Let’s talk about what’s up with Bonds, and what ever else you’d like to ask me



Guess I should be used to it. Every time the market drops, the flood gates open with questions and concerns.

Still it surprises me. After all, I have written extensively about bear markets…

…to name a few.

The message is always the same:

This too shall pass. Stay on the path.

I’ve even provided a guest post with an investment strategy that avoids stocks altogether for those who simply never want to deal with Mr. Bear:

This time, most of the concern is around what’s up with bonds falling along with stocks. So in this post, I’ll respond to some of the typical questions around those I have gotten so far.

Then, if you’d like, Ask Me Anything in the comments and over the next couple of days I’ll do my best to answer. After that, not so much. (Dec 3: We’ve reached the “not so much” stage on questions.)*

My thanks to my pal Go Curry Cracker for this idea which I got from his recent Ask Me Anything post.

And let’s get started.

“Is it different this time?” 

No. And yes.

No in that every market drop runs its course and then recovers. Some fall deeper than others. Some take longer to recover than others. Now, like every time in the past there is no way to know.

As always, my advice is to stay the course and keep buying as you were before. A bear market is a gift that allows you to buy shares on sale.

Everybody makes money when the market is rising. But what determines whether it will make you wealthy or leave you bleeding on the side of the road is what you do during the times it is collapsing.

And yes in that what triggers each market drop is always something different. Last time it was covid. This time it is being triggered by inflation. Unless you are old like me and were investing in the 70s and early 80s, you have no personal experience with inflation. As you are learning, it is ugly and it hurts everyone.

This is why the Fed is aggressively raising interest rates, which is exactly what they should be doing in my opinion. My fear is that they will bow to political pressure and ease up too soon. But, so far so good.

This political pressure comes because raising rates causes short-term pain and we are very likely headed into a recession. This is why the stock market is falling, it recognizes that the talk of a “soft landing” is a fantasy. 

Why are my bonds dropping in value? I thought bonds were supposed to go up when stocks fall, or at least hold steady.

Ordinarily, you’d be right. But there is nothing ordinary about inflation. It messes with everything, including bonds.

Given inflation, there is nothing surprising happening with bonds. In response to inflation the Fed has been raising interest rates. When interest rates rise, the price of existing bonds drops as newer, higher yielding bonds are issued.

If you want to know more about how these things work, here is…

 my primer on Bonds.

The good news is that, if you hold your bonds in VBTLX (or a similar broad-based, low cost total bond market index fund) as I recommend, eventually the newer, higher-yielding bonds will make their way into your portfolio and the interest rate it pays will also rise.

“Why are my bonds doing worse than my stocks?”

“However I find myself having to sell stocks to buy bonds at the present to reach my target allocation.”

“The bonds that are supposed to be the stability pillar of any portfolio are doing worse than stocks.”

Recently, VTSAX (stocks) is down ~25% and VBTLX (bonds) is down ~15% YTD. 

If your bonds are down more than your stocks, you have been chasing performance with you bond allocation. I advise against this:

The Bond Experiment: Return to VBTLX

“…are we just seeing the end of the allocation principle theory?”

Of course not. Here’s why:

Are Bonds Done?

In fact, even with all the noise in the markets this year, my allocation has only moved a couple of percent more to the bond side. Hardly enough to bother rebalancing. 

As I have written before, we consider rebalancing each year on my wife’s birthday. I say “consider” because the allocation rarely diverges enough to bother.

“JL is quiet on this matter of bonds for some reason.”

Because JL has already written about it extensively. (See the links above)

OK, to calm your nerves I’ll leave you with this…

…and on to the comments.

Ask me anything!

*Dec 3

OK all…

As I said above in the post: “Then, if you’d like, Ask Me Anything in the comments and over the next couple of days I’ll do my best to answer. After that, not so much.” That was on Oct 21st and it’s now Dec 3rd. So, we’ve reached the “After that, not so much” time.

Feel free to continue to post your questions and while I won’t be able to respond I encourage long time readers to weigh in with their thoughts.

Thanks for all the questions!

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  1. Cathy says


    Thank you for the post! I’ll ask! My bond fund is down. Wouldn’t I be better off building a bond ladder to lock in returns versus having my bonds in a fund? Ty.

    • jlcollinsnh says

      Hi Cathy…

      Building a bond ladder is certainly an option, but it doesn’t fit with The Simple Path I espouse here.

      Not sure what bond fund you have, but VBTLX will be fine as a long-term holding.

  2. Jason says

    I really enjoy your commentary. As a new investor, where would you recommend putting investments in terms of index funds when they have increased so much since 2017-2018 and could have more room to decline (i.e., not just the technology ETFs, albeit VTI and VSTAX as well)?

    • jlcollinsnh says

      Hi Jason…

      My go to stock fund is VTSAX or a similar total stock market index fund. S&P 500 index funds are fine too, as are the ETF equivalents of both these.

      Doesn’t matter how the market has performed in the last few years.

  3. roxborg says

    Thanks for the reminders to stay the course. It’s a bit nervewracking but I keep reminding myself this is a 10 year + game and I’m only in year 4.

    I’m on the lookout for an online financial advisor / competency course in the spirit of your book / teachings and general FI principles. Any suggestions from you or your readers are appreciated.

    • jlcollinsnh says

      None come to mind, but this time next year my new book Pathfinders should be out. It tell the tales of many different people who have taken the principles of The Simple Path to Wealth and applied them to their own unique situations. Perhaps that will help?

        • jlcollinsnh says

          Hi Zack…

          This is my favorite question so far. 🙂

          Pathfinders, the new book, should be out around this time next year. It should be easy to find as we plan to do plenty of promotion announcing it. (unlike the zero amount I did with my last one: How I lost Money in Real Estate Before it was Fashionable 🙁 )

          There are no plans to have a mailing list to sign up for notifications, but that is a great idea I’ll suggest to the publisher.


          • Zach says

            Hahaha I am honored.

            I have read plenty of investing books in the past but yours was really the one that tied it all together and got me started in my investing journey. I still follow the advice to this day and bought several copies for friends and families.

            Yes please have a mailing list go out for the new book, or at least put a few plugs in your current mailing list (that I am already signed up for), which is how I found this post!

            Would love to pick up or pre-order a copy.

            Thanks for the post on bonds and linking some of your older content that is relevant on the subject. Big fan.

          • Chris says

            Multiple moving ads, and constantly adjusting/changing their position makes the site very hard to view… for those of us who who have been here for a decade and have bought the book, is the extra cent worth the degraded user experience?

            Are there other options for less intrusive ads?

          • jlcollinsnh says

            Thanks for the heads up, Chris. I don’t see that looking at the site myself, but I know how irritating it is when I am on others.

            The team is in the process of completely reevaluating the design and revenue model here, with an eye towards a better user experience.

            Please bear with us!

  4. Pedro says

    Thanks for the good post as usual. For your case for VBTLX, I wonder if these funds will keep bonds until maturity (to allow for price recovery) or will they sell some bonds before maturity to maintain its maturity allocation. If the latter, under the current scenario, they would be definitely taking longer to recover, would they not? Wouldn’t you be better off keeping a bond ladder (i.e. iBonds) in an inflation decade?

    • jlcollinsnh says

      VBTLX would only sell bonds if they needed to cover redemptions. This is a small risk. short of that, they hold them to maturity.

      A bond ladder might work, but would take more effort than The Simple Path I espouse.

  5. Dan says

    I’m sorry but you have written about bonds extensively but never ever described something like it’s happening now. My TLT is down 30%+. Your book doesn’t say a word about stocks and bonds sinking together. I’m sorry but this post also didn’t help much!

    • jlcollinsnh says


      If you have read my post in the stock series on bonds and/or the chapter on bonds in my book, you should know how rising interest rates affect bonds. I even covered it again in this post.

      In investing in TLT you have chosen to do exactly what I advise against. Again as I mention in this post and in the post linked to with that mention.

      Not sure how to help when you are not listening.

    • Curt says

      Mr. Collins, I find your posts and book to be helpful. I’ve pointed many to your stock series. Although I am staying the course I recently changed course slightly. Before interest rates started rising I decided to time the market. I decided I want to take my risk in VTSAX and VTIAX so I sold all my VBTLX and bought the G Fund. As a former military member I had access to the TSP. Anyway, I was wondering about your thoughts on the G Fund in general? And what are your thoughts about a 3 Fund portfolio with the G Fund as the only bond holding holding? Thanks for your time and I look forward to reading your reply!

      • jlcollinsnh says

        Hi Curt…

        Any particular reason you posted this as a reply to Dan?

        The G-fund, which is only available to government employees as part of their TSP, is a short term treasury fund. Basically cash as with a savings account or money market fund. In general, I am a fan of TSP and the G-fund is fine. Plus, if you switched to it from VBTLX before interest rates started up, you have dodged the bullet of declining bond prices.

        Because the G-fund is short-term, interest rates will have little effect on its value. That’s great when rates are rising and pushing down bond prices; not so much when rates are falling and pushing bond prices up.

        If you understand and are comfortable with this, the G-fund is a fine companion to your two stock funds.

      • Brandon says

        There is a retired Air Force officer by the name of Rich Carey that has been promoted here. He has a blog by the name of richonmoney.com that may by more TSP specific. He is a big proponent of real estate, but in emails he promotes maxing retirement account before even thinking of real estate.

  6. Anonymous says

    I can ask you anything? Even if it’s shamelessly specific?

    I came into $63K just after COVID and I put it in the Wellesley Fund as my Bucket #2 (a la The Retirement Manifesto — since it was bond-heavy and presumably “stable”).

    Well, it’s down about 13% since I bought. So I’m trimming my expense sails to try to keep from tapping it while it’s down, but do you have any recommendations? I still have a couple of years in Bucket #1.

    Also, I *must* do $15K IRA conversion to Roth, to generate a taxable event so can qualify for my ACA insurance. What should I sell? I’m 55% stock and 45% bonds – and I’m comfortable around there. Do I sell pro rata?

    And should I tax loss harvest the Wellesley to convert more? If that’s a good move, what should I move the Wellesley into?

    • jlcollinsnh says

      Sure you can ask anything, but there might be limits as to how helpful I can be. Especially in sorting out what you might do using anther strategy.

      I’m not sure what bucket #1 & #2 refer to, but I am guessing that #1 is cash for immediate expenses? If so, and since you have a couple of years in it, just keep drawing on that.

      Wellesley is a well regarded fund, but it is actively managed and so not one I would choose. As an “income” fund it has served you well in this market being down only ~13%.

      If you want to harvest the loss, you might go into VBIAX which is Vanguard’s balanced index fund.

      “Also, I *must* do $15K IRA conversion to Roth, to generate a taxable event so can qualify for my ACA insurance.”

      This doesn’t make sense to me and I thought one wanted the lowest taxable income for the best ACA rates. But to answer your question, sell whichever keeps your allocation best where you want it.

      Good luck!

      • Anonymous says

        You’re a dear! And yes, Bucket #1 is the cash-to-live-on bucket, and #2 is what I’m supposed to use to fill #1 back up. I just wasn’t expecting it to go down (silly me).

        As for the ACA, yes, you want to keep income low, but a lot of people don’t know that you have to have a *minimum* income to qualify at all! If you don’t have poverty-level “income”, you’re forced to apply for Medicaid.

        But the work-around is to convert enough money (about $13-$15K for a single) from a traditional IRA to a Roth, to create that taxable event on your 1040. So it looks like you made money — and you can qualify to buy a policy from the healthcare marketplace.

        I was just thinking to magnify the amount of money I convert by tax loss harvesting the Wellesley. So thanks for your suggestion.

        And thank you, thank you, thank you, for everything you’ve done JL.

        Your voice of reason, your FREE (and BRILLIANT) financial education is one way I know if someone is worth listening to — if they promote your book before they try to send newbies (like me) elsewhere, … Shoot, you even produced a guided meditation! You’re a helluva guy. (I don’t care what everybody else says; LOL)

      • Liana says

        If one’s income gets too low, one is disqualified from ACA enrollment and forced to apply for Medicaid instead.

  7. Drew says

    Can you share your thoughts on iBonds in addition to VBTLX? If I have an extra $20K annually, thoughts on $10K of iBonds and $10K of VBTLX in the years ahead? Any concerns of iBonds over the next few years?

  8. Vorlic says

    Hello Mr Collins,

    Still here, still sane (just!) and still buying.

    Any question?! OK, here goes – have you heard of BSV (the one and only Bitcoin)?


          • Joe says

            Yes “Satoshi Vision” – sorry, misspoke. Doesn’t matter, “value” or “vision” the fact remains it is definitely NOT what Satoshi Nakamoto’s “vision” ever was and instead is a complete scam coin being pushed by one of the world’s most extreme pathological liars, Craig Wright – who has virulent narcissistic personality disorder and who claims to be Satoshi Nakamoto, yet has consistently failed to present a single shred of evidence to that fact every single time he’s brought legal action. He keeps trying – and failing in court. So instead, he’s decided that pump & dumping a scam coin “BSV” is his way toward wealth and fame. A sad road to take, but nonetheless, it has probably been somewhat lucrative for him because, let’s face it – there’s a sucker born every minute…

    • jlcollinsnh says

      Hi Jen…

      When I said ask me anything, I didn’t expect to be given homework. 😉

      I only had a chance to skim the article before MarketWatch started pestering me to subscribe, but I think I got the gist of it.

      He actually anticipated and dealt with most of the objections at the end that occurred to me as I read it.

      Not developing the habit of saving, missing out on compounding, etc.

      He is assuming a very low interest rate, but of course that is changing with the current inflation. More importantly he glosses over the power of investing as opposed to saving.

      It is an interesting perspective and worth thinking about, but in the end it strikes me as mostly theoretical. Truth is, once people get used to spending all of their paycheck they are unlikely to develop the saving habit in later years. Spending is a tough habit to break.

  9. Gabriela Martinez says

    Mr. Collins,

    Greetings from London.
    I’m newly introduced fan after I gobbled up your book. I went with Vanguard right away, which has slightly higher costs for the US Equity Fund (equivalent of VTSAX) here in UK vs in US, but we can have tax-free ISAs (equivalent of IRAs) up to 20k/year (which is more than IRAs in US I believe). Considering these facts, should I always max my Vanguard ISA account before putting more money into my company-driven pension pot or something else? Do you still suggest to have 5-10% cash if you’d be in your late 20s and are thinking long-term?


    • jlcollinsnh says

      Hi Gabriela…

      I’m afraid I just don’t know enough about UK pension and ISAs to comment. Perhaps another UK reader will have something to offer.

      As for cash, I don’t recall suggesting holding 5-10% cash at any age. Cash is idle money and I like mine working as hard as possible. You should hold some as an emergency fund, but how much depends on factors like, do you have…

      -A non-working spouse
      -An insecure job
      -An old car likely to need repair
      -A house

      Anything that is likely to spring sudden cash needs on you.

      • Gareth Ghost says

        I’m from the UK. If your company matches your pension contributions, you’d be better off funding the pension over the ISA. It’s free money. You also get tax relief (and don’t pay National Insurance) on your pension contributions. Especially valuable if a 40% taxpayer. However, an ISA is more flexible as you can access the funds any time you want/need. Hope this helps.

      • Beyond Barefoot says

        Hi JL – a few thoughts on the UK in the hope it may assist…

        First, I’m assuming Gabriela is:
        – A vanilla UK tax resident, not an ex-pat or caught up in any tax complicated multi-jurisdictional tax arrangements (hello USA!)
        – Is employed by someone else rather than self-employed
        – The money to invest is surplus to the factors you have already flagged.

        If so…

        Many people like to ‘salary sacrifice’ into their pension pot if they can afford to (up to a max of £40k/annually – sometimes known as a ‘SMART’ scheme). This reduces income tax, National Insurance and remains untaxed until it is withdrawn. https://www.gov.uk/workplace-pensions/what-you-your-employer-and-the-government-pay

        If you are lucky enough to have more than £40k surplus in any year, or have any sort of unexpected windfall *outside* of your salary, an ISA is the only game in town.

        If you are still going after your £20k annual ISA allowance is maxed, it’s back to general investing. Needless to say, it can still be the same tried and tested Vanguard approach, but these funds will be subject to capital gains and other taxes that don’t count within the ISA tax wrapper.

        The only riders I would add to the vanilla scenario would be:

        – Expats should check whether a pension pot ‘traps’ their money in the UK until 60+ if they ever move home
        – Self employed folk outside of IR35 often don’t take anything more than a minimal salary. An ISA can often be easier and less costly to administer unless you are committed to locking up all of most of £40k annually
        – Many self employed are working through umbrellas or other inside IR35 arrangements these days however, in which case, the vanilla scenario probably makes sense.

        As always – DYOR – good luck!

  10. Francis says

    Thank you so much for your work. I guess what people want is a post reassuring that “this time, it’s NOT different”, even if covered in multiple posts before. No question on my end, I stay the course and buy and chill. But appreciate your post today anyway!

  11. Loran says

    Hi Mr Collins,
    I realize this may be a very simple (and possibly dumb) question but I am new to the investing and FI world. Should investing as your plan suggests be done in place of or after retirement accounts are set up? I have a state pension through my employer but I am currently in the process of researching options for my husband (and additional funds for myself). Should we have a Roth IRA (or something similar) set up for him before we follow the investing plan or would we be safe to put our extra income into the index fund as you recommend?

    Thank you so much for your time.

    • jlcollinsnh says

      Hi Loran…

      Not a dumb question at all, but it is a broad one not easy to answer in a brief comment.

      Pensions, 401Ks, IRA and taxable investments are all part of the mix.

      Before making these decisions read through my Stock Series here on the blog and/or The Simple Path to Wealth.

      • Jenna says

        If I may pile on… I think I recognize one of my own prior misconceptions in Loran’s question. I am one of those Mr Collins recognized as never wanting to spend the time to understand “all this financial stuff” or indeed even realizing it had any applicability to me.

        If I’m right about your question Loran, what I learned is that there is really a second decision after deciding to invest your money in index funds:

        1. What type of investment – this is where the Simple path recommends index funds.

        2. What type of account to buy those index funds in … 401k, IRA or taxable accounts can all be used to purchase/hold index funds instead of the alternatives (individual stocks, target funds, active managed funds etc).

        So once you decide whether you should setup an IRA first, you can then buy index funds in *either* that IRA (up to the contribution limit) or a “normal” taxable investment fund (no limit). Or both.

        While learning about all this, I highly recommend Mr Collins’ Simple Path to Wealth book – much of the advice is here on the blog too but the book structures it in a way that I found very helpful, it builds slowly from simple to more complex advice.

  12. Randy says

    You’re the best!

    Quick question: I’m 80% index funds and 20% individual stocks.

    I would like to be 100% index funds, but right now, my individual stocks (the biggest holding is Tesla) are down about 40%, while index funds are down about 25%.

    Should I wait for my stocks to (hopefully) recover before selling and buying index funds? My thinking is that when they recover, they’ll possibly go up faster than index funds, but maybe this is not the greatest way to think.

    The reason why I feel queasy about selling the individual stocks right now is that I’d be locking in a 40% loss. How would you approach this? How should I think about asset allocation when I want to change it, but everything is down right now?


    • jlcollinsnh says

      Thanks Randy!

      Your question is a good illustration as to why I am no longer a stock picker. Too many impossible decisions to make.

      Tech stocks, like Tesla, lead the recent Bull and so lead the recent Bear. It is tempting to assume they will lead the way back up when the market returns. And they might. Especially if tech is the leading sector next time around. But, of course, there is no guarantee of that.

      Holding on to your tech expecting that outperforming rebound is an interesting speculation. But I am not a speculator.

      If you want to be 100% index funds, move to 100% index funds and don’t look back.

      That’s what I’d do.

  13. Prob8 says

    It’s always nice to see one of your posts in my inbox. I hope you are well! I was a little surprised that you received so many comments about the bear market. Then I remembered that this may be the first time many people have seen what an extended downturn looks like. In one of your posts you said, “[T]he ride will be very rough at times…If you are not tough enough to stay the course, if you get scared and bail when the storms are raging you are going to drown.” Those words were true then and now. Personally, I’m enjoying buying at the lower prices. I hope the other readers are too.

    • jlcollinsnh says

      Always nice to see one of your comments show up here, Prob8!

      I try to remind myself that what we take in stride is very new and scary for newer investors. I wonder at times if people can learn by reading that these things are normal and will pass, or if they have to panic, sell and then watch the market recover without them for it to sink in.

      With my writing I hope to save them from that expensive lesson. But then I read a comment like Dan’s and realize that won’t happen for everyone.

  14. Matt says

    Mr Collins,

    Awesome job as usual and thanks for your time and effort.

    As it pertains to the current situation no one knows the future. Staying the course is always the best advice but with the current down turn in US stocks and bonds do you have any insight into adding more investments abroad? I certainly agree if you invest in US large cap via your recommend funds you are also investing abroad but should we allocated a larger percentage in your opinion? I currently have only 10% if that via 401k and am comfortable with that.

    This great buying opportunity is welcome and hope the future plays out as the past.

    Thanks again, Matt

    • jlcollinsnh says

      Thanks Matt…

      …your kind words are much appreciated.

      As you suggest, I don’t feel the need to hold international funds for reasons I discuss here: https://jlcollinsnh.com/2012/09/26/stocks-part-xi-international-funds-2/

      The largest of those, as you indicated, is that in a fund like VTSAX I hold the largest US companies and those are international in nature. So, I’ve got international covered.

      There is nothing in the current downturn that would make me change this approach.

      However, it is based on the US being such a dominate portion of the world economy. The USA is the only country with an economy large enough to invest only at home. If I lived anywhere else, as I tell my international audiences, I’d be in a world fund.

      When the time comes that the US is a smaller fraction of the world economy, I’d look at a world fund.

      I don’t see this happening in my lifetime, but I’m in my 70s. I do tell my daughter to keep an eye on it.

      • Laura says

        Hi there,
        We are planning on taking a sabbatical (inspired by you) starting next summer. We have no debt and have been pumping money into retirement and VTSAX. We’re wondering what the best way to prepare for that sabbatical given the current economic climate? Should we continue to stockpile cash (our current strategy) or do some other strategy? (We have 4 young children)
        Also, would you have done anything differently during your sabbaticals if you had to do them again? (In any aspect, not just financial)

        • jlcollinsnh says

          Hi Laura…

          Almost missed your comment tucked in here under the thread with Matt’s. 😉

          Yes, I would continue to stockpile cash for your sabbatical. The thinking here is the same as for saving for any other purchase: That is money that needs to be available to you. It is not investment money, which is money you plan to keep invested for decades.

          Interesting question as to what I might have done differently. Probably travel more. Mostly I wish I had had more perspective on them. No one else I knew at the time was doing such a thing.

  15. Mark says

    Hi Mr. Collins,

    I’m 55 years old and retiring from the federal government in 15 months. I currently have 1.2 million in a 70/30 allocation. I don’t plan on touching this money when I retire as my pension should be enough for now. Would you recommend this allocation and if not what allocation would you recommend?


    • jlcollinsnh says

      Hi Mark…

      You can think of your pension as filling the role of bonds. So then the question becomes what do you want the 1.2M to do for you and your heirs.

      The traditional school of thought says that you’ve won the game and don’t have to play anymore. With that thinking you’d step away from risky stocks into less risky fixed income. Of course, this would reduce your portfolio’s growth over time but you’d have less volatility.

      Another school of thought says, since you’ve won the game you can play even more aggressively. With this thinking you tilt heavily into stocks and reach for maximum growth. If the market moves against you, it doesn’t matter as you’re covered with your pension.

      Your call.

      My preference, not that it should matter to you or anyone else, is the latter.

  16. Daniel in Las Vegas says

    Hi Mr. Collins. All the advice I read online preaches holding the bond fund portion of one’s portfolio in tax deferred accounts for tax efficiency purposes. My question is, if I’m aiming to retire in my 40’s, do I buck that tax efficiency advice and hold a portion of VBTLX in my taxable brokerage account if I want access to draw from it (particularly during stock market downturns) before traditional retirement age allows me easy access to my tax deferred accounts? One more question, if I’m aiming for a somewhat more conservative 2.75% to 3% max withdrawal rate throughout the entirety of retirement, do you think it might (no guarantees obviously) sound reasonable to forgo bonds altogether and stick to the Wild Wild West ride of a portfolio composed of 100% VTSAX ? Thanks so much in advance!!

    • jlcollinsnh says

      Hi Daniel…

      1. Typically it does make sense to hold bonds in tax deferred accounts for the reason you mention. But, sure, you can hold VBTLX in your taxable account to have ready access to it. Especially since once you retire and presumably your income drops the tax hit won’t be such a big deal.

      2. Again, sure if you are sure you have the stomach for the volatility. What’s going on now is a good test.

      VTSAX pays ~1.5% in dividends so with your projected 2.75% to 3% withdrawal rate you’ll only be selling 1.25% to 1.5%.

  17. Fortuna says

    Hi JL,

    I think this will be the first time I have ever commented on a post. But I have read them all and bought your book. Since you asked for questions, here is one, I have my opinion but why not hear your take. I am in Canada so bear that in mind however I still buy a broad market bond fund (VAB) from Vanguard. My question is for now I have some new money add to Fixed Income and since we may still see some interest increases why not just by a GIC (called CDs in the US?) since they are paying 4% with no interest rate risk of capital loss. And that rate is about the same as the YTM for VAB. They are not as liquid sure, but I can commit to a 1-year term so not an issue. This may seem like a dumb question but there are some writers who are against the idea of a GIC and now that rates are higher, I cannot see why? If you have to add to your bonds at this time what are the downsides to a sure thing?

    • jlcollinsnh says

      Hi Fortuna…

      With the caveat that I know nothing about Canadian investment options, based on your description I agree: buying the 1-year GIC is fine.

      Other than you’ll have to decide what to do with the money again in a year and if interest rates rise during that year you’ll miss out, I don’t see a problem.

      Not a dumb question at all. 🙂

    • Sandra says

      I’m no expert but if it isn’t tax sheltered (RRSP, TFSA) then GICs are less tax efficient than dividend paying stocks or ETFs. Interest is taxed fully so depending on your income and marginal tax rate, you might only keep 2% of the 4%. If you invest in a dividend paying stock like one of the banks, the tax rate is significantly lower – typically get 4% dividend payout understanding the stock value could go up or down. It’s really down now so I’m considering buying these types of stocks (stock picking, uh oh! don’t shoot me JL) assuming they will spring back to their old value as we move out of the bear market. Or you could buy an ETF, lower dividend rate (depending could be 1% to 2.5%) but you get the upside of the stock market when it rebounds. Selling some of the ETFs, you’ll only get taxed on the capital gain (50% of the gain is taxed, depending on your marginal tax rate it could be 25% or less of the total money you make). Taxes are tricky so it makes it really complicated!

      • jlcollinsnh says

        Not gonna shoot you, Sandra 🙂 …

        …but I will point out there is never any guarantee that any individual stock will spring back at all, let alone to their former value.

        VTI, being self-cleansing, will.

  18. Mike says

    “The good news is that, if you hold your bonds in VBTLX (or a similar broad-based, low cost total bond market index fund) as I recommend, eventually the newer, higher-yielding bonds will make their way into your portfolio and the interest rate it pays will also rise.”.

    But after a 15% nominal drop with 8% inflation it means the real value of money invested in those bonds lost about 22%.

    While true that new bonds are yielding more they are still lagging inflation.

    I’m other world VBTLX might never recover in Real terms.

    I wish this was explained to people in a better way. Individual TIPS ladder and Ibonds wouldn’t have this problem.

    • jlcollinsnh says

      Hi Mike…

      You are assuming inflation will continue to rise without end, dragging interest rates along with it. If you are right our problems will be much greater than the price of VBTLX. This is similar to the assumption people are making when they panic during a stock market plunge — they fail to see the market will turn and rise again.

      When inflation comes down, so will rates and then bond prices will rise and VBTLX will recover. If you have been buying shares and/or reinvesting the dividends you will benefit even more. Just like staying the course in VTSAX.

  19. Joe says

    I recently got 200 000 to invest. I’m 53. I sat on it for a bit as the market was dropping. I didn’t want to get burned investing right before a crash as that happened to me before. Although the market is down considerably, it has been practically vertical for the past 10 years on free money, so that made me nervous that even though the market is down, there may be considerably more to go to bring things back to reality. I finally decided that I should put at least half of it in with the market down 20% so I don’t miss a recovery. I am still sitting on the other half because of all the talk of recession.

    My idea is to sit on the 100 000 and DCA in if it keeps dropping along with my monthly salary investment.

    If the market doesn’t go down but instead goes back to a bull run, at least I had the 100 000 in already to gain some benefit and not feel like a total dumbass.

    Does this makes sense? I am trying to hedge both possibilities.

  20. Yucheng says

    Thank you JL for your post! It’s reassuring. I love your book and I watched your 1-hr interview on Talks at Google at least 10 times. I was able to hold the course during covid and I shall do the same this time!

    May I ask what your take on US Government debt is? It always goes up but how will it end eventually? I am curious about your prediction. Thank you!

    • jlcollinsnh says

      Hi Yucheng…

      When I read “May I ask what your take on US Government debt is?” what flashed through my mind was “Don’t get me started…” LOL

      Truth is I am horrified by our national debt which has now topped 31 Trillion Dollars. That is a breathtaking, unimaginable about of money and yet our politicians talk about spending even more. In the last decade this debt has doubled. That’s 15 Trillion spent in 10 years.

      If you want to know why we are facing this inflation, it is this huge influx of money created and flooded into the system. Everything else, the war in Ukraine, the supply chain issues, etc are just minor kindling in this gasoline dump of debt.

      How will it end?

      It depends.

      Will the Fed stay the course and keep raising interest rates until inflation is under control, or will it succumb to the political pressure to ease too soon?

      Will the politicians finally realize that spending money you don’t have, no matter how good the cause, will lead to disaster?

      Beats me. But this is the one thing that keeps me up at night and tempers my otherwise optimistic view of our economic future.

  21. BG says

    Thanks for everything you do JL!
    Perfect timing for “ask anything” – in particular from a European perspective where we often have to “interpret” VTSAX into similar alternatives.
    An added layer of complexity is the strong US dollar versus the EURO (and DKK where I come from) meaning that the current discount on the global index funds will more or less evaporate if and when the US dollar is bouncing back to more normal levels as – most global funds all have a strong overweight of US companies.
    I am so fortunate to be in possession of a significant windfall – but also totally confused about how to invest it…(?)

  22. Eddie says

    Still buying 100% VTSAX every two weeks when I get paid with as much as I can squeeze out. My shares are stacking up. I’m 53 and not in panic mode. Really I would like the market to drop more so I can collect more shares. Been on the path ever since I started reading you blog six years ago. Also read Just Keep Buying by Nick Maggiulli.

    • jlcollinsnh says

      Hi Eddie…

      One of the often missed aspects of market declines is the wonderful buying opportunity they provide.

      Like you, I’d also like to see the market drop even more. Among other things, it creates a more advantageous environment to convert stock like VTSAX in IRAs to Roths.

  23. John says


    Thank you for doing this! I’ve been comatose during this sell off – thank you so much for helping me get there! But I’m less sanguine about geopolitics I suppose.

    When you see the actions of Russia emboldened by what they believe is a decline in America’s role in the world (not too mention China’s support (miscalculation?) that emboldened Russia in Ukraine), does that cause you to reevaluate your investment solely in US equities? I’m 41 and have spent my adult life in the US military, so I recognize that I could suffer from some form of anchoring bias in my feelings about the country. Accordingly, I sometimes wonder whether it wouldn’t be more prudent to invest in a total world fund like VT and let the chips fall where they may. I know you’ve addressed this question on VT in comments before, but I don’t think in the past two years where I feel like much has changed (Covid, Jan6, Ukraine and so on). Buffett says never bet against America, and I tend to agree. But if the US is a receding superpower as someone like Ray Dalio might have us believe, what effect do you think that could have on US equities writ large?

    • jlcollinsnh says

      Hi John…

      I appreciate your perspective, especially given your years of military service.

      For what it is worth, I think recent geopolitical events have strengthened the US position as the world’s most dominate superpower. Briefly, here’s why:

      —Despite my concern over our debt (see my reply to Yucheng) most of the rest of the world is on that same path and the US is by far in the strongest position to deal with it.

      —The US dollar remains by far the world’s strongest currency and is in fact the world’s currency. This is all the more remarkable in that so many countries in the world would prefer this were not the case.

      —Russia may have been emboldened to invade Ukraine in a perception of a declining America and NATO, but what that invasion has shown instead is just how weak Russia actually is.

      —This Russian experience is likely not lost on the Chinese as they look to Taiwan. It is a lot harder to invade across the sea and there is the serious risk of losing face if it doesn’t go well. That could break Xi Jinping’s hold on power. Plus there is really no way to seize Taiwan without destroying the golden goose.

      —Xi Jinping is tightening his grip on China and in doing so is pulling back from capitalism. Communist countries are prosperous in direct proportion to how freely they allow capitalism to flourish. This, combined with China’s other serious internal issues (A billion people still living in poverty for one), may well make for a very difficult future for them.

      Of course, if Putin turns the war in Ukraine into a nuclear conflict and/or a Chinese invasion of Taiwan triggers a major war in the East, things will get very ugly indeed.

      Investing in a world fund might makes sense as the rest of the world grows and prospers and the US share of the world market continues to decline, as it has since the end of WWII. But I don’t think we are there yet.

      • John says

        JL, thank you for taking the time to respond to my question, and thank you simply but profoundly for everything you’ve done to educate investors including me. You’re more appreciated than I’m guessing even you know.

  24. Joanie Greenberg says

    I read that Paul Krugman thinks the feds should stop raising interest rates because of the lag effect. If they keep raising rates, the economy will collapse. What does that mean? It scares me, since we are 70 and don’t have a lot of time to recover. I know other economists have warned of a market collapse too. Please explain what that would mean. We have all our money in vtsax and vbtlx and a few holdover individual bonds.

    • jlcollinsnh says

      Hi Joanie…

      Paul Krugman is one of those economists who believes there is no limit to our ability to spend (see my reply to Yucheng) and he can’t wait to get back to it.

      As I’ve said already, the idea of a soft landing is a fantasy and a recession is definitely in our future. I doubt it will be a collapse. That is panic talk from the likes of Krugman to scare us away from the medicine we need to take.

      But it could be ugly, and there is no question that will hurt a lot of people. But inflation hurts everyone and uncontrolled can destroy every thing. Think Venezuela, which BTW had one of the strongest currencies in the world back in the 1950s.

      Inflation is the disease brought on by too much money pumped into the system. Higher interest rates are the medicine and if it tastes bitter don’t blame the doctor.

      • Harvey09 says

        Dear JL,
        Sorry I was in a hurry and was not sure if I would miss the window to do a post. I mainly wanted to express my gratitude for all the information you have shared about financial subjects. I think you have true gift to be able to communicate so well (speaking and in writing). Thank you for sharing this gift.

        Normally I would be in the camp to stay the course and buy more when the market is down. However, at 65 it is interesting how ones perspective starts to change. I understand things will likely come back (hopefully) but it is a little scary to think how long that might take and in the meantime the impact on being able take advantage of saving now vs having to wait. I have noticed you responded about this to at least a couple others and so I will read those posts and your responses closer. I just wanted to thank you again for all you do. It has helped me a lot.

        Best regards,

        P.S. Thank you for looking into the pop up ad issue. I think that will really help for reading your website.

        • jlcollinsnh says

          Good point, Dan.

          I think a lot depends on whether you are looking at your investments serving you only during your lifetime or if you are planning for them to serve your heirs as well.

          • Harvey09 says

            Hi JL,
            Ideally I (we, my wife and I) would like to enjoy more now and as part of that provide gifts to our heirs while we are living as best we can. For planning, I used to use a default of living to 100 but that is probably too conservative (unfortunately). Vanguard used to have a calculator for estimating longevity for a single or married couple but they took it off their website. I would appreciate any insights you have about how to determine a number (age) to use for planning purposes.

            Thank you,

  25. John says

    This years market drop has coincided with recently paying off my house and becoming completely debt free. Thanks to your work I can see the blessing in both events while having the knowledge and fortitude to stay the course. Pursuing FI (and Simple Path to Wealth) has helped me to grow in many unexpected ways beyond the accumulation of wealth. I am grateful.

    I just updated my investment contribution rate to over 50% of gross income and I suspect that the next bull market cycle will propel me to my FI number sooner than later. Do realize however when this happens I will be upgrading my fanboy membership card to an in person Chautauqua event to thank you in person. You’ve been warned!


  26. RB40 says

    Wow…a cranky JL Collins tell us much about the state of the US economy and the market itself !
    Biden is killing this country. I’m keeping tabs of how many billions he gives out on a daily basis and it’s honestly shocking! I wonder how long it will take for the US debt rating to be cut again!

  27. Daniel LasVegas says

    Hello Mr. Collins. Looking at a mid 40’s retirement. Comfortable w/h extreme, Wild Wild West portfolio volatility. Can I bypass VBTLX altogether and just continue to hold 100% VTSAX if the withdrawal rate I’m aiming for is a somewhat conservative 2.5% to 3% max ? Thank you in advance!

    • jlcollinsnh says

      Hi Daniel…

      Given your tolerance for volatility and your very conservative planned withdrawal rate, I’d say – Sure!

      VTSAX pays ~1.5% in dividends these days so, at your projected withdrawal rates of 2.5% – 3%, you would only be selling 1% -1.5% of your shares each year.

      Keep in mind this runs counter to the thinking you’ll find anywhere else. Most would be horrified. For what that’s worth.

  28. Markola says

    Hello Jim, I hope you are well.

    I don’t own any Treasury Inflation Protected Securities (TIPS), which I thought were invented to outperform during exactly our current market. However, VIPSX is distinctly “meh” over 1, 3, 5, 10 or whatever period. I thought that index fund’s underlying TIPS were supposed to adjust? Or maybe they are adjusting but the performance is still “meh”? What do you think? Cheers to you.

    • jlcollinsnh says

      Thanks Markola…

      …hope you are as well.

      I’m afraid I’ll not be much help with your question.

      I’ve never really seen the appeal of TIPS and so haven’t paid much attention.

      That said, I agree that this seems like the environment for which they were made. If as you say there performance is “meh”, my question would be:

      If not now, when?” 🙂

  29. Kathy D says

    Hi Mr. Collins,

    Thanks in advance for your reply. I don’t have anything in bonds right now. Perhaps I should have moved some over when the market started to drop but I just stayed the course. We are 50 with 2 kids in HS. We are living in CA so we can’t seem to get ahead with COL. We are not from here, came for husbands work but trying to find a way to move East for lower COL. Income is around 200K, rent of $2500, car pmt of $485 and no other debt. Hate the car payment but my husband commutes 3 hrs a day so we had to get something more reliable.

    Our Rollover IRA is at 165K, down from over 200K over the past year. I have a current employer simple IRA at 10K (investing at 3%, 3%match). These are fidelity accounts and all in FSKAX.

    My husband has a 401K with current employer that’s at around 5K (4% wiht 4% match I believe). Only $17K in cash savings in an Ally account.

    Would you diversify into bonds at this point? Any general big investment goals you would suggest we aim for? I know we need to increase cash but fixing our old paid off cars over past 2 years has eaten up some of our savings.

    Staying the course but needing to up my game too 🙂


    • jlcollinsnh says

      Hi Kathy…

      Adding bonds is always an anchor on performance over time. If I were in your situation I would be looking to pick up as many new shares of FSKAX as possible with the market down and putting them on sale.

      As for investment goals, longer term of course FI. But that can feel very distant.

      What is much closer is the improvement you see along the way. Keep in mind that with every step on to journey you increase your financial strength.

  30. Paul says

    Hello JL,

    I know you hear this all the time but you have helped me in my investing unbelievably and this I cannot thank you enough. I have been following your advice and The Simple Path To Wealth for 6 years now and absolutely love it. I am currently at a 90% VTI, and 10% (Bonds split between BND and TLT) which I am looking to sell and get to 100% VTI. TLT was something I had before reading your book and website. We all know that it is a great time to buy :).

    I have 2 simple questions:
    1. I have an emergency fund and business emergency fund now (mainly in case the gov’t decides to try shutting us down for any reason). Where would you place this money in to get some sort of return?
    2. When would you sell off the BND and TLT funds to buy VTI? Right now both of mine are sitting at a loss and was thinking of holding until they come up a bit. But in saying this, I know this is “trying to time the market”. My guess is if I am going to sell then do it now, and be done with it.

    • jlcollinsnh says

      I do Paul…

      …but I still appreciated you saying it too. 🙂

      1. An emergency fund needs to be there when you need it and that means keeping it in cash: Savings account, money market fund, etc.

      2. If you have decided 100% VTI is where you should be, now is the time. That would be my answer regardless of what the market was doing. But seeing as VTI is down more than BND (not sure about TLT) all the better.

  31. sam says

    Big fan, JL! I was “retired” during covid. With everything down, how should I fund my life? Portfolio: 30%VBTLX (8 years of spending), 50%VTI, 20%VXUS. Hoping I don’t have to go back to work!

  32. Another formerly NH yankee says

    Love your writing, JL! You e helped simplify my investing and life! My question is for my 79 year old retired mother. Her modest wealth is in VTSAX and VBTLX (when she widowed several years ago simplified her investments). She needs to sell some to live off these investments. Which should she sell, or both? And sell at what frequency? Thanks!

    • jlcollinsnh says

      Thanks NH-Y!

      If your mom is happy with her target allocation percentages for her VTSAX & VTBLX, when she needs to sell some to live off I’d just choose the one that is slightly too high to bring them more closely into alignment.

      If they are already in alignment, just alternate between them.

      As for frequency, whatever works best for her: Quarterly or monthly.

  33. Joe says

    Hi JL,
    I’ve always appreciated your perspective. I have a question (at the end) but first, some macro context for that question: Ray Dalio speaks very convincingly that we are at the end of a long-term debt cycle and the beginnings of a great monetary reset. The US’ current dominance on the world economic stage really does seem to be an inherited “exorbitant privilege’ – being able to print at-will, what is still (but perhaps not for long?) the world’s global monetary reserve asset. OPEC and Russia desperately want to get away from the petro-dollar and the only reason they haven’t yet is because a suitable alternative hasn’t emerged. Will it be China’s Central bank digital currency (CBDCs) forced down the throats of oil rich nations through its Belt and Road initiative? Will it be Bitcoin? When the war in Ukraine first kicked off, the US froze Russia’s holdings of US Treasuries. This was a clear signal to Russia and other large economies (both friend and foe to the US) that holding US Treasuries only offer shelter as long as they stay in favor with the US. If the Fed has to re-start QE again…who in the heck will be buying – where is the demand? Every country is now aggressively pursuing their own (CBDC) and aside from all the dystopian consequences of that, the fact remains that it is very likely we will be transacting in a new “Fed-coin” instead of the greenback by the end of the decade. Given all of this, even if we do manage to avoid WW3, it would seem that the 4% and the 60/40 rules of investing are relics of a bygone era and maybe not the safest/simplest path to wealth as we head into this fourth turning. A hefty mix of VTI/BND still does seems to be the default safe choice for the vast majority of our respective net worth. BUT, in light of this macro picture, wouldn’t you agree that it probably makes sense to put more of our net worth into hard assets like real-estate and alternative assets like Bitcoin?

    • jlcollinsnh says

      Hi Joe…

      First, apologies for not getting to your comment sooner. I just rescued it from the spam folder.

      I mention that as I have already given my geopolitical take in response to another comment and so won’t repeat it here.

      In short, my guess is the dollar will remain the world currency and the US the world’s leading superpower. So VTI/BND, the ETF versions of VTSAX/VBLTX remain my core holdings.

      Investment RE can be very profitable if you want to be in that business and take the time to learn to do it well.

      Bitcoin, in my view, is still far to volatile to serve as a currency (Witness how disruptive 8% inflation is) and thus remains a speculation. That is to say it is bought in the expectation someone will pay more for it in the future. I am not a speculator.

  34. Jason says

    Thanks for the book and all the great info over the years. I’ve recommended your information many. I am usually 95% some combination of VTSAX and S&P500 (TSP). With increased strength of the dollar, would it be a buying opportunity to direct new 401k contributions (for a couple of months day) to an international fund (such as EFA) thus arbitraging currency a
    advantages of USD? I wouldn’t move any current investments around, just use new earnings to invest. Time horizon is 12-15 years until I would need it. I realize this goes against the simple path, but I was curious about your take. Thanks!! —Jason

    • jlcollinsnh says

      Thanks Jason…

      …I appreciate you sharing my work!

      What you are suggesting is a speculation in currencies, and you are correct: Speculating is not part of the Simple Path.

      That said, if you want to add international to your portfolio, while I don’t feel the need, I am not against it.

  35. Julie says

    Hi JL, firstly I just want to say thanks so much, your book & blog have made a massive difference to my life. I have been a star pupil, and a diligent follower of your advice.

    My question is how can I get excited again about investing in the current climate? I was 2 years away from FI at the start of the year, I continue to invest but all the excitement has gone now this is being pushed out.

    I try focussing on getting on with my life but I have put in so much effort to get to where I am now (I earn an average wage) that I am deflated.

    • jlcollinsnh says

      Hi Julie…

      Thanks for your kind words, and I am sorry to hear you are feeling deflated with the current market. That can happen, especially when you focus on the dollar, or in your case Pound, amounts in your account.

      I still remember when I was first learning to drive over half a century ago, the instructor saying “Aim high in steering.” This meant, don’t fixate on the road immediately in front of the car. It comes at you far too fast and it is far too late to do anything about that. Rather look far down the road at the bigger picture that actually matters.

      As long as you stay the course and follow your investing discipline, market drops are gifts.

      Focus on the number of shares you own and how now each pound you invest buys more.

      Thanks — I love your question. It is a reminder of how important our mindset is to successful investing.

      Relax, and enjoy the journey.

  36. Enda says

    Hi JL,

    Thanks for all of the great information you provide.

    My question relates to real estate and negative real interest rates (aka financial repression). I understand that you don’t view real estate as a great investment and that it should be viewed as an expense which can provide lifestyle benefits. But what of the current scenario where many homeowners have 30-year fixed rate mortgages below 3% and inflation is running above 8%. Isn’t this a powerful (and leveraged) long-term wealth accumulation? Particularly if inflation remains elevated for many years. I’d love to know your views on this.

    Thanks in advance,


    • jlcollinsnh says

      Hi Enda…

      Your thinking is spot on.

      Inflation is very bad for lenders as they get paid back with dollars that buy less. It helps borrowers because they get to pay back their debt with cheaper dollars than those they borrowed.

      Anyone with a low interest loan in a high inflation environment is well served by paying it back as slowly as possible.

  37. The Crusher says

    JL – Thank you for a very timely and reassuring post. It is always a pleasure to devour all that you share.

    We retired early (age 56) right into the teeth of this bear market. Less than ideal timing but then again if a person waits for “the perfect time”, the will never pull the trigger. 🙂

    I have read much of your work and find it a great blueprint for success. I personally adhere to the spirit of The Simple Path but can’t help but tinker under that umbrella (I Bonds, Treasury Bills, etc) in an effort to juice return without taking on additional risk. Don’t you ever feel the urge to tinker a bit??

    • jlcollinsnh says

      Thanks Crusher…

      …love your take on timing.

      At this point I have almost no urge to tinker. But for most of my investing life, I was a stock picker and tinkering all the time.

      Even in the early years after I embraced indexing, I still fooled around with some individual stocks. As I have said, I have the disease. 🙂

      But it has been years now.

      Most of this was with stocks rather than bonds, but I also experimented a bit with them as described here: https://jlcollinsnh.com/2017/12/20/the-bond-experiment-return-to-vbtlx/

      These days I shake my head at the time wasted for lower results.

  38. Lee says

    I have been following your advice since reading your book maybe a year after it came out. I had read others but the two most influential and beneficial books were, Jack Bogles ” The Little Book of Commons Sense Investing, 10 th anniversary edition and , of course ,yours. Jacks mostly the theory and some practical and yours mostly practical with the best interpretation and useable description of the theory. Thank You! It completely changed my life around , gave me a very clear direction, and has proven to have been for the extreme better!

    Now my ? I have been considering doing some smallish Roth conversions but do not have the cash for paying the taxes except in my brokerage account. All my funds are 100 %VTSAX ( had some Primecap but years ago you gave me the slight nudge to switch to only VTSAX in my rollover IRA, TY ! That proved to be the right move ! ) Back to my ? Does it make sense to pay the taxes from the VTSAX in my brokerage account to do the Roth conversion ? Or am I just kidding myself that would make much ,if any, difference?

    • jlcollinsnh says

      Thanks Lee…

      …I always love being mentioned in the same breath as Jack Bogle. 😉

      Interestingly, I am planning to do exactly the same with some Roth conversions and, like you, both my IRA and my Roth IRA are in VTSAX. So the investment will remain the same, only it will go into the Roth bucket.

      Because I want as much as possible going into the Roth, I plan to pay the tax from my brokerage account. This will require selling some VTSAX from there, which will create tax loss I can then use against my taxable income and carry forward.

      Finally, with the market being down, this conversion will have a lower tax due than it would have when the shares were priced higher.

      In case this is confusing…

      Let’s say I have 100 shares of VTSAX I want to move to the Roth. A year ago these would have been worth ~$115 a share or $11,500. At the moment they are worth ~$91 a share or $9100. So moving them today I only have to pay tax on $9100 rather than $11,500.

      This is one of the reasons I’d actually like to see the market drop a bit more.

      • Lee says

        Ah ! , that makes perfect sense. I am very glad I asked. I guess it is a guess ( market timing ?!? ) to know when to pull the trigger. Less concerning to me than that is I am a bit hesitant / unsure knowing how much and when. The when being what time of year. Is that a common problem ? And knowing what ones tax bracket is and how much one can convert to not allow that to happen to such extent that you push yourself into too high a bracket. That is another complication I am trying to figure out and answer. I have been working on a semi-retired level in my own small business. So I can keep my income on the lower side and thinking doing so will enable me to convert more at the lowest possible tax bracket. So I am trying to factor that in. Would you think also that the time of year one chooses to do so makes any difference ? Meaning relating to the tax year ? But thank you for answering my ? as to using a brokerage account to accomplish paying the taxes for this process. Hope this is not too confusing to you , it is to me !

  39. RSmith says

    Hi, JL Collins!
    After reading your book I am fully funding my 401K (Fidelity Total Market Index Fund) and Roth IRA (VTSAX), which puts me in the 12% federal tax bracket. And I’m only 37 so I’m 100% stocks and not worried about bonds! 😉 Given the current bear market I’m wondering if I should change my 401K contribution to a Roth 401K which would put me in the 22% tax bracket. Because I’m buying stocks on sale it seems like a Roth 401K might make sense. Or would I be better off with a traditional 401K and putting the federal tax money I save in a taxable account?

    Also, your advice helped me purchase my brand new Subaru Crosstrek in January 2022. It was a delightfully easy process, $27,089 out the door including tax and registration in Arizona. Meanwhile, the car market was in flames because of supply chain issues and many people were paying a lot more. I had been driving a 27 year old high mileage Volvo and had no intention of buying a new car but because of supply chain issues I couldn’t source parts for a major engine repair and used Subaru Crosstreks were selling for more than I purchased new.

    Your advice has been invaluable to me and even if you have no advice on the Roth 401K I just wanted to say thank you for everything.

    • jlcollinsnh says

      Hi RS…

      Deciding between a Roth or deductible 401k is both incredibly complicated and very simple.

      The simple part is the math and the question: Will you be in a lower tax bracket when you take the money out?

      Here’s a nice description of the math:

      “As an example, consider an investment of $10,000 invested for 20 years with a 7% return taxed at 25%.

      “A traditional account would allow you to defer taxes and invest all $10,000. After twenty years, this would compound to $38,697. After paying 25% tax, you would ultimately have $29,023.

      “A Roth contribution would be only $7,500 after paying 25% tax on your original $10,000. After 20 years, your $7,500 would grow to an identical $29,023. You could take this amount from the account tax-free.”

      As you can see, whether the market is down or not won’t matter, you’ll get the same market return either way.

      That quote above comes from this excellent post: https://www.caniretireyet.com/roth-vs-tax-deferred/

      and that post provides a great overview of the issues to consider in the Roth vs. traditional decision.

      Great to hear about your new Subaru! Ours is coming up on her 3rd birthday already. 🙂

  40. Matthew Nixon says


    Just want to say thanks. Your book and insight have changed my life. Buying VITNX through my company’s plan every week and I’m LOVING this bear market. What a gift to provide all this knowledge for free. Thanks again!

  41. John says

    Your comment is awaiting moderation.

    Hi JL,

    Thanks for all the investment advice throughout the years.

    A few different questions I hope you don’t mind the bouncing around. I’m 95%+ VTSAX at 38 y/o with a substantial balance and a large government pension that starts at 50 y/o. With a guaranteed pension do you think I should go 100% VTSAX and don’t worry about the bonds? Or should I start balancing my holdings with some bond exposure?

    Second question: what are are your thoughts about the security of stocks and vanguard in regards to the future technological innovations? I know that over the past 100 years things are still the same and the market has been through a lot (wars, recessions, etc) however we are at a time where technology is anticipated to increase exponentially in regards to the digital age and with digital comes a more rapid speed to innovation and potential disruptive technologies. Are you at all concerned about an alternate form of currency or alternate forms of value that disrupt traditional investment methods such as stocks and that impact?

    Lastly: Do you keep any printouts of your vanguard balance? As a vanguard holder that is set to paperless statements (and with a significant amount of shares), if they were to lock me out of my account and deny my membership and holdings what recourse would I have? I love Vanguard, and I could get a lawyer I know but what kind of receipts or proofs do you keep on file?

    Thank you for all you do.

    • jlcollinsnh says

      Hi John…

      1. Yes, you can think of your pension as serving the same role as bonds in your portfolio. Whether you should go 100% VTSAX depends on how big that pension is and tolerance for volatility. Since you are already at 95%, my guess is that tolerance is high.

      2. Haven’t thought about the impact of future tech, but my guess is that Vanguard and the other investment houses are keeping a close eye on it. An alternative form of currency would simply mean an alternate way to value the percent of your ownership in the companies in which you hold stock. That wouldn’t impact stocks as an investment vehicle.

      3. Nope. Maybe I should. But even then should they lock you out you’d probably need a lawyer. I see the chance of that as being remote and I can’t think of a good protection. I know some agree that this is a reason to hold assets in more than one investment firm. I guess that’s what I’d do if I felt the need.

      Hope this helps!

  42. Uri says

    Hello JL,

    Thank you for sharing your wisdom.

    What do you think of the following 2 alternatives to improve the returns, and reduce the risk of a portfolio:

    1) Instead of buying SPY,
    sell a cash secured put on SPY, 2% to 10% below the market price, once per month, and in case of getting assigned, sell a call (covered call), above the SPY market price, until I stocks end in the money, and I repeat the process…

    this is not good for tax, but in my experience, it can produce a few % more than buying SPY, and reduce the risk, since if I got assigned, it’s below the price that I should bought SPY…or not get assigned, even than the SPY was down this month, but end above the strike price…

    2) For a bond portfolio, international bonds in USD (EMB) or high yield bonds (HYG)


  43. Todd R Garrett says

    Uncle Jim ~

    Just reminding you that your wisdom and experience is what I come here for.

    No questions from me, just a ‘Thank you’.

    – Todd

  44. Beth Fairbanks says

    Hi JL,
    Many thanks for all your columns over the years—I’m pretty sure I’ve read every one. This column is especially relevant as I’ve been struggling with some of these same issues. I’ve noticed that since I’ve gotten older, my risk tolerance has fallen. In 2000 and in the last recession, I just lowered my head and stayed the course—but I was still working. Now that I’ve been retired for 11 years and just turned 70, I feel that I should dial back risk even though, with two modest pensions and social security that easily cover all my expenses (everything paid off, including the house), barring something unforeseen, I won’t be touching my retirement savings (approximately 60/40 stocks/bonds, all in Vanguard) except for RMDs. I am also not buying in this market, even though I know it’s the smart thing to do, because if the market stays down for a while, as it has done in the past, I might not have time to recover. Should I be more conservative, to allay my fears of running out of money if I have a big medical emergency not covered by insurance? Or should I somehow talk myself into not being such a scaredy-cat?

    • jlcollinsnh says

      Hi Beth…

      First, congratulations. With your paid-off house, pensions and SS able to “easily cover all my expenses” you have won the game. 🙂

      As I mentioned in replying to another comment above, since you are not dependent on your investments, this gives you two options:

      1. You can stop playing, i.e. stop investing in stocks and bonds. You have earned the right not to have to think about this stuff anymore. Rather you might embrace the approach described in this guest post: https://jlcollinsnh.com/2017/09/09/sleeping-soundly-thru-a-market-crash-the-wasting-asset-retirement-model/

      2. You can play the game more aggressively, increasing your stock allocation.

      My guess is #1 would be best for you.

      This is assuming you are only concerned about this money during your lifetime. If you have heirs you’d like to leave it too, you might just keep your 60/40 allocation and let it ride.

      And, stop worrying about it. This is a nice balanced allocation that should do just fine.

      • Beth says

        Thanks so much for the advice. I also re-read the guest post and many of the comments, all of which was helpful, too.

  45. Vince says

    Hi JL,

    Many thanks for what you wrote on this blog and your book!

    I am a recently laid off tech worker who would like to rollover my 401K in Fidelity to Vanguard rollover IRA. My 401K is 100% invested in DSPIX(S&P 500 index fund). I would like to invest 100% in VTSAX once it is moved immediately. Vanguard says it is going to take 2-4 weeks to process the rollover.

    My first question is that during this volatile market, would 2-4 weeks lag period cause any harm to my money pile?

    My second question is that since my 401K is down about 20% this year, is this still the right time to rollover my 401K? From my understanding, if I am reinvesting immediately with similar funds, then it makes no difference. But I would like to hear what you think.

    Many thanks,

    • jlcollinsnh says

      Hi Vince…

      1. It could harm, or help. If the market rises in the time it takes for the rollover, you’ll pay higher prices getting back in. If it falls, you’ll benefit by buying in at lower prices. Problem is, there is no way to predict this. There is also no way around it.

      You might check and see if the funds remain invested in DSPIX during that 2-4 week lag. The shorter the time the less risk.

      2. You are correct: “if I am reinvesting immediately with similar funds, then it makes no difference.”

      Good luck!

  46. robyn says

    Hello JL,

    Cannot thank you enough for sharing your investing knowledge. I truly appreciate you.

    Call me crazy, but I am seriously considering leaving my soul sucking job of 27 years in health care and utilizing the Rule of 55 in 2023. Now might be the worst time to do so given the state of pretty much everything, but I just cannot continue doing what I’m doing.

    Here’s what I’ve saved so far: 1 million in VTHRX, held in my 401k with Fidelity; in Vanguard I have $45k of VTSAX in a brokerage account, and $9k of VTSAX & $49k of COST in a ROTH. My plan was to take out $40k from my 401k (they will withhold 20% for taxes).

    Am I crazy to go ahead with my plan or should I put off retirement till things calm down?

    Thank you so much!


  47. cole archer says

    hi JL, would you mind disclosing your vtsax/vbltx allocation? 80/20? 90/10? I recall reading it a while back but wonder if that has changed of late? thanks so much.

    • jlcollinsnh says

      Hi Cole…

      My current target is 80/20.

      Right now it actually sits at 77/21/2 stocks/bonds/cash.

      It has drifted this way because stocks have fallen more than bonds. So far the drift isn’t enough for me to bother rebalancing.

      I toy with the idea of moving to 100% stocks for these reasons:

      1. Other than our travel, our expenses are covered with our social security income. (modest needs)

      2. There is still a steady stream of book royalties that cover the travel.

      I haven’t done it yet for these reasons:

      1. The royalties feel temporary. But, while book sales are down sharply for this year, they seem to have leveled off and are holding steady.

      2. 80/20 is already a fairly aggressive allocation, which suits me.

      The more the market drops, the more tempted I get.

  48. VS says

    Hi Mr. Collins,
    It is wonderful to see you helping so many with your steady logic and experience. I took to your investing advice several years ago and have happily followed it ever since. I bought copy of your book for my children when I finished reading it. I devote my time nowadays aware but hardly worrying about how the stock market is doing.

    I sold my house, which had been fully paid off, when I moved to another city two years before I retired at 66. I could have bought a house as part of the relocation but didn’t. I put the proceeds from the sale of my last house in VTSAX/VBTLX and have been renting for the last four years.

    Looking at what taxes and expenses totaled for my last house over 20 years of owning the same, my net return from my investment in the house was close to zero (negative 0.3%) and I used 2% as average inflation. So, I recognize housing was not an investment but I lived “rent free.”

    Over these four years, the rent has been $1,700 per month to currently about $2,200. The “effective” rent that I pay varied from nearly zero to currently about $1,500, depending upon how the stock market is doing. I estimate the effective rent by subtracting the returns at the time from the total rent paid.

    So, the picture is a little bleaker at the moment, as $1,500 per month is net expense. However, I like the freedom it brings with regard to travel, not having to worry about maintenance or being tied to a location etc. And you have covered the subject in detail. With my savings, a 4% withdrawal coupled with my social security meets my needs. At almost 69, should I buy a house now or should I have bought four years ago? It is a purely personal/lifestyle decision of course, but I sometimes wonder. Our situations are entirely different but I seek your comment, you being the “Kibanda” owner. I have a deep appreciation of your wisdom and have followed your flawless logic over the years. Thanks in advance for your comments.

    • jlcollinsnh says

      Hi VS…

      As you correctly point out, buying a home is a very personal/lifestle decision. As such it is very hard, and maybe not useful, for me to suggest what you should do.

      I will say, reading your comment, it sounds like you very much regret not buying a house when you moved to your new location. If that is the case, it might be a useful guide going forward.

      Good luck!

  49. Samantha says

    Hi Mr. Collins, I’m a big fan. I was reading your book just last week seeking explanations for what’s happening in the bond market and I failed to find it. I was really waiting for a post about it with details and your very comforting words that the bond market will recover and this also shall pass but I guess this is not it. Maybe bonds don’t behave like stocks that you can count on a recovery, right? What’s your take on it?

    • jlcollinsnh says

      Hi Samantha…

      In my book in the chapter on bonds, I describe what happens to their price when interest rates rise. I do so again in this post.

      Just as bond prices fall when rates rise, so too they rise when rates fall which is what has been happening since the early 1980s until this year.

      Meanwhile, assuming you hold your bonds in VBTLX or a similar fund, as the bonds in it mature they will be replaced by the newer, higher yielding bonds being issues now. You can already see the results of this process in the higher interest rate it is paying vw. that at the start of the year.

  50. Lee says

    Any practical advice on how to stop watching the markets? I don’t sell, but watch the dumb thing all day. I also have about 4% of my portfolio in BND and constantly think about whether to just move it over to VTI. I also have some employee stock options that are about 80% down for the year. I think about what to do constantly, but do nothing.

    • jlcollinsnh says

      Hi Lee…

      Take one last long look at your allocation and decide if it is where you want it to be. If it is, just stop looking.

      If it is not, make the necessary change so it is and then, stop looking. 🙂

  51. Paul says

    Mr. Collins, would you be willing to help me make sense of the “it is a recession or it isn’t a recession” topic?

    The commonly accepted definition is a fall in gdp in 2 consecutive quarters. On the other hand the NBER hasn’t declared it to be a recession as of yet. On the NBER website they don’t commit to any specific criteria/rules in making the determination. (I’m sure they’re incredibly knowledgeable, it just doesn’t seem a useful designation if the criteria can change from one recession to the next)

    Even Wikipedia has had some recent controversy about this topic, with individuals constantly editing the page on recession. In your lifetime have there been other instances where this term has been highly contested or it’s a new phenomenon?

    • jlcollinsnh says

      Well Paul…

      …you’ve got the definition right, but that doesn’t mean that is how recessions are discussed in the media.

      Personally, I don’t much care about how the criteria/rules are being defined, changed or stretched.

      It enough to know the economy goes in cycles and there is a very good chance we are in the downward leg of the cycle right now or will be soon.

      How deep and how long is anybody’s guess.

  52. David says

    Thanks for this timely post!

    My question is related to my geographical location (New Zealand).

    For the bond portion of my allocation (when I retire) would I be better off investing just in the local bond market, or a global fund hedged to our currency? My concern is the lack of diversification but I’m not sure how much of an issue that is when viewing bonds as ballast.

    Best wishes,

    • jlcollinsnh says

      Hi David…

      Since I know nothing about the New Zealand economy or its bond market, I am afraid I’ll not be much help.

      If there is an NZ bond fund with a few thousand individual bonds in it, I might be tempted. But the global fund is probably the better choice.

      Hope this helps at least a little. 😉

      • David Kelly says

        Thanks so much for your reply.

        Most NZ fixed interest funds own considerably fewer than 100 securities in total, so I’m thinking you are correct. But am I also right in thinking that the benefit of having wider diversification outweighs the currency risk? Or have I misunderstood hedging…

  53. Giff says

    I have been only investing in stocks lately, as I am still young and bonds did not yield anything anyway. Maybe this is a good moment to start adding bonds to my portfolio? Assuming inflation will eventually slow down, bonds will appreciate, right? Sounds a lot like market timing 🙂

    • jlcollinsnh says

      Hi Giff…

      Assuming you are working and investing from your earned income, along with being young, 100% stocks in a broad based, low cost index fund would be my suggestion.

      Yes, when inflation slows and rates fall once again, bonds prices will rise. But that is not the reason to add them.

      Here’s my thinking on this:


      If you do decide to add bonds, now is a fine time if you are buying them with your cash flow. If you are selling stock to buy bonds you’ll be selling an asset that is more greatly down to buy one less so. Bad move.

      • Giff says

        Thanks for the reply. Indeed I am still accumulating and the idea would be to start buying (also) bonds, besides stocks and real estate.

  54. David says

    I bought 100k of vbtlx late 2020 and now it’s maybe $83k. I’m mid 30s and thinking I might tax loss harvest to put the vbtlx into vtsax. I have a traditional Ira that I could convert to Roth with the offset or just keep the loss on the books. Anything worth considering with that move? I have roughly 90/10 vtsax/vbtlx but would be more 95/5 if I pursue the strategy. Any thoughts?

  55. jeffrey L says

    JL, what do you think about dividend paying stocks/funds? theres something attractive about being paid a share of company profits without having to sell actual shares of the company. Warren Buffet has spoken well about dividend paying stocks as well ( yes I know even though for his own wife hes recommending S&P)

  56. Patrick says

    Hi JL!

    My wife and I have just recently discovered your book and website. We have been devouring your articles and are wanting to get started ASAP. Thank you for your practical easy-to-understand advice!

    My question is this…she has approx $15k in cash that we would like to invest. My thoughts are to put open a Roth IRA for her and invest it 100% in VTSAX, and possibly rebalance later when the markets go up. Do you think this is a good plan? We are in our mid-40’s, have a higher tolerance for risk, and won’t need the money for another 15-20 years.

    Thanks again!

    • jlcollinsnh says

      Hi Patrick…

      Sounds good to me!

      Not sure how you plan to rebalance, or why. Given your age, risk tolerance and time frame, I’d vote to just keep adding to it whenever you can.

  57. Mikki says

    Hi JL. Thanks again for your insights.
    I use the ETF IUSB for my total bond investments. I had so many problems with Vanguard platform and their support that I moved everything to Fidelity and away from their funds.
    Do you see any differences or downsides of using IUSB instead of BND (or VBTLX for those still in the mutual fund times) ?

    • jlcollinsnh says

      Hi Mikki…

      Like BND, IUSB is a total bond index fund and so they are much the same.

      The only slight downside I see is that at .06% IUSB’s ER is higher than BND’s which is .03%. But as I say, that difference is slight if you are other wise happy with it.

  58. Lauren Ashburn says

    Hi JL! I want to thank you for your book and blog! Your wisdom has inspired me to grab hold of my life and call the shots!

    So I am a newbie. My spouse has an employer sponsored 401K target date fund that is in sight of being maxed out. I just opened a traditional IRA from an old 401k, that I am maxing out set to 90% total stock index and 10% bonds.

    I am feeling pretty warm and fuzzy about those, but already hungry for more!

    I want to invest our money and future contributions in our HSA (which we max out for the family) but I am frozen with indecision on what to do.

    I came across the idea of investing in high dividend funds in an HSA because of the awesome tax advantages. The source I was listening to was into REITs. But I just came across an article about Vanguard High Dividend Yield ETF. ????????

    Any wisdom that might help me decide if I should stick with the formulas within the Simple Path or if I could get a little fancy with the HSA, would be greatly appreciated!

    Have an amazing day!

  59. Steven L says

    Thank you JL for the reminder to ‘stay the course’ in systematic investing. I am hearing “noise” by so many about the bear market and panic selling. Systematic investing into 401k and after tax funds such as the VTSAX or VFIAX is working great for me as the shares are much much cheaper and I will not have to live on any of this money for at least 5 more years! Then I will get into VBTLX (25%) as a ballast when I retire. Many people are not cut out for investing and feel the need to “re-adjust” their portfolio regularly which is the big mistake. Also, financial managers cannot even beat the S&P over a 10 year period so why even consult them? I agree with your long term play on the regular investments and staying the course in these low cost index funds. As Einstein once quipped, the magic of compound interest is the 8th wonder of the world! Thanks again and I enjoyed your book. I keep it in my reference book section because it’s good to review and read it again every few months!

  60. Asim Sheikh says

    Great post as always! I have read multiple articles that state that if you have a managed account, over the long run, those accounts typically lose less in value over a downturn and make slightly (1% – 4%) more, after management expenses, and I have also read that you can do it yourself by simply investing in 2 – 3 index funds and that no one can truly beat the market consistently.
    How would you reconcile these two statements, as they seem to contradict each other?

    The other advantage that I have thought about recently is that it’s a bit comforting to know that someone with more experience than me is managing my account, especially during a downturn, even though I have been in the market for about 25 years, and would say that I have above average investment knowledge. Would love to hear your thoughts!

    • jlcollinsnh says

      Hi Asim…

      Those statements do contradict each other. That is because the first is wrong and the second is correct.

      It might feel comforting to have someone manage your account, but it is expensive. And, all to often, they manage it for their benefit not yours.

      • Asim Sheikh says

        Thanks for the response JL! Great to know that some people still care, as I’ve been to other sites (GRS and Financial Samurai), and there is often no response. Anyway, can you give me a specific example of how they manage my account for their benefit? Are you specifically referring to selling particular stocks/funds over others where they may be a behind-the-scenes relationship (just a guess!)? Thanks again!

        • jlcollinsnh says

          My pleasure Asim…

          …but in fairness to those other sites, most times I don’t answer questions here either. There are just far too many and it takes far too much time.

          The purpose of this post was to open the window for a bit knowing that it would take such time. OK to do once in awhile but a huge burden to try to do all the time.

          Especially as most questions could be answered using the Search function on the blog.

          For instance, entering “Investment Advisors” would take you to this post which has my thoughts on having someone among your account.


          For a specific example, as you asked, they tend to put you in to investments that charge high fees and/sales loads. Plus they charge you 1% or more your assets in annual fees.

          • Asim Sheikh says

            Thanks again JL! I was recently lured into a Personal Capital managed account with the promise of a “free” 6 month trial period to see how they stacked up against an account that was a 60-40 stock-bond index fund split, and even requested that they track this comparison on a monthly basis over that timeframe, and at the end of it, I would make a permanent decision moving forward. After reading some of the articles on your site, and being a bit more educated, I’ll have to dig deeper into the investments that they have made on my behalf, which includes individual stocks, stock funds, bonds funds, gold, REITS, etc. to understand if there are any additional fees/loads associated with any of these investments.

  61. Nel says

    JL — Love, love, love this blog and the accompanying book. I have followed a lot of the advice here within. I recently heard about Vanguard offering fractional shares of VTI and saw that a transferring of VTSAX to VTI is a non-taxable event. Is it worth it to consider this to save the .01% Expense Ratio? Thanks for the guided meditation 🙂

    • jlcollinsnh says

      Thanks Nel!

      You certainly could switch to VTI and, while I also am sure it is a non-taxable event, I’d still confirm that with Vanguard.

      I haven’t bothered personally, but can’t see why not. 😉

  62. Jeff says

    Hi Jim
    I’ve enjoyed your blog over the years and your book as well. I semi-retired about 3 years ago and started a monthly draw from my Vanguard IRA (supplemented by the part time seasonal work I continue to do). I’ve been pulling from the cash portion (I’m 65% VTSAX 25% total bond market index and 10% cash). I’ve rebalanced or taken some profits a couple times to replenish cash. How do you pull your withdrawals? Proportionately from both the stock and bond funds? Or just from stock fund? I don’t recall seeing that addressed in your book – you covered overall withdrawal percentages but not which specific funds to withdraw from. Thanks for all you do.

  63. wallies says

    “There’s no such thing as F-you money, there’s only F-you poverty.”
    Tucker Carlson, Tucker Carlson Tonight 10/28/22

  64. Asim Sheikh says

    Hi JL – in addition, and something that I should’ve asked above in relation to fees: why continue to invest with Vanguard, when there are multiple zero fee Fidelity funds? Wouldn’t it be better to go with, let’s say FZROX (0% exp ratio) versus VTSAX (0.04% exp ratio)?

    Also, is it better to: (1) have an IRA with multiple investment options with a large sum AND a separate 401k with a limited number of options, OR (2) have everything in a single 401k with limited options, given that there is regular dollar cost averaging happening in the 401k with the ability to potentially grow faster than having two accounts? The reason why I ask is that I don’t know if it really matters over the long haul.

  65. Julie says

    Thank you for simple path to wealth… between that, Mike Pipers SS made simple and Scott Burns Couch Potato Portfolio , we felt confident retiring 8 yrs ago at age 61.

    I moved 50% of our bond portion from vbtlx to vtapx because of inflation…the dividends are great, but the value has gone down. I’m wondering if this was a mistake. For the last 8 yrs we’ve kept proportion approximately the same vtsax/ vbtlx….rebalancing when the market went down significantly. Which actually made our accounts really increase when it went back up.
    Do you have any thoughts on Vtapx?

    • jlcollinsnh says

      Hi Julie…

      VTAPX is a short-term bond fund and those tend to do better at times of rising interest rates. It is down ~6% for the year, which while not ideal, is far better than the ~16% drop of VBTLX. So, you’ve done well.

      Of course, if/when rates peak and come down you will see less of the benefit of the then rising bond prices.

      In short, VTAPX can be expected to be less volatile. If that is you goal, it is a fine choice.

      • Julie says

        JL, Thank you so much for your quick response. Yes, I was simply trying to keep our bond portion a little more stable. I was just a little confused as it went down more than I thought it would. Also thought it would be nice to have the dividends to use as extra income.

  66. Cindy says

    Thank you for the friendly, steadfast clarity on FI. I return to your book often. My kids all have a copy of your book. After I loaned my copy to my dad to read, he told me that you said that the grandkids owed him dinner 🙂

    My question…. how necessary is continued investing during the downturn to a full recovery? There’s an example I’ve read that goes something like this. If you had 100k in 1929 and stopped investing, it took 20+ years to recover. But if you kept up regular investments during the downturn then you recovered to 100k in a few years. That’s a significant difference.

    We are 57, own our home, 90% VTSAX. Last year we began to shift from super-saving mode to enjoying-the-excess-income-now-while-we-are-healthy mode. By the time we are 65, our invested nest egg should be plenty to pull from to cover living expenses.
    How powerful are those discount stocks right now? Should I return to saving mode to speed recovery or trust that time and compound interest will do the work? You’ve probably addressed this somewhere, but clearly I haven’t grabbed ahold of this principle yet. Thank you for your time.

    • jlcollinsnh says

      Hi Cindy…

      Buying stocks when the market is down is very powerful, for what are fairly obvious reasons. So it is well worth doing financially.

      But if I understand your comment correctly, you already have enough invested to reach your goals. If that is the case, and if you’d rather spend your surplus $$$ while you are still healthy and can best enjoy it, you’ll get no argument from me.

      Hope your dad got his dinner. 🙂

  67. Bill V. says

    JL, thanks for your insightful words. Your book found me at a perfect point in life and helped me implement some changes, better identify my goals, and I haven’t looked back since! Wanted to know your thoughts on maxing out your tax advantaged accounts, more specifically your 401(k). Some data, including from this article https://ofdollarsanddata.com/should-i-max-out-my-401k/ have made me think twice about maxing out contributions to my Roth 401(k). Especially as I want to retire early, it’s important to have more funds available to invest NOW, rather than being unable to touch a large bulk of net worth in a tax advantaged account. I know your advice is usually to max out the 401(k), but does that article or similar literature give you any reason to change your mind? Or, would it be best to just contribute up to your employer’s match (free money up to 6% for me!), and invest the rest now? Again, only talking traditional and Roth 401(k)s, I will continue to max out my HSA as the triple tax advantage is just too good to pass up. Let me know your thoughts, and thanks again for everything!

    • jlcollinsnh says

      Hi Bill…

      This question, which comes up a lot, as always felt odd to me. It seems that if your savings rate is aggressive enough to reach ER, you are maxing out your 401K and IRA, and investing the surplus into taxable and readily available accounts. That surplus should bridge the gap.

      If for some reason this is not the case, there are many ways to access money in tax advantaged accounts before 59.5

      But whatever you decide, you are right to be sure to capture the match!

  68. AD Jones says

    Mr. Collins, I’m hoping to retire in 3 years at the age of 55. We opened a brokerage account last year and began investing in VTSAX to build the funds that I will use between the ages of 55 and 59.5 when I can access my 401K. My question is should I continue to invest in this brokerage account, or would you recommend I just save cash instead since I will depend on this money until 59.5? Thank you.

    • jlcollinsnh says

      Hi AD…

      You question is really about when to shift to a more conservative allocation as you approach retirement. The answer is dependent on your tolerance for risk.

      Personally, I waited until I quit my job to add bonds to my portfolio. Not necessarily what I’d recommend, just what I did.

      Because the market is down at the moment, I would probably keep investing in stocks to pick them up on sale. That, of course, carries risk.

      Using the next three years to build your cash position is the more conservative and safer approach. And, of course, you can do something in the middle.

      Hope this helps you think it through.

      • AD Jones says

        Thank you Mr. Collins. I tell everyone I can about Simple Path to Wealth. My hope is one day I can fund the initial Roth IRA investments for some African-American teens and prompt them to follow the Simple Path. Building generational wealth has been out of reach for most of us and I hope to create lasting positive change in the community.

  69. Ariel says

    Dear JL, thank you for your answers.

    I have a question that after reading your blog/book, listen to interviews, and answers to questions, I didn’t find an answer, even that it’s the most basic question…

    And it’s: How much is your net liquidation value of your portfolio?

    It’s true that it’s not my problem, but if it’s big, it will help me and motivate to follow the simple path, and if it’s too small, let’s say below $100k, it’s easy for you to stay the course with market crashes…

    I understand if you don’t want to answer with a number, but at least, can you tell me, if it’s:

    1) Less, than $100k
    2) between $100k and $1 million?
    3) between $1 million and $5 million?
    4) between $5 million and $10 million?
    5) between $10 million and $20 million?
    6) more than $20 millon?


  70. Jeff says

    The longer this bear market goes on (and the higher rates go) the more happy I am about the bonds in my portfolio. I can expect higher future income as bond interest and maturities are reinvested. As long as there are not a large amount of defaults (unlikely if you’re sticking with a high quality bond index fund like the one mentioned in this article) the bond prices should recover over time as well. Of course if inflation stays high for a long time that is the risk, but there’s no free lunch in investing!

  71. Josh says

    Hi JL

    Thanks for all the good work.

    Do you think the stock market is manipulated, particularly in the US?

    I know the argument is that the stock market goes up over time because businesses get bigger and earn more money over time. Humans are endlessly productive, if you own stocks, you earn a piece of that growth etc, etc.

    But is there an argument to be made that actually the stock market goes up because we don’t have a suitable store of value. The government prints so much money over time, causing inflation which in turn decreases the value of the money you earn and save. We realise that we cant save our way to wealth or retirement so we put money into alternative stores of value, such as housing or a broad stock index. And it’s only this broad consensus that stocks are a store of value which keeps them going up. The population puts money into an index, which keeps them rising. There’s more money circulating and therefore more money chasing after a fixed amount of stocks, making them go up.

    This can be evidenced by looking at M2 money supply in comparison to the S&P 500. The 8% annual returns of S&P 500 over the last 40 years can be broken down into two parts:

    – 6% annual growth in money supply
    – 2% annual growth in GDP

    The S&P has basically been flat since the 1980’s when you compare it to the M2 money supply. https://endlessmetrics.substack.com/p/s-and-p-500-m2-money-supply

    It certainly seems right now that the fed almost controls the stock market with an on off switch. When they print/QE, stocks go up. When they QT the stock market goes down.

    The US has the advantage of having the global reserve currency in the dollar. It has been the dominant global super power since WW2, and globalisation has worked in its favour. This has allowed it to rack up an incredible amount of debt which (until recently) hasn’t troubled it too much, as other countries still want the dollar etc.

    But this could get very ugly, very soon. I’ve seen you argue that increasing interest rates is the right thing to do. And yes, normally it would be. But now because of the amount of debt in the US and global economy, keeping interest rates high, or increasing them much further might not be an option. It causes too much pain for populations and governments. History shows that Governments almost always choose to print their way out of these problems, as that’s the most politically viable option.

    This could lead to a potentially hyper inflationary scenario, which will be a problem for stocks if the argument is correct that they go up because of manipulation in the money supply.

    Thanks for listening and i’d like to hear your thoughts on this line of argument.


  72. Tom says

    As always JL, I enjoy your posts. We’ve been traveling so hadn’t seen this one.
    Yes, my VBTLX is down, in fact it shows a loss. That’s ok though. It still provides a dividend and at the lower value that dividend buys more of it. I actually quit buying it when it hit $11 then when it started dropping I slowly started buying it again. When it went below $10 I stopped and wanted to see how far it would go. Now that its $9+ I’m considering buying a chunk before eoy. This essentially will be a buy down. When it starts going back up, then my actual per share cost will lower and I can watch it grow again. If it stay low after Jan then I think I’m going to DCA it until it hits $10.
    VTSAX is down as well but I DCA that one every week and have for years. Once again, dividends reinvested and just let it grow. With the highs it hit a few months ago at $115, I was very tempted to sell some. Instead I just changed the allocated amount I buy in at.
    To quote someone on a certain video “we’ll **** it up ourselves, which we have, from a great **** you position”.
    “that’s all I have to say to anybody, on a social level”
    Later tater

  73. AD says

    I have one more question Mr. Collins. In my 401K there’s no equivalent to VTSAX, but they do have a large cap index fund (s&p 500 tracking) and a mid cap/small cap index fund. Currently I’m 100% invested in the large cap.

    Should reallocate some to the small/mid? If so, what percentage allocation per fund would you recommend?

    Thank you

    • jlcollinsnh says

      Hi AD…

      You could basically recreate a total market fund with the S&P 500 fund and adding mid and small cap funds. Maybe 80/10/10. But I wouldn’t bother.

      The S&P 500 fund is a fine long-term choice and the performance over time will be much the same as VTSAX.

  74. robyn says

    Hello Mr. Collins,

    Thank you so much for sharing your investing wisdom. I have enjoyed your blog and book and shared them with family and friends.

    I will be retiring in 2023 utilizing the Rule of 55. My 401k is in a Vanguard target date fund and as soon as I turn 59.5 I will roll it into an IRA and invest in VTSAX and VBTLX.

    Given the bear market I would love to know your thoughts on how often I should take a distribution from my 401k. I know dollar cost averaging is the way to go while investing, is there something similar for taking withdrawals?

    Thank you so much.

  75. Asim Sheikh says

    I just made a big blunder of transferring all of my IRA from one financial institution to another and am now in the process of rolling it into my work related 401k to combine all funds. In the process, I may have missed out on a 1500+ point gain/rally in the market during all of the movement, which hurt me quite a bit. That being said, is there anything that I can do to recover, as I have another 11 – 12 years to go before I need to tap into any of these funds, outside the obvious of increasing TO my catch-up contributions when I do hit 50 in a couple of years? Thanks again for your help!

    • Chase Thomas says

      I have this exact same question! Sadly, I just changed jobs, and in the 10 day blackout period to roll my 300k over to Vanguard, the market jumped up. It’s now sitting in cash at Vanguard. If I buy VTSAX now, I’ll essentially be losing about $25,000 just for the timing of the rollover. That’s much of my earnings; it’s so painful. What can I do?

      • Asim Sheikh says

        Hi Chase – since you can’t really time the market, I dove right back in as opposed to holding the transferred assets in cash. I did speak with an advisor that manages my company’s 401k, and he recommended that I make regular after tax contributions via my company’s plan, and although it’s not much, in a way, it may make up for some lost time, even if it takes a few years. This would continue to leverage dollar cost averaging and the automation that comes with participating in company plans, even though this is something that anyone can setup themselves outside of these plans. However, my company makes it easy to participate as it’s just another option via the plan, as opposed to me going out of my way to set this up on my own.

        Hope this helps!

    • jlcollinsnh says

      Hi Asim & Chase…
      Sounds like you guys have already pretty much sorted this out.
      I’ll only add there is really not much you can do when these gaps in transfer happen. Sometimes you get unlucky if the market rises while you’re out and sometimes lucky when the market falls and you get in cheaper.
      I wouldn’t lose sleep over this. 😉

  76. Anita says

    What if one day VTSAX stops going up ? Is it really safe? I’m going to put all my eggs in this nest and I’m so concerned

    • jlcollinsnh says

      Hi Anita…
      Your question indicates a lack of understanding what you own with VTSAX: virtually every publicly traded company in the United States. For it to fail would mean the entire US economy has failed.

      Could happen but, as Satoshi points out, the odds are you are more likely to regret not being in 20 years from now.

      I suggest you give the Stock Series here a close read.

      Good luck!

  77. Mario says

    I’m using this drop in bonds to buy a lot more as I approach FIRE. My allocation will be 60/40 in about a year and I feel this is the perfect time to buy bonds yielding a nice 4%~, which we haven’t seen in decades!

  78. Noah says

    Hi JL. Kudos on your interview to ChooseFI. As usual, a voice of calmness among the chaos.
    I have just one comment. I don’t know if you are aware but non-Americans cannot buy Mutual Funds as per the SEC normativ (The purchase of U.S. mutual funds by non-U.S. residents is restricted in order to comply with U.S. regulations).
    MFs like the almighty VTSAX or VBTLX aren’t reachable to us. Since I’m pretty sure more than 50% of your audience is from ex-US, I think it’s important to make you aware of that so you can adjust your narrative when you’re speaking at Chautauquas or a broader audience like ChooseFI.
    Cheers from Switzerland !

  79. J says

    Hi JL, I was curious what you recommend in regards to minimizing taxes on distributions of VTSAX. On Vanguard they present 3 methods: 1) First in, first out method 2) Highest in, first out method and 3) Specific identification method, which is the best for minimizing taxes?

    Thanks in advance!

  80. Tammy says

    “Unrealized gains don’t pay my rent, and unrealized losses don’t make me lose sleep. The market is more driven by emotion than logic and has exhibited volatility from time to time. Stocks drop hard when investors are afraid, and they rally when the fear subsides. I don’t base my retirement on the unpredictability of the stock market, nor do I want to spend my retirement trying to buy low and sell high. Instead, I build my retirement on the income generation potential of my portfolio. Companies that pay dividends are generally more mature with better fundamentals than their non-dividend-paying counterparts.”

    Since this is ask me anything, what do you think of this quote from a vary famous and successful investor.

  81. Patrick says

    Hi JL, I’m wondering if you have any thoughts on the advice of “don’t buy the dividend.” Around the end of each quarter, and especially in the month of December, I find myself hesitant to buy more VTSAX in my taxable account before the dividend distribution (Usually around December 22 in the 4th quarter). I’m not buying for the dividend, I’m just buying to hold long term, and reinvest whatever dividend I would receive. However, if I know I could cause myself more taxes, especially at year’s end, I find myself going “well, maybe just hang on to this cash until after the 22nd so I can shave this small amount off this year’s tax bill.” Vanguard themselves draws attention to this kind of thinking here: https://investor.vanguard.com/investor-resources-education/taxes/buying-dividend

    All that said, I realize what I’m doing is akin to market timing, and we all know how we feel about that. This piece by Harry Sit especially makes me question my instinct to wait until after the dividend distribution each quarter: https://thefinancebuff.com/conventional-wisdom-dont-buy-a-distribution-is-wrong.html

    The fact that you’ve never written about this (at least not to my knowledge) makes me think you find the difference between investing before and after the dividend date to be inconsequential for long-term investors. Still, I’d be remiss if I didn’t take this opportunity to ask you about this question that’s on my mind once every three months. If real numbers matter here, the amount I’m usually thinking to invest is about $5000.

    Thanks for your thoughts here, as well as for all of your thoughts throughout the years. You’ve been very helpful to me, and also to my family and friends.

    • Arnold says

      I love dividends. Can’t understand why for some people tax is more important than income, the only thing that pays bills

    • jlcollinsnh says

      Hi Patrick…

      You’re right, I haven’t written about this for the reason you guessed.
      My take would have been the conventional wisdom, but that second link you provided is an interesting perspective.

      But either way, long term investors need not be bothered in my view.

  82. jlcollinsnh says

    OK all…

    As I said in the post: “Then, if you’d like, Ask Me Anything in the comments and over the next couple of days I’ll do my best to answer. After that, not so much.” That was on Oct 21st and it’s now Dec 3rd. So, we’ve reached the “After that, not so much” time.

    Feel free to continue to post your questions and I encourage long-time readers to weigh in with their thoughts.

    Thanks for all the questions!

  83. Craig says

    As many have stated in the past, your book “A Simple Path to Wealth’ is what broke it down for me in to understandable terminology for investing. Completely changed my world view. Question? I plan to stay the course and am invested in Vanguard’s VTSAX. I recently came into a large chunk of money from a relative who passed. Is it a good time to dump it into VTSAX, or should I be waiting for a further bottom of the market? Still fairly new to investing on my own so a little skiddish on moving around large sums of money. Thank you.

  84. CC says

    Thank you for your wisdom, JL! My wife and I have started to move down the simple path, and we have made changes for all future 401k contributions to be sent to the VTSAX equivalent for our company 401k plans. My question is what to do with the previously saved balances from the past few decades of saving?

    I don’t have a problem moving most of the funds over to this VTSAX equiv. fund, but with the current state of affairs, our technology fund is down a whopping 38% YTD, much lower compared the total stock market. Moving it to the VTSAX equivalent just seems to go against the sell high, buy low concept. I get that everything is down, but few funds are down that much. This fund in particular is about 25% of our retirement portfolio. I’d prefer to move to the VTSAX equivalent to make it simpler, but just wanted to see your thoughts on situations like this.


  85. Robert says

    Hello Mr. JL Collins,

    I always had the idea of investing, but I never knew where to start. Through Alan Donegan’ s podcast, I learned about you and your fabulous book “The SP to W.”

    I have probably 15 years of work ahead of me. Following “The SP to W” on (vtsax) in Taxable Account, (vtsax) in Traditional/Roth IRA, and (vbtlx) in Traditional IRA. If I started investing late in life, and the contributions to the Taxable Account (vtsax) would have been much higher than the maximized contributions made to the Traditional IRA (vtsax), and the last amount would have not been enough to be able to buy in Traditional IRA (vbtlx) and to get the 25% (Bonds) by the time of retirement, to be able to rebalance when it needed. Which index fund (Bonds) at Vanguard should open today or in the future in a Taxable Account knowing that the index fund (vbtlx) is not tax efficient?

    Another question I have is: Are Robo-advisors at Vanguard worth it?

    Thank you for your humble, and honest help.

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