that I have read, and the podcasts, and and so many other informative articles. I have soaked it all up.
    Jim Collins, A Saint on a Bike!

    • Derric says

      PS-Didn’t even mention the $1200-1400 quarterly we are not paying Wells Fargo anymore, and unbelievable E/R’s. I wish I had found Mr. Collins Stock Series 10 years ago. However, I did find it just in the nick of time!
      Thank you, thank you, thank you.

    • jlcollinsnh says

      Well played, Derric.

      Just remember the same lesson when the future, and more brutal, drops come. 😉

  52. Joe says

    Hey Jim,

    Great Post. One question I do have is on the subject of rent. I’m 22 years Old and currently have 100K in VTSAX! Luckily I have no debt and am excited to be on this path. Fortunately, I’ve been able to save 90% of my income. I live at home with my parents. However, sometimes I do wonder if living at home just to save is a good idea. My parents are very supportive and like that I stay at home. Do you feel it is good idea stay at home as long as possible just to invest excess cash ? Rent is very expensive in Illinois and I’m curious to know how much I should look to spend monthly on rent If I do decide to move out. Is there a general rule of thumb you adhere to when finding a place to rent? I currently make 70K and work from home when not traveling for work. I live in Illinois. Thanks again

    Best Regards,

    • Luke says

      Hi Joe,

      I know you were asking JL for his thoughts on this, but I figured I would jump in. I spent just over a year after college living back home, unfortunately I wasn’t as smart as you and didn’t invest what I had been saving. This wasn’t even on my radar until a couple years ago. That’s incredible that you’re able to save and invest as much as you are!

      My parents didn’t mind me living at home either. I didn’t move out until I found a roommate and then we both looked for a house that suited our needs. i.e. close to work, good neighborhood, highway access, well within the budget. Your living situation is a lifestyle choice. I wasn’t about to spend every penny just to move out without a roommate, but living at my parents’ house made some things (like dating) a bit harder.

      I don’t have a clear answer for you as to whether you should move out. At the end of the day that is up to you and your parents.

      • Frankie says

        The general recommendation is to spend about 30% of your gross monthly income (before taxes) on rent. Therefore, if you’ll be making $4,000 per month, then your rent should be $4,000 x 0.3, or about $1,200. You could of course spend less, but that depends on the type of lifestyle you want and how frugal you want to be. Getting a roommate or house hacking would be great things to do. You will need a budget and can use YNAB or Mint. Just keep investing.

    • jlcollinsnh says

      Hi Joe…

      Living with your parents, as long as it also works for them, as a strategic financial strategy is a fine and very effective idea.

      As for how much to pay in rent when and if you do move, as little as possible would be my choice. 😉

  53. Mario says

    I’m thinking to gift my kids with shares when they reach 18+. I want to help them to open a Roth IRAs or pay for a house down payment or buy cars….
    I opened a separate taxable accounts for them on my name and the money invested in vanguard total stock market vtsax 100%. Is it a good idea? Thanks.

  54. Ryan B says

    Hello Jim; great read as always!

    Regarding your “dry powder” for market drops, do you think this could be an investment strategy for someone that wants to be in 100% stocks?

    For instance, I sold all of my bonds for SP500 when the market had a hiccup in mid-December and I ran the math and discovered that I purchased 8% more SP500 shares by buying bonds (my contributions are 80/20 SP/Bonds) and then selling them than I would have if I just was 100% SP500 from the beginning.

    Is there merit to this strategy? It assumes that 1) the market will have occasional hiccups (it does) and 2) when you buy in, the market will recover (it will). There is math that tells you exactly when to sell your bonds for stock to break even, 5% profit, 10% profit, etc. The only two variables are the price of the bonds and the price of the stock shares. The best part is that when stock prices go down, bond prices go up! Which works in your favor!

    I’m a new investor and I’d love to hear your thoughts on this. It is “timing the market” but you’re only calling the low. Further, math tells you when to sell for C profit: there is no guesswork. From what I’ve seen (or haven’t seen), no one has written this up as an investment strategy yet.

      • Ryan B says

        I was worried that I was a bit hard to follow…
        Scenario 1: buy 100% SP500 with your 401k contributions.
        Scenario 2: do an 80/20 SP500/Bonds split with your contributions and wait for the market to drop (like December 2018) and sell your bonds for SP500 stock.
        Question: which scenario gets you the most SP500 shares?

        In my brief experience, scenario 2 results in more SP500 shares since you are buying when the market is low. You can prove it by calculating the SP500 shares you would have bought if you followed scenario 1 and compare that to the shares you bought when you sold your bonds for stock in scenario 2.

        Thanks for the reply. I hope I came across a little clearer this time. >.<

  55. Sam says

    Hey Jim, I have a question about a 401k, a 403b, and and IRA. Is there any way I could get your advice on the situation? If so, what is the best way to do this?

    I’ve read your book, and it has definitely changed the way I think about investing. I would really appreciate any time of yours!


  56. Brian M. says

    This is a timely post and thank you for starting the conversation. There are some extremely smart folks out there that have recently presented on the topic of stock vs bond allocations. There is a fellow named Mark Eppli who is a director at the Wisconsin School of Business who has assembled data that sheds serious doubt on several “rules of thumb” we have all heard regarding bond allocation investing (such as age multiplied by %). One important takeaway is the need for investors to consider real returns, instead of nominal returns. Unlike stocks, there are several protracted periods in the last 90 years where fixed income investing would not have outperformed inflation (negative real returns). It begs the question, if you are not beating inflation and not planning to retire imminently, what is the “safety” of fixed income really giving you?

    More importantly, Mark deconstructs the definition of risk that is often used to separate stocks vs bonds. Namely, standard deviation (or volatility). Most of the investment industry looks at standard deviation on a short-term basis and concludes stocks are very risky and bonds are much less risky. However, if you power up the calculator (or more likely Excel) and measure over a longer period of time, the standard deviation of a portfolio of stocks drops significantly (much more than the drop in standard deviation bonds experience during the same period), and thus makes stocks much less risky than at first blush. And most of us are investing for more than the short-term, so it’s very relevant to measure risk against the appropriate time period you plan to be in the market. One example he gave in one of his presentations is that of an investor with a seven year outlook….. unless you were in the most risk averse class of investors who could hardly withstand any volatility, allocations to fixed income securities (bonds or treasury bills) should be very limited or zero. Even a 60 year old could fall into this category of looking out to 67 and wanting to maximize real portfolio returns (depending upon health, financial position, etc)! And of course if you are 30 or 40 and planning to work until 60, it really throws into question what the point of bonds would be.

    Just a little bit of context here but not the whole enchilada – find the paragraph that starts with “Have they gotten it all wrong?”:


  57. Joe says

    Aren’t money market rates at 2.34% a tactical place for money instead of bond funds given the uncertainty of the next few years?

  58. Xenocles says

    I’ve followed off and on for a while, and am so early in the process that this idea seems so cart-before-the-horse that maybe it’s silly to think about it as much as this post has inspired me to do. But it has gotten me thinking.
    Perhaps some structure is in order to help accomplish the mission. So I’ve been kicking around some ideas. I remember reading in a Heinlein story where one character’s ancient ancestor established some sort of trust that provided an outlandish allowance to make descendants after they added some large sum to the trust (female descendants were provided for automatically out of old-fashioned gallantry). At first I thought of starting with this model, but I couldn’t overcome the objection in my head to the effect of “why bother with the trust if you’re going to make them become FI first?” (Because my goal would be to provide a subsistence allowance only, something that could free the heirs from material fear and allow them to take risks, and perhaps eventually to generate giving out of the remainder of the 4%.)
    So my thought now is based on a payback model – you sign up to receive the allowance at the beginning of each year and pay some fraction of your income over and above it (preferably on your honor) at the end of the year. First thought is 5% of gross but I haven’t done any math on it. I have three heirs already and it’s likely I will gain some more, so there does need to be some provision for expansion. Naturally, I’d have to figure out a good structure for tax and liability purposes, but I’d be interested in any basic feedback.

  59. Hank says

    Hi Jim – I hope you’re doing well! HUGE fan of you and all of your content here and your book as well (which I’ve gifted copies of to family). I think I know the answer but for peace of mind I wanted to confirm with you if I can actually consider myself FI. I’m 36 and my total net worth (basically all equities) is 25X my annual spend. My question is…since it’s approximately 50/50 between taxable and my retirement accounts (other half mostly 401k & less in an IRA), can I still consider myself FI? I definitely plan to keep working and “padding” but just wanted to get your thoughts on if it’s OK to view it that way given I’m quite a long ways from age 59.5+ and all. I have read about the Roth IRA ladder conversion, etc. but unfortunately have peanuts in a Roth as my income exceeded the annual limits years back so majority of my tax-advantaged retirement investments are 401K and a smaller traditional IRA account. Many thanks in advance!

  60. Victor says

    Hi Collins,

    I am currently assessing the opportunity of investing into the stock market for the first time. However, I’ve listened to Ray Dalio and he claims that the assets are fully priced and that we are at the end of the long debt cycle, in a period similar with the great depression that might come again.

    In this respect, with the price of assets being very high, I’m struggling how to enter the market with my lump sum of 50k EUR as a European citizen (I’m living in Romania) and in the same time how to configure my asset allocation.

    I’m 30 years old and definitely agree with the fact that on the long run the stocks will outperform any asset classes, but my financial freedom expectations are to retire in about 15 years. So if Dalio is right and we are heading into the big depression, despire the short term decrease of the market with about 70%, we will also very likely experience the so called “lost decades”. So if this happen, even though on very long time frame stocks will continue to do great, how will this affect our goals?

    So I’ve thought about several options and I’m currently trying to replicate Ray Dalio’s All Weather Portfolio by adjusting it a little bit as follows (reducing the maturities of bonds due to the yield curves and increasing the exposure on emerging markets stocks because of the better valuations – 12 PER vs 18 PER for MSCI World)

    What do you think of this strategy of investing a long sum of about 25k (half of my bankroll) in a very defensive portfolio like I will show below and keep the other half in bank deposits as a cash pile for when recession comes (for the night is dark and full of terrors):

    10% IWDA EUR Not Hedged Acc – MSCI World ETF
    20% EIMI EUR Not Hedged Acc – MSCI Emerging Markets ETF
    20% IBTE EUR Hedged Acc (1-3 years US Treasury Bonds)
    40% AGGH EUR Hedged Acc (7-10 years US Treasury Bonds)
    10% EGLN EUR (Gold ETF)

    In this way I can at least save some brokerage fees which I would have paid by doing DCA and in the same time, I have both a defensive portfolio and extra cash to buy more when the panic sell begins. What do you think about this mixture of “time in the market vs market time”?

    • jlcollinsnh says

      Well Victor…

      If the markets drop 70% and if panic selling begins and if you can time the bottom and if you have the courage to then get back in when the rest of the world is saying the bottom is still yet to come your rather cumbersome strategy could work.

      Not something I would do, but then I don’t have such a crystal ball.

    • Konrad says

      Hi Victor, I’m in quite similar position (31 years, European citizen – living in Poland).

      I’m not trying to time the market (after reading multiple blogs like Jim’s, books and also after having bad experience with trying to) and my asset allocation is as follows:
      80% in Vanguard FTSE All-World ETF (“VWRL”) via Euronext Amsterdam stock exchange,
      20% in certificates of deposit in polish banks (paying about 3% right now minus 19% tax).

      The simpler, the better.

      Good luck.

      • Baytep says

        Hello Konrad,

        No idea if you get a notification of this reply, so it might end up in the digital twilight.
        On Dutch FI forums the VWRL is the ETF of choice since the EU banned the use of VTI/VXUS.
        To get the most of your investment it is important to compare brokers, as the combination of broker fee and ETF TER gives you the best option.
        Lately there are some large banks also offering very low fees in combination with the Northern Trust funds
        see also
        (Dutch, but tables should make sense)

        For non residents in the US it is also important to check what can be done against dividend leakage. This should be taken into account when choosing broker and fund.

        It all makes for a nice puzzle!

  61. Vanessa says

    Hi Jim,

    I recently discovered your blog and am blown away by the wealth (pun intended) of information that you provide. I have read most of the stock series and strongly suspect that when I am in my 50s/60s I will accredit most of my financial success to your writings. Thank you so much for all that you do to educate others! And now for my question…

    I am 21 years old, about to graduate college, and currently have about $55k sitting in cash (with no debt). I have a full-time job waiting for me after graduation that pays $70k annually. Even though I strongly believe that we will be entering a recessionary period soon, reading your blog has taught me (among many things) that I can’t time the market and should just invest all of the $55k in VTSAX now (which, admittedly, makes me cringe). When I start working, I plan on saving at least 50% of my salary every month (about $2000). But here is where I am unclear– should I always immediately invest the $2000 every month? Even throughout the inevitable market crash? Or should I accumulate cash to buy during dips?

    Any advice is much appreciated. Thank you again!

  62. Raj says

    Hi Jim,
    i am 33 years old and recently discovered about FI and index fund, i am thinking about investing in index fund but i am confused about do i put more money in my 401K ? currently i am putting 6% that is max for the company match,Do i open roth IRA and put money there before investing in index fund ? or do i just start putting as much money as i can on index fund? My goal is to retire by 45. I also have a HSA account but haven’t put much money there.Thank you for your service and information you provide.

    • jlcollinsnh says

      Hi Raj…

      If you scan through the Stock Series posts, you’ll find ones on both 401Ks/IRAs and HSAs.

  63. Peter John says

    Hi Jim,

    Very interesting post! Would adding Vanguard’s Total International Stock fund VTIAX accomplish the same as using VTWAX?

    Is there any benefit of VTWAX over VTIAX? Also, what percentage of a portfolio would you consider for international funds?

    Thanks so much!

    • jlcollinsnh says

      Thanks Peter!

      Adding VTIAX to VTSAX in a 50/50 balance would give you about the same as VTWAX. You’d also have a slightly lower combined ER.

      But if I were to add international, I’d keep it simple and just use VTWAX.

  64. SB says

    Hi Jim,

    Great article, blog and book. Your book has truly shown me the light!

    Would you be able to point me to references for your comment in the article above about “Research shows an 80/20 allocation closely tracks the performance of 100% equities over time. Occasionally it even slightly outperforms.”?

    I’m at a point right now where I’m trying to decide on my portfolio’s bond allocation, and would really like to see some of the research behind the 80/20 allocation. I tried doing some quick Googling, but wasn’t able to come up with anything substantial, so I may just have been searching in the wrong places. Appreciate it.

  65. Brian says

    Hi Jim,

    Hoping all is well. Re-reading through your Simple Path to Wealth. Just two quick questions.

    First, I have a Roth IRA. My wife is going to roll over her 401K, and she had hers through Fidelity. Would you recommend rolling hers into the Fidelity Total Market Index Fund (FSKAX)? Trying to think along your lines here.

    Second, would you recommend that we put money into a taxable investment account? We have some money we wanted to invest in a non-retirement account (we will be receiving a rather large sum coming up in the next year through family). Would you recommend just opening a Vanguard (or Fidelity) account and putting the money into the Total Market Index Fund, and putting left over money monthly into that?

    Overall, I think I am on the right track here, but maybe looking for some slight guidance and wisdom before pulling the trigger on it. Only debt we have is our mortgage.

    Thank you Mr. Collins for your insights.

    • jlcollinsnh says

      Hi Brian…

      1. I use Vanguard exclusively and am not a fan of Fidelity as they offer index funds only as loss-leaders. However, their index funds are fine and many people like them.

      2. Sure, but first (unless you are in a very low tax bracket) I would fully fund my tax-advantaged accounts. You can find more on this in my post on 401Ks & IRAs.

  66. Nate says

    Human nature can get in the way of doing the “right thing”. I’ve been all in on the total stock market index for six years since I graduated. I find it interesting in the comments seeing people that say something like “I like you’re strategy Jim but I’m doing X”. X is often market timing. It’s a terrible, terrible thing. It’s much worse if you get it right once or twice because you’ll be a market timer for life. If you’re going post anything that starts with “I know you can’t time the market but…” Don’t invest and re-read the entire stock series.

    I hear the same tired excuses of P/E ratios, market highs, hedge fund managers. No one knows and the market has a mind of its own. I pick my allocation (100% total stock market for now) and forget about it.

    When I retire, I’m going to decrease my allocation to stocks. While I’m working, I’m too lazy to change an already perfect strategy. Thanks again Jim for everything you do.

    • jlcollinsnh says

      Well said, Nate!

      Always nice to hear from someone who gets it. 🙂


      ” It’s much worse if you get it right once or twice because you’ll be a market timer for life.”

      …applies equally to stock pickers.

  67. Stefan says

    Hi – Love the book, blog, audiobook, and everything else. My question is is it worth for any reason to consider the VTI (VTSAX as EFT) vs. the VTSAX the mutual fund? Could there be tax differences?
    Let’s assume there is no apparent reason on why to choose one over the other why would Vanguard create a VTI?

  68. Ran says

    Hi Jim,

    Big fan of you, your book and this blog, (all required reading in our household) it’s changed my life. Thank you for all you do and the immense work that has gone into this endeavor. Nate summed up my thoughts.

    All the best

  69. Brian says


    I think I know how you would answer, especially since I am reading your book, but I want to inquire anyway. Here is the brief snapshot: my wife and I (with 4 children) are in our early 30s, debt free except our home, and I am earning around $69,000 annually. We have just about $30,000 saved, half in my IRA and the other half in my wife’s IRA.

    Within the next year, we are going to be receiving a lump sum of money from our family. The low end of this will be $100,000. It is very likely to be higher, but I am just going to be conservative for the sake of simplicity.

    I was going to max out both IRAs for that year, and then put the rest in a VTSAX taxable account. In your talk at Google, you said if you were given $100 million, that you would put it in VTSAX. So I have my Jim Collins cap on, and I am thinking to put the money into our taxable VTSAX account. Any additional thoughts or corrections?

    Thanks so much. I have sent the book to numerous friends and co-workers, and it has changed their lives. Most of them went and switched the 401ks to Vanguard, and the VTSAX! How awesome.

    Thanks again,

    • jlcollinsnh says

      Hi Brian,

      Thanks for your comment!

      Mr. Collins is currently traveling and unable to respond just now.

      We find for most questions, he has already covered the topic. Using the Search button might very well provide your answer. If not, please post your question again after October 15, 2019.

    • Jason H. says

      I’m not Jim, but If I were in your situation, I would max out any tax-advantaged accounts I had access to first. Including IRA’s, ROTH IRA’s (at least you’re only paying taxes once, eh?), 401(k)’s (by diverting more of your paycheck there, relying on the cash in hand in its place), HSA’s, and THEN put the difference in a taxable investment account (where you are taxed multiple times).

      Those are the investment buckets. Within each bucket, Jim advocates for VTSAX, or the closest equivalent low fee broad based index fund. (S&P 500 index funds are a pretty close equivalent, and you can almost always find one as an option). If you need an ETF equivalent, VTI is the ticker. BND is the VBTLX equivalent ETF, if you’re looking to balance your stocks with a percentage of bonds.

      – NOT Jim.

      • Brian says


        Thanks for the reply and very insightful!

        I wanted to ask an additional question that anybody can answer that may have some insight. Is there any significant difference between the Vanguard S & P 500 index fund Admiral shares vs. the investor shares? Since I just opened my Vanguard account, it says that I am not able to invest in the 5oo index fund investor shares, but only have the option of doing the admiral shares, or the 5oo index fund as an ETF.

        Any thoughts on this are greatly welcome!

        • Luke says

          Hi Brian,

          With Vanguard the Investor Shares have a lower minimum investment requirement, but a higher expense ratio than the Admiral Shares. Looking at the Vanguard website it looks like VFINX (Investor Shares) is closed to new investors.

          VFINX (Investor Shares) – Expense Ratio: 0.14%

          VFIAX (Admiral Shares) – Expense Ratio: 0.04% and $3,000 minimum investment requirement

          VOO (ETF) – Expense Ratio: 0.03% and is sold by the price of one share

          I don’t know enough about ETFs to help you out past that information, but good luck on your journey!

  70. Brian says

    Dear Jim,

    I know that you are invested in VTSAX, and we are as well. My Personal Capital account says that I would be earning more doing the Total Stock Market Index Fund ETF (VTI). Comparing them, however, they seem to be practically identical.

    Your thoughts on this are welcome, or any insights from anyone that is willing to share. Thank you!

    • jlcollinsnh says

      Hi Brian,

      Thanks for your comment!

      Mr. Collins is currently traveling and unable to respond just now.

      We find for most questions, he has already covered the topic. Using the Search button might very well provide your answer. If not, please post your question again after October 15, 2019.

  71. Trey says

    Hi Jim,

    First off, thank you for creating (and continuing to contribute to) your Stock Series. I originally read through your posts about a year ago after beginning full time work, and have implemented your strategies as well as strongly recommended your articles to family and friends.

    Your mention of there being examples of 80%/20% Equity/Bonds outperforming 100% Equity have stuck with me (though I’ve stuck with 100% equity over the past year). Could you post links to the research you’ve seen that’s been most helpful in explaining how the 80%/20% can occasionally outperform?

    Along the same lines, I’ve given a lot of thought to the Trinity Study you mentioned in one of your articles; unfortunately I believe the study only lists the percentage of portfolios that last for 100/0, 75/25, 50/50, 25/75, and 0/100 – the 75/25 seemed to be the strongest at a 4% WR, but was wondering if you have seen any research into what specific percentage (to the nearest percent) has had the highest success rate.

    Thanks again for all your help along the road to FI!

  72. Robin says

    Hi Jim,
    Just returning to south Florida yesterday. Thank goodness we were spared. Those poor people in Bahamas!!!
    I too have the same question as Trey. We are just about to retire and was wondering what studies show what ratio has the strongest success rate for a 4% WR besides 75/25. I’m not sure our risk tolerance is that high. Thanks again for all you do. Just bought my 7th book to give to family members! I hope they heed your advice!

  73. Cameron says

    I plan to keep most of my assets in a Lifestrategy- like Growth ETF (I live in Canada). It will maintain an 80/20 AA.

    I see this as a forever fund. I can pass this onto my children.

    I plan to keep about 5-10 years living expenses liquid.

    When I delay my government benefits to 70, my SWR will drop in half.

    This way the children/ spouse can also just keep the fixed 80/20 AA going.

    They just have to watch their cash/ liquid positions and not have to watch the stock market.

    I think this would help with behavioural errors.

    My simpleton take on this.

  74. Kristin says

    I have recently read an article on Bloomberg (and this article referenced by NPR claiming index funds are becoming a new bubble, mainly by Michael Burry and a few others that I’ve read about. Do you see any truth in this? I understand any involvement in the stock market has its risks but just curious what your thoughts on overvaluations of index funds, especially as more people start investing in them, are. Thank you for any insight!

    • Kristin says

      You may of ignored this comment anyway but I read the Mr. Money Mustache post addressing this and my concern (or more so just lack of understanding) has been calmed. Thanks

  75. Bill Yount says

    VTWAX/VT with evidence based paired strategic beta asset class tilts (LCV/SCV, EM/IntlSC, US REITs/IntlREITs) for a 7 equity asset class forward rebalanced with DCA contributions portfolio run at 75/20/5 (Eq/Bnd/Cash) while in accumulation and folded into VTWAX/VBTLX/Cash at 70/20/10 in the 3-5 years before full retirement is my plan. Thank you JLCollins for your wisdom. Buy the world economic engine and hold it for generations.

  76. Ryan says

    Quite timely that I found this post tonight. Read the book a few months ago. We’ve been using Vanguard’s Personal Advisor Services for the past two years. Started reconsidering after reading the book. Just did a deeper analysis of their current allocation of our assets (rounded):
    – 55% VTSAX
    – 30% VTIAX (Total International Stock Fund)
    – 10% split evenly between VBTLX and VTABX (International Bond)
    – 5% between short and intermediate term Admiral Shares.

    VTIAX is practically comparable to the bond funds. What’s the point? Feels like too much of a hedge. So I am now thinking:
    – a) Drop out of the Personal Advisor Services (That’s going to get more and more expensive as my funds grow).
    – b) Reallocate to something like 80% VTSAX and 20% in some combo of VBTLX and VTWAX. I’m 42, and my wife is 40.

    Thanks Jim for keeping it simple!

  77. rishit kanchan says

    Hey wonderful post, you have explained everything very nicely. Each and every point is explained in a proper way so anybody could understand very easily. Your way of writing a post is very good and I can see by reading your post that you have a lot of experience in blog writing. I just have a small request, I have also written a blog post and it would be very helpful for me if you would just read it and tell me your views about it and suggest we ways to improve my post or blog.

  78. Jeff says

    Dear JL,

    Regarding bonds and if I were to add international stocks, where do you recommend putting them? Traditional IRA, Roth, or taxable accounts, and in which priority? I’m unclear as to what is best long term with the tax free gains of stocks vs the tax free dividends of the bonds in the tax advantaged accounts, the foreign tax credit, etc.

    If it matters, I am 40, so have 30 years to go before my RMDs.

    Warm regards,

  79. Mario says

    I invested my Roth IRA in vanguard target date fund 2045. I’m thinking to change my investment portfolio to a 2 or 3 funds portfolio. I’m thinking to go with VTWAX 90% 10% VTBLX or VTSAX 70%
    VTIAX 20%
    VTBLX 10%
    I’m 40 years old.Any thoughts?

  80. Derek Ketcher says

    I made it…35 blog posts and I am kicking myself for not educating myself sooner, but hey at 33 now is better than ever to get my financial house in order.

    I am still a bit confused since I live in Canada (I am a US citizen though). I have a good amount of money in my RRSP (401k Canadian twin brother) which I can invest pretty much in anything I want which is very nice. I was looking into everything vanguard offers…

    Would it be beneficial to stick with something like the VFV.TO since it is in CAD? Or should I just convert to USD and dump it in the VTSAX? Or is there a better Canadian Vanguard option?

    Like the Ronco Rotisserie I want to, “Set it and forget it”.


  81. Tarheels>BlueDevils says

    This was a fantastic series!
    As a 25 year old shoveling the majority of his income into VTI every month, I thought I had it all figured out. However, the stock series really helped to crystalize my thoughts on personal finance and the role that money plays in all of our lives.

  82. Brad Beckstrom says

    Love this idea. Not too long ago I reduced bond holdings to 20%. I added 20% international.

    The only challenge I have is that many international index funds have a very high correlation to VTSAX. I took a look on Portfolio Visualizer and VTWAX has a very high .99 correlation to VTSAX.

    I would look at an international index fund possibly not including US to lower the correlation and balance this out.


  83. Mark says

    TWO things, emphasis on #2:
    1. I know I am getting lost in details here, but looking at ERs, why bother with VTWAX? They are charging pretty much the same ER of VTIAX (0.11 vs 0.10) but half of VTWAX is just VTSAX (0.04 ER), but for the higher 0.10 ER of WTWAX. …So why not just achieve your domestic/international balance exclusively through VTSAX and VTIAX, for example, instead of 80:20 VTSAX/VTWAX, do 90:10 VTSAX/VTIAX?
    2. Also, I am curious, looking back on your post now, after the close 2020 election, Trump’s calls to Brad Raffensperger in Ga, Jan. 6, etc… how close to you think the US came to a more precipitous decline, or how much higher is that risk still, and what is your current US / international investment ratio?

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