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You are here: Home / Life / Things important, and unimportant

Things important, and unimportant

by jlcollinsnh 58 Comments - Updated: March 1, 2023

Photo by Megan Ruth on Unsplash

Important:

Investing for the long-term. Think decades. My holding period for VTSAX is forever, other than maybe selling a few shares while living on my portfolio. I am investing for generations.

Unimportant:

Market Crashes. These are an expected part of the process, like blizzards in New England and hurricanes in Florida. Scary and dangerous if you make the wrong moves, but they always pass and the sunshine returns.

They are best ignored. What the stock market does today, this week, this year — That’s just noise.

Important:

Staying the course. This is the only way to enjoy the long-term growth of stocks. If you panic and sell, the market will leave you bleeding by the side of the road.

You have to be an optimist, believing in the future of the United States, the world in general, and that the incredible drive, creativity and problem solving ability humans have displayed so far will continue.

Unimportant:

Obsessing about safety. No investment is 100% safe. Stocks are volatile. Cash in the bank is guaranteed to lose value to inflation. Real estate investments can turn sour in more ways than you can count.

As an investor, you don’t get to avoid risks. You only get to chose which ones.

Important:

Long-term, 10+ years, stocks actually carry very little risk. In fact, stocks are about as safe as you can get.

Long-term, stocks also offer the highest return.

Unimportant:

Investing internationally

Also, unimportant — if you choose to ignore my advice and invest internationally anyway (which almost everyone else is telling you to do).

Jack Bogle, Warren Buffett and I don’t feel the need, but if you do, you’ll be fine. International stock markets, for the most part, have done pretty well.

Important:

Having a guideline as to when you have enough money to consider yourself financially independent (FI). Here’s the one I like:

25x the annual amount you spend/4% of your assets.

Spend $40,000 a year x 25 = $1,000,000 to be FI/spend 4% of $1,000,000 = $40,000 to spend each year.

This is what is known as “The 4% Rule”

Unimportant:

Whether 4% is exactly the “correct” withdrawal rate percentage.

4% was originally arrived at as a very conservative number and, indeed, the Trinity Study bears this out. (see link above) However, twice in the period of that study it failed.

If you have the misfortune of retiring at the beginning of a multi-year stock market decline, and you set your 4% withdrawal, and adjust it for inflation each year, and you put it on auto-pilot and you forget it, well then, you’ll have a slim chance of running out of money before the end of 30 years.

This is called Sequence of Return Risk.

But you’re not going to do that, are you?

If you are the kind of person who reads this blog and thinks about this stuff, there is exactly zero chance of you doing that.

Rather, you will begin your withdrawals and, keeping an eye on the market, adjust as/if needed. This adjustment, BTW, may well lead to you withdrawing more money as your investments grow. Indeed, in the Trinity Study, portfolios were far more likely to grow substantially in value than to crash and burn.

Catch 22: If you are the kind of person who obsesses about what withdrawal rate you can safely put on auto-pilot and forget about, you are the kind of person who would never put your withdrawals on autopilot and forget about it.

4% is a poor “rule” but it is a fine guideline. 

Important:

Becoming financially independent. In doing so you have bought your freedom. Freedom to spend your life and time as you wish without the need to trade your labor for money. With every step you take, you are that much stronger.

There is nothing more valuable that money can buy. At least for me.

Unimportant: 

Whether you choose to retire from your job or keep working once you are FI. Being FI doesn’t require you to quit a job you enjoy. It just means you get to choose, which is the point.

Important:

Finding meaning and joy in your life and your activities. It is hard to imagine anyone with the focus, intelligence and work ethic to achieve FI wanting to spend the rest of their lives doing nothing. 

Unimportant:

Having “the internet retirement police” declare you Not Retired! because some of your new activities generate income.

For me, it has never been about retirement.

Important:

Investing in broad-based, low-cost stock index funds.

Unimportant:

Which investment company’s funds you use.

I prefer Vanguard, for reasons I outline here.

My preferred fund is VTSAX which is Vanguard’s Total Stock Market Index Fund.

But an index fund is an index fund, and a total stock market index fund or S&P 500 index fund or total bond market index fund are essentially the same across investment companies. Feel free to use the firm of your choice.

Unimportant:

Whether you use a total stock market index fund or an S&P 500 index fund.

Both are broad-based, low-cost funds, which is what you want.

VFIAX is Vanguard’s S&P 500 index fund and it is more commonly found in 401k type plans than VTSAX. (Or the equivalents from other firms.)

I prefer VTSAX, because it holds some mid-cap and small-cap stocks as well as the 500 largest. 

But because these funds are “cap-weighted” ~80% of VTSAX is made up of the S&P 500. If you track the performance of VTSAX v. VFIAX over 20 years the difference is tiny.

Jack Bogle held VFIAX until his death. Warren Buffett has it as the investment of choice for his heirs. If it is what you have, or what you prefer, you’ll be fine with it, too.

Unimportant:

Mutual Fund v. ETF.

There are differences between funds and ETFs (exchange traded funds) but none that really matter to us long-term investors.

VTI is the ETF version of VTSAX. VOO, of VFIAX. In both cases they hold exactly the same respective portfolio.

Which you hold is more likely a function of your age than anything else — you own what was available/new when you came of age.

Either is fine.

Important:

Expenses.

Expense ratios (ER) are the fees funds/ETFs charge their shareholders and are a direct drag on our returns as investors. The difference between a 1% annual ER of an actively managed fund/ETF and the .04% of VTSAX is HUGE compounded over time.

Most broad-based index funds like VTSAX & VFIAX or ETFs like VTI & VOO are very low-cost. High ERs tend to be found in actively managed funds to, well, pay for all that active management.

Unimportant:

When the difference in ERs is .04% v .03% as it is between VTSAX and VTI. 

Important:

Choosing index investing over active management/stock picking.

When Jack Bogle introduced the first index fund in 1975, it and he were widely ridiculed. But as the decades rolled on and the research piled up, the brilliance of the concept was repeatedly confirmed. Indexing outperforms active management and the greater the time period, the greater the outperformance.

Outperforming the market is extraordinarily hard, especially with the handicap of high fees to overcome.

Unimportant:

Having an investment advisor to help you buy your index funds. More than unimportant, potentially dangerous.

Advisors are better served by putting you into high fee, actively managed funds that pay them better while likely underperforming.

To be sure, there are honest advisors out there but by the time you are well educated enough to recognize them in the herd, you are educated enough to do this yourself.

If you have an advisor and your answer to the question of “why” is some variation of…

  • “I’ve had them a long time.”
  • “They were my parents’ advisor.”
  • “They are my friend.”

…it’s time to take a very close look at what they have you invested in, what the fees are and why it is so damn complicated. Because it probably is.

Red flag: If they resist this conversation.

Oh, and if your answer is that last one, it could be being your friend is the real skill their company hired them for.

Important:

Your savings rate is one of the most powerful tools you have to reach FI. I used 50% in my journey. At the risk of stating the obvious, the higher your rate the faster you get there. The lower, the longer. Your choice.

Unimportant:

Whether your saving rate should be calculated based on your pre-tax or after tax income. Clearly, 50% of the former is more than of the latter. Who cares?

That’s it…

..for now.

I’ll add more if/as they occur to me.

Your turn:

What have I missed?

Share your “things important, and unimportant” in the comments below.

****************************

Pathfinders is my new book coming later this year. It is the follow-up to The Simple Path to Wealth.
It is already available for pre-sale: https://linktr.ee/jl.collins
If you are so inclined, do me a solid and order now!
******************************

Read Next from JL

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Important Resources

  • Talent Stacker is a resource that I learned about through my work with Jonathan and Brad at ChooseFI, and first heard about Salesforce as a career option in an episode where they featured Bradley Rice on the Podcast. In that episode, Bradley shared how he reached FI quickly thanks to his huge paychecks and discipline in keeping his expenses low. Jonathan teamed up with Bradley to build Talent Stacker, and they have helped more than 1,000 students from all walks of life complete the program and land jobs like clockwork, earning double or even triple their old salaries using a Salesforce certification to break into a no-code tech career.
  • Credit Cards are like chain saws. Incredibly useful. Incredibly dangerous. Resolve to pay in full each month and never carry a balance. Do that and they can be great tools. Here are some of the very best for travel hacking, cash back and small business rewards.
  • Personal Capital is a free tool to manage and evaluate your investments. With great visuals you can track your net worth, asset allocation, and portfolio performance, including costs. At a glance you'll see what's working and what you might want to change. Here's my full review.
  • Betterment is my recommendation for hands-off investors who prefer a DIFM (Do It For Me) approach. It is also a great tool for reaching short-term savings goals. Here is my Betterment Review
  • NewRetirement offers cool tools to help guide you in answering the question: Do I have enough money to retire? And getting started is free. Sign up and you will be offered two paths into their retirement planner. I was also on their podcast and you can check that out here:Video version, Podcast version.
  • Tuft & Needle (T&N) helps me sleep at night. They are a very cool company with a great product. Here’s my review of what we are currently sleeping on: Our Walnut Frame and Mint Mattress.
  • Vanguard.com

Filed Under: Life, Money

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Comments

  1. Dwayne says

    February 28, 2023 at 3:28 pm

    Important:
    Doing what JL suggests/tells you to do if you want to be FI or perhaps good to go at retirement or when you “get retired” unexpectedly.

    Unimportant:
    Listening to the talking heads on TV, online, or on podcasts that try to convince you to be a more active investor

    Reply
  2. ken says

    February 28, 2023 at 3:30 pm

    Jl hits the nail on the head always
    Investing is so simple but Wall St wants to make you think otherwise
    If you want to “BEAT THE MARKET”, read this book by Edward Thorp-online PDF

    Reply
  3. Frank says

    February 28, 2023 at 4:10 pm

    Great post JL… Thank you.

    What cost basis do you use/suggest when drawing the 4% from your brokerage account with Vanguard?

    Would you classify this as important or unimportant?

    Reply
    • Corwin says

      February 28, 2023 at 10:43 pm

      Personally I’m a big fan of using “specific identification of shares” for a cost basis, for maximum control of how I sell the lots. That way you can ensure the lots are over a year old (to make sure you’re paying long term capital gains instead of short term at much higher tax rates). And if you need more cash and want to keep your income as low as possible, you can sell lots with lower cap gain percentages. If you want to do cap gain harvesting and don’t need the extra cash, you can sell lots with higher cap gain percentages.

      Fortunately the default cost basis at Vanguard is FIFO (first in first out), so that will maximize the odds you’re selling lots that are at least a year old. Given that fact, I’d probably lean towards classifying this as a bit less important.

      My first exposure to this concept was the “Specific Identification of Shares” article from the Mad Fientist – recommend checking that out.

      Reply
  4. Sarah says

    February 28, 2023 at 4:17 pm

    Being investing every month in the VTSAX and so far I’ve got less than 10% of return (IRR). It sucks! Far from the promised 8-10% a year!
    I’ll stay the course but I’m not as excited as these FIRE people out there…

    Reply
    • Prob8 says

      February 28, 2023 at 5:58 pm

      Sarah –

      Investing can be an emotional grind at times and you have to decide whether you have the temperment for it.

      Nobody can “promise” you 8-10% returns. Nobody. Returns cited by most people are based on historical long-term averages.

      I don’t know how long you’ve been investing but I’ve been at it for over 25 years. Some years are great and some terrible (50% loss on more than one occasion). But staying the course has earned me an average annual return at the high end of that range.

      If you haven’t done so already, I suggest you read (or re-read) the entire investing series on this blog and internalize the lessons.

      Reply
      • Sarah says

        February 28, 2023 at 9:58 pm

        Since 2016,every month. I’ve read many times and that’s where I got the 10% a year. Actually 11% if I’m not mistaken.
        I’m inclined to move everything to CDs now paying 5.10% year guaranteed.

        Reply
        • jlcollinsnh says

          February 28, 2023 at 10:16 pm

          From the beginning of 2016 to the end of 2022 the S&P 500 returned 134.06%, or 12.92% per year.

          An inflation-adjusted return of about 91.95% cumulatively, or 9.76% per year.

          Your VTSAX probably did about the same, maybe slightly better.

          This is in no way a promise of future returns.

          https://www.officialdata.org/us/stocks/s-p-500/2016?amount=1000&endYear=2022

          https://jlcollinsnh.com/2022/12/14/fun-with-numbers-historic-stock-market-returns/

          Reply
          • Sarah says

            March 1, 2023 at 8:56 pm

            Yeah but I didn’t invest in 2016. I started investing in 2016. Every month I can put a little more, and 2022 was the year I put the most in, therefore the worst performance. The biggest problem with these past returns is that they are cherry-picked and are all in at that point in time. It’s nothing like the real life where you have to invest a drop every month.

          • Jack says

            March 10, 2023 at 8:03 am

            Sarah, it’s actually you who are cherry-picking. You’re picking one bad year (2022) as the basis for your decision to leave the market. JL is doing the opposite.

        • Corwin says

          March 10, 2023 at 10:30 am

          Hi Sarah, that definitely sounds frustrating. I’m guessing you started reading about FIRE back around 2016, started to invest a bit more seriously, and then in 2022 you finally had more funds to invest and you were promptly greeted by a year long slump in the markets. That definitely sucks. It will get better though, even if it feels like it never will. I’m glad to hear you’re gonna stay the course. As many FIRE folks espouse, this is a fantastic buying opportunity, you just gotta get through this rough patch now. Go listen to JL’s calm voice talking about index funds on a podcast and I bet you’ll feel better 🙂

          Reply
          • Pete says

            March 11, 2023 at 11:58 pm

            @Sarah I am the same like you. Incesting for 3 years. I have negative return so far. I keep buying and tell myself that I am buting cheaper whenever my nrgativr return increases. I am patient. When there are good days I check my portfolio often. When there are bad days I only look when I nerd to pay in another $.

  5. Sally says

    February 28, 2023 at 4:20 pm

    Bonds? Total Bond Index vs. Intermediate Treasury Fund? I keep thinking it is important and I should “figure it out “. I’m currently 70/30, Total Stock Index/Total Bond Index.

    Reply
  6. Corwin says

    February 28, 2023 at 4:29 pm

    Agreed 100% on the savings rate pre- vs post-tax calculation. Though I’m a big fan of using the pre-tax calculation. What really amazes me is that if you have reasonable expense levels (~$50K to $60K) and a nice mix of pre- and post-tax assets, you can usually easily avoid federal income taxes during retirement by taking advantage of the standard deduction for pre-tax withdrawals and the 0% long term cap gains tax bracket for post-tax withdrawals. I was a bit stressed about how taxes would impact our withdrawal rate, but very fortunately there’s no reason for concern. Only exception: if you have state income taxes. But if you do, there’s a good chance your property taxes are a lot lower than mine here in TX.

    Reply
    • EP says

      February 28, 2023 at 4:53 pm

      Do you have any suggestions on where to start to decode this comment? I want to understand it; I just haven’t reached that level yet. Is this a very accountant-specific aspect I should talk to a CPA about? Thanks!

      Reply
      • Corwin says

        February 28, 2023 at 5:13 pm

        Hey EP! You can definitely talk to a CPA (which I am not) if you’d like, but I think most folks who are sufficiently interested can at least understand the fundamentals. As JL says above, “you are educated enough to do this yourself”.

        Every year when you do your taxes, most folks will elect for the standard deduction. That means any standard income (like what you get when you pull from a pre-tax account) less than this standard deduction is not taxed.

        After the standard deduction, the bottom tax bracket for long term capital gains (gains on investments at least a year old) is 0%. That goes up to $41,675 for single filers, $55,800 for head of household filers, and $83,350 married filing jointly filers. As long as you only sell post-tax lots over a year old, you can fit nicely into this 0% LT cap gains bracket.

        So if you take advantage of the deduction and 0% bracket, you won’t face any federal income tax, while still getting more than enough cash to fund your retirement (if it’s not too expensive).

        Reply
        • EP says

          February 28, 2023 at 6:36 pm

          This is so helpful Corwin, thank you. I am within 3-4 years of my goal of 27 x (I have about 23x right now), but I have NO IDEA on what to do once I actually reach my number or how to manage my spending/investment mix in my post-FI years. I have spent so much time learning how to get here, I’m not prepared for what’s next.

          Reply
          • Corwin says

            February 28, 2023 at 10:15 pm

            First off, congrats EP! 23x is a fantastic accomplishment, especially with the awful returns we’ve had over the last year.

            Second, I know exactly what you mean about post-FI finances. In many ways it’s a very different beast to tackle, knowing how to manage withdrawals instead of just pouring as much money as you can into your investments. That’s why I went a bit crazy with tons of analysis on my site to make sure we were OK – and I still have lots more to consider/analyze.

            If you haven’t seen the safe withdrawal series by Karsten at Early Retirement Now, I highly recommend it as well. I now heavily lean towards his recommendations for computing safe withdrawal rates.

      • Corwin says

        February 28, 2023 at 5:22 pm

        JL, if you’re OK with this, here’s a blog post I wrote when I was first figuring this out and testing it myself: https://engineeringyourfi.com/withdrawing-money-after-fire/. Feel free to discard this comment if not.

        Reply
  7. Wade says

    February 28, 2023 at 4:34 pm

    I advise those starting their careers to focus on all the above but just as important growing their income. I made the mistake of staying at one company too long. While I did fine financially, I did not earn as much as I could have.

    Reply
  8. Paul says

    February 28, 2023 at 4:59 pm

    Important
    Reminding yourself you will not live forever, or even maintain your current state of health if/when you find yourself afflicted with “one more year…” syndrome while working.

    Unimportant
    What anyone else thinks about your decision to FIRE.

    Reply
  9. Christina says

    February 28, 2023 at 5:16 pm

    LOVE this post!

    Reply
  10. Penny Price says

    February 28, 2023 at 5:20 pm

    Important – Discuss, generally, personal finance topics with those you care about. Your kids, your spouse, your siblings. Learn from each other, and be willing to be somewhat vulnerable with what you’ve learned through making mistakes. Forgive yourself, heal, and grow. A rising tide lifts all boats.

    Unimportant – being mysterious.

    Reply
  11. Vasudev P Saraf says

    February 28, 2023 at 6:00 pm

    Hi JL,
    you have condensed all that one needs to know. Improving on this is hard, and in my opinion, unnecessary.
    Thank you for the education. I have followed it more or less in the last ten years or so (or more?), bought couple of copies of your book for my adult children, and hardly watch the noise on TV or the sites. Since my retirement in 2020 I am now 100% on board.

    You freed up my time to do other important things. That is important.

    VS

    Reply
  12. Chris Collins says

    February 28, 2023 at 6:19 pm

    Important – Accumulate a good amount of broad-based, low-cost stock index funds as early as you can. The compounding will work miracles.

    Unimportant- Don’t make sub optimal life choices once you have the ball rolling. Cutting out vacations or drinks with friends to take you FI date from 5.9 years to 5.1 years doesn’t make sense.

    Reply
  13. Fritz @ The Retirement Manifesto says

    February 28, 2023 at 6:32 pm

    You’re a genius, JL! One to add:

    Important:

    Never stop learning. Read varied sources and form your own opinions.

    Unimportant:

    Whether you read JL’s blog, or mine. Wink.

    Great post!

    Reply
    • Jim says

      March 4, 2023 at 3:49 pm

      I’ll second that! Nice to have these 2 great resources 🙂

      Reply
    • LMG says

      March 21, 2023 at 6:39 am

      Ha ha great comment! Both of you are brilliant. 🙂

      Reply
  14. Ralph Smith says

    February 28, 2023 at 8:02 pm

    Great reminder ! However, now with the US falling way behind China on tech, military development, space, quantum computing and a bunch of other areas, do you still don’t see the need to include assets from the major global power if your portfolio?

    Reply
    • Jim Curtis says

      February 28, 2023 at 9:55 pm

      Not so fast. While is undeniable that China is surpassing us in many key areas, while the world is still reliant on the USD for trade, we should be fine. That shouldn’t change in the coming years or even decades.

      Reply
  15. carrie says

    February 28, 2023 at 8:12 pm

    Best article ever. I love the simplicity of it.

    Thank you and looking forward to your new book.

    Reply
  16. Dylan says

    March 1, 2023 at 12:15 am

    JL,

    Thank you for another thoughtful, simple, and profound post! I’ve been an admirer ever since plowing through The Simple Path several years ago.

    Recently I’ve been curious on your take around this hypothetical, but not unrealistic scenario: if the tax rate of long term capital gains ever shifts upwards from their current rate to or around the tax rate of ordinary income

    1) how (if at all) would this adjust strategy of “the simple path”?
    2) philosophically, do you think they should be taxed at the same rate? Despite the obvious benefit of a lower tax rate, I find it hard to justify that income from passive investment be taxed less than income from hard earned sweat/work

    Would love your thoughts, and thanks!

    Reply
  17. David Crabill says

    March 1, 2023 at 5:59 am

    Important – Jack Bogle / Jim Collins

    Unimportant – THE TALKING HEADS

    Reply
    • JohnR says

      March 1, 2023 at 5:46 pm

      David Byrne and company are very important! 😉 If you haven’t seen it, Stop Making Sense is one of the best concert films ever made.

      Reply
      • David Crabill says

        March 1, 2023 at 6:42 pm

        LOL! At first I was very confused (I was born in `87). Then I looked it up. 😉

        Reply
  18. PFGuy says

    March 1, 2023 at 7:01 am

    It’s as if I stumbled upon my PF journey over the last few years – all in one place. Did I unknowingly write this blog? Am I JL Collins?

    Reply
  19. Tracey says

    March 1, 2023 at 10:17 am

    Always love his posts and have read AND listened to his book. Such great stuff – wish it was taught in schools!
    Really looking forward to Pathfinders being published.
    (btw: Does anyone else hear JL’s soothing voice in their “internal monologue” while reading his posts, or is that only me?!) 🙂

    Reply
    • CE says

      March 5, 2023 at 7:25 am

      lol. Tracey, you are not alone. I keep hoping JL will post some covers of a few 70’s smooth R&B hits. What say you, JL?

      Reply
      • jlcollinsnh says

        March 5, 2023 at 8:21 am

        Be grateful you have never heard me sing. 😉

        Reply
  20. Accidentally Retired says

    March 1, 2023 at 11:50 am

    As you’ve perfectly pointed out here…it’s always important to look at the big picture.

    Play the long game.

    Be patient.

    The rest will take care of itself!

    Reply
  21. Wood, Adam says

    March 1, 2023 at 1:26 pm

    JL,

    Just a small observation:
    1. Good to add a line break between Important and Unimportant, after reading some
    “pairs”, I lost track of which belongs to which.

    2. I am not sure if you have already written about this: What should I person start doing when they are “near” to their FI and wants to retire in a few years?

    As always, you have a great context, simple and concise.

    Reply
  22. Guy Enemare says

    March 1, 2023 at 4:07 pm

    I’d like a brief lesson on Bond index funds such as BND/VBTLX. With all the current media noise (no I’m not tuned in!) about high bond yields up until the 2-yr, I’m just trying to figure out if there is an easy ETF way to buy into the short-term opportunity. Does BND adequately cover this at the moment? Or is something like VTIP a better choice? I know this is not a long-term investor question, but just looking to understand how BND indexes relative to all these different maturities.

    Reply
  23. Chris says

    March 1, 2023 at 7:39 pm

    Great post!!
    Important- invest in yourself to maintain good physical and mental health.

    Unimportant- keeping up with the Joneses.

    Reply
  24. John Harris says

    March 1, 2023 at 9:00 pm

    What would you do in my case JL where I’m 55 and have a very poor health condition. In my family nobody lived past 70. Do I plan for a shorter lifespan and retire now? I’m at 22x my annual expense exactly at the moment using a 60/40 index portfolio.
    (I should be able to get ACA)
    Thoughts?

    Reply
    • Dave says

      March 12, 2023 at 5:18 pm

      John,
      While I am certainly no Jlcollins, I do have couple thoughts on your situation. First of all, I would start with a different question. Do you enjoy your job and does it add purpose to your life? If the answer is yes to this question then I would consider keeping the job, but maybe scaling back to part time if possible. There is a tremendous amount of research showing how important it is to have some kind of meaningful work and purpose in your life.

      On the other hand, if you do not enjoy your job and what lights you up is thinking about all the things you want to do in retirement then I would say go for it. It sounds like you probably have plenty of money for your situation especially if you can be a little flexible with your spending depending on how the market is doing. Also, keep in mind that you will probably still earn money again but on your terms and hopefully doing things you are passionate about.

      Reply
  25. Brandon Johnson says

    March 2, 2023 at 4:42 pm

    Could be my all-time favorite post my friend. Thank you for continuing to share your gifts and HEART with this world.

    Blessings and Positive Energy your way!

    Reply
  26. Sabrina says

    March 3, 2023 at 8:30 pm

    Love that your book was complimented on The Daily Show! Well deserved. https://youtu.be/I30_q6Tjaxk

    Reply
    • jlcollinsnh says

      March 3, 2023 at 8:40 pm

      Thanks Sabrina…

      …it was a very cool surprise!

      Reply
  27. Wheat says

    March 4, 2023 at 3:44 pm

    Saw a discussion elsewhere today and have this to add:

    Important: Putting as much as your savings as you can in tax advantaged accounts (IRA, 401k)

    Unimportant: Traditional vs Roth (at least for 401k)

    Roth IRA has advantages over traditional IRA so I think for most people that’s the right choice. With 401k it’s a difficult calculation filled with political crystal ball gazing as to which will end up being better 30-40 years down the road. I don’t know which will turn out to have been better in 30 years time, but I have a suspicion the difference between them will end up being a small fraction of the tax savings either way.

    Reply
  28. Joanne says

    March 5, 2023 at 8:42 am

    One of JL’s best posts! I just sent the link to several family members. Thanks, JL.

    Reply
  29. jkub says

    March 7, 2023 at 5:03 pm

    In the unimportant comment: “If you have the misfortune of retiring at the beginning of a multi-year stock market decline, and you set your 4% withdrawal, and adjust it for inflation each year, and you put it on auto-pilot and you forget it, well then, you’ll have a slim chance of running out of money before the end of 30 years.”

    Did I read that right? There is a slim chance of running out of money even with a declining market at the start or does that mean there’s a slim chance of not having enough?

    Reply
  30. Leonard says

    March 8, 2023 at 8:32 pm

    Did you know that if you had invested $1 in the market in 1871, you’d only have $87k right now? That’s it, less than 7% annualized return.
    It’s really not much all things considered.

    Reply
  31. Frank says

    March 10, 2023 at 10:10 am

    I’m sitting here hoping for the market to plummet even more than it did it 2022. This is the best buying opportunity since 2008. Volatility is your friend!! This is when true wealth is built. Those you hold the line in a bear market will be handsomely rewarded when the market returns. Just keep plowing money in each money and disregard the notice (as JL Collins suggests)

    Reply
  32. Boring Stephanie says

    March 12, 2023 at 7:40 pm

    Important: after you put $ in an investment account, make sure it actually gets invested (not sitting as cash)!

    Unimportant: crypto and other new shiny things

    #boringforthewin

    Reply
  33. yslwl says

    March 14, 2023 at 2:47 pm

    Is avoiding capital gain distributions (in certain funds) important or unimportant?

    Reply
  34. Lisa says

    March 15, 2023 at 8:53 am

    Thank you so much for this post!

    Reply
  35. Brian says

    March 21, 2023 at 7:20 am

    The 4% rule / 25x your annual spend is based on a 30 year draw down period. What is the rule/guideline if you want a 40 or 50 year draw down period?

    Reply
    • Corwin says

      March 21, 2023 at 4:39 pm

      You might check out the really nice white paper that Vanguard put together in 2021 titled “Fuel for the F.I.R.E.: Updating the 4% rule for early retirees”. I’d recommend page 11, in particular, which shows some different scenarios of interest. If you’re not willing to consider dynamic spending or the current CAPE values for computing a safe withdrawal rate, then they indicate a reasonable rule of thumb is around 3.3% (Case C on page 11) for a 50 year retirement.

      Reply

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  • ► 2023 (6)
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      • Why your house is a terrible investment
    • ► February (2)
      • Things important, and unimportant
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      • When Your Country Becomes a Global Outcast
      • Staying the Course in War-Time
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  • ► 2022 (12)
    • ► December (3)
      • A New Chapter for Chautauqua
      • Season's Greetings!!
      • Fun with numbers: Historic Stock Market Returns
    • ► October (1)
      • Let’s talk about what’s up with Bonds, and what ever else you’d like to ask me
    • ► August (1)
      • The Price of Security
    • ► July (1)
      • Case Study #17: Buying into the market right before a Bear
    • ► June (1)
      • Case Study #16: Helping dad with an inheritance
    • ► May (1)
      • Just inked a contract for my next book, and I want you to be a part of it!
    • ► April (1)
      • The Dinky Diner
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      • Chautauqua: A terrible business model
    • ► February (2)
      • Chautauqua is back for 2022!
      • JLCollinsnh.com Enters New Era
  • ► 2021 (14)
    • ► December (1)
      • Season's Greetings!!
    • ► November (2)
      • The new book is out!
      • Are bonds done?
    • ► October (1)
      • Guess what I just finally read for the first time...
    • ► September (1)
      • The negligence that led me to DIY investing
    • ► August (3)
      • Chainsaws and Credit Cards
      • Part XXXVI: Estate Planning 101 -- The Simple Path to an Estate Plan
      • The Simple Path to a Lucrative Career
    • ► July (1)
      • Help Wanted: a new book
    • ► June (1)
      • The Top 9 (Bad) Arguments Against Bitcoin
    • ► May (2)
      • Collins on Crypto
      • The Alfred Hitchcock Path to FI
    • ► April (1)
      • Time to sell?
    • ► February (1)
      • Mariah International: All that glitters…
  • ► 2020 (11)
    • ► December (1)
      • Season's Greetings!!
    • ► June (1)
      • How to give when you have a business
    • ► April (4)
      • Investing with Vanguard for Europeans: 2020 update
      • Part XVII-B: ETF vs. Mutual Fund -- What's the difference?
      • Reviewing the comments on my post of April 1st
      • Why I will no longer be writing this blog
    • ► March (4)
      • My move from VMMXX to VBTLX
      • COVID-19: The unvarnished truth from Doc G.
      • Chautauqua sits out 2020
      • Taking advantage of Mr. Bear
    • ► February (1)
      • Mr. Bear, Podcasts, a good book and why I should be in 100% stocks
  • ► 2019 (11)
    • ► November (4)
      • How we bought our new car
      • The House Hacking Strategy
      • What does buying a new car really cost over the years?
      • Why we bought a brand new car
    • ► August (1)
      • A Guided Meditation for When the Stock Market Is Dropping
    • ► June (2)
      • 7 Days in Heaven: or Why Slowing Down Will Get You There Sooner
      • Quit Like a Millionaire
    • ► March (1)
      • Stocks -- Part XXXV: Investing for Seven Generations
    • ► February (1)
      • Chautauqua 2019 - UK & Portugal - Tickets Now Available
    • ► January (2)
      • Mr. Bogle passes
      • Financial Independence Case Study: How to Reach FI in Your 30s
  • ► 2018 (16)
    • ► December (1)
      • Happy Holidays! and a bit on Mr. Market
    • ► November (3)
      • Truly Passive Real Estate Investing
      • Car Talk: An update on Steve and looking at Leafs
      • Chautauqua 2018 Greece: A week for the gods!
    • ► October (1)
      • On Twitter, gone for Chautauqua and dark on comments till November
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      • What we own and why we own it: 2018
      • Tuft & Needle: Our Walnut Frame and Mint Mattress
    • ► August (1)
      • Kibanda Part 5: Pretty, and pretty much done
    • ► June (3)
      • Stocks--Part XXXIV: How to unload your unwanted stocks and funds
      • Tracking your holdings
      • Stocks -- Part XXXIII: Optimism
    • ► May (2)
      • Kibanda Part 4: Quicksand!
      • My Talk at Google, Playing with FIRE and other Chautauqua connections
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      • Stocks -- Part XXXII: Why you should not be in the stock market
    • ► February (1)
      • Chautauqua 2018: Mt. Olympus, Greece
    • ► January (1)
      • An International Portfolio from The Escape Artist
  • ► 2017 (15)
    • ► December (2)
      • The Bond Experiment: Return to VBTLX
      • How to Invest in Bitcoin like Benjamin Graham
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      • Kibanda Part 3: Running the numbers
    • ► September (1)
      • Sleeping soundly thru a market crash: The Wasting Asset Retirement Model
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      • Stocks -- Part XXXI: Too hot. Too cold. Not pure enough.
      • Kibanda, Part 2: Negotiating the deal
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      • Time Machine and the future returns for stocks
      • Kibanda: Mr. Anti-house buys his dream house
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      • Is there an interior designer in the house?
      • The Simple Path to Wealth goes Audio!
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      • Life on the Beach
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      • Sell! Sell!! Sell!!! Sell?
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      • Vicki comes to Chautauqua: United Kingdom
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      • Chautauqua - Ecuador 2017 open for reservations
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      • Season's Greetings and other cool stuff
      • Angel Investing, or Angel Philanthropy?
      • Mr. Bogle and me
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      • Where did you learn about money?
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      • Buy Your Freedom; Rent the Rest
      • So, what do you drive?
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      • Stocks -- Part XXX: jlcollinsnh vs. Vanguard
      • A visit to the Frugalwoods
    • ► August (1)
      • What the naysayers are missing
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      • Reviews of The Simple Path to Wealth; gone for summer
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      • The Simple Path to Wealth is now Published!
      • A peek into The Simple Path to Wealth
    • ► May (1)
      • It's better in the wind. Still.
    • ► April (3)
      • Cool things to check out while I'm gone
      • Stocks — Part XXIX: How to save money for college. Or not.
      • Help Wanted: The Book
    • ► March (1)
      • F-You Money: John Goodman v. jlcollinsnh
    • ► February (2)
      • Q&A - V: The Women of Amphissa
      • jlcollinsnh gets a new suit
    • ► January (3)
      • Chautauqua 2015 Reviews, 2016 registration open
      • Case Study #15: The Scavenger Life -- Freedom first, then Financial Independence
      • 3rd Annual (2015) Louis Rukeyser Memorial Market Prediction Contest results, and my forecast for 2016
  • ► 2015 (18)
    • ► December (2)
      • Q&A - IV: Strawberry Patch
      • Seasons Greetings! and other cool stuff
    • ► October (2)
      • Personal Capital; and how to unload your unwanted stocks and funds
      • Stockchoker: A look back at what your investment might have been
    • ► September (2)
      • Case Study #14: To Dream the Impossible Dream (and then realize it)
      • Hotel Living
    • ► August (1)
      • Mr. Market's Wild Ride
    • ► June (4)
      • Gone for Summer, an important note on comments and random cool stuff that caught my eye
      • Around the world with an Aussie Biker
      • Case Study #13: The Power of Flexibility
      • Stocks — Part VIII: The 401(k), 403(b), TSP, IRA & Roth Buckets
    • ► March (2)
      • Stocks -- Part XXVIII: Debt - The Unacceptable Burden
      • Chautauqua October 2015: Times Two!
    • ► February (2)
      • YNAB: Best Place to Work Ever?
      • Case Study #12: Escaping a soul-crushing job before you're 70
    • ► January (3)
      • Case Study #11: John, a small business owner in transition
      • Trish and Stan take an Intrepid Sailing Voyage
      • 2014 Annual Louis Rukeyser Memorial Market Prediction Contest results, and my forecast for 2015
  • ► 2014 (29)
    • ► December (2)
      • Diamonds and Happy Holidays!
      • Micro-Lending with Kiva
    • ► November (3)
      • Chautauqua February 7-14, 2015: Escape from Winter
      • Stocks -- Part XXVII: Why I Don’t Like Dollar Cost Averaging
      • Jack Bogle and the Presidential Medal of Freedom
    • ► October (3)
      • Tuft & Needle: A better path to sleep
      • Nightmare on Wall Street: Will the Blood Bath Continue?
      • Help Wanted
    • ► September (1)
      • Chautauqua 2014: Lightning strikes again!
    • ► August (2)
      • Stocks -- Part XXVI: Pulling the 4%
      • Stocks -- Part XXV: HSAs, more than just a way to pay your medical bills.
    • ► July (3)
      • Stocks -- Part XXIV: RMDs, the ugly surprise at the end of the tax-deferred rainbow
      • Summer travels, writing, reading and other amusements
      • Moto X, my new Republic Wireless Phone
    • ► June (1)
      • Stocks -- Part XXIII: Selecting your asset allocation
    • ► May (1)
      • Stocks -- Part XXII: Stepping away from REITs
    • ► April (3)
      • Q&A III: Vamos
      • Q&A II: Salamat
      • Q&A I: Gaijin Shogun
    • ► March (2)
      • Top 10 posts
      • Cafe No Se
    • ► February (4)
      • Chautauqua 2014 preview, closing up for travel and other random cool things that caught my eye of late.
      • Case Study #10: Should Josiah buy his parents a house?
      • Case Study #9: Lars -- maximizing some good fortune and considering "dollar cost averaging"
      • Case Study #8: Ron's mother - she's doin' all right!
    • ► January (4)
      • roundup: Some random cool things
      • Stocks — Part XXI: Investing with Vanguard for Europeans
      • Case Study #7: What it looks like when everything financial goes wrong
      • 1st Annual Louis Rukeyser Memorial Market Prediction Contest 2013 results, and my forecast for 2014
  • ► 2013 (40)
    • ► December (4)
      • Closing up for the Holidays, see you in 2014
      • Betterment: a simpler path to wealth
      • Case Study 6: Helping an ill and elderly parent
      • Stocks -- Part XX: Early Retirement Withdrawal Strategies and Roth Conversion Ladders from a Mad Fientist
    • ► November (3)
      • Death, Taxes, Estate Plans, Probate and Prob8
      • Case Study #5: Zero to 2.6 million in 25 years
      • Case Study #4: Using the 4% rule and asset allocations.
    • ► October (3)
      • Republic Wireless and my $19 per month phone plan
      • Case Study #3: Let's get Tom to Latin America!
      • The Stock Series gets its own page
    • ► September (2)
      • Case Study #2: Joe -- off to a fast start!
      • Chautauqua 2013: A Week of Dreams
    • ► August (1)
      • Closing up shop plus an opening at Chautauqua, my new podcast, phone, book and other random cool stuff
    • ► July (1)
      • They Will Kill You For Your Shoes!
    • ► June (4)
      • Stocks -- Part VIII-b: Should you avoid your company's 401k?
      • Shilpan's Seven Habits to Live More with Less
      • Stocks -- Part XIX: How to think about money
      • My path for my kid -- the first 10 years
    • ► May (4)
      • Stocks — Part XVIII: Investing in a raging bull
      • Dining with the Ghosts of Sarah Bernhardt and Alfons Mucha
      • How we finally got the house sold
      • Stocks — Part XVII: What if you can't buy VTSAX? Or even Vanguard?
    • ► April (4)
      • Greetings from Prague & a computer question
      • Swimming with Tigers, a 2nd chance on the Chautauqua, a financial article gets it wrong and I'm off to Prague
      • Storage, Moving and Movers
      • Homeless, and a bit on the strategy of dollar cost averaging
    • ► March (4)
      • Wild Turkeys, Motorcycles, Dining Room Sets & Greed
      • Roots v. Wings: considering home ownership
      • How about that stock market?!
      • The Blog has New Clothes
    • ► February (5)
      • Meet Mr. Money Mustache, JD Roth, Cheryl Reed & me for a Chautauqua in Ecuador
      • High School Poetry, Carnival, cool ads and random pictures that caught my eye
      • Consignment Shops: Best business model ever?
      • Cafes
      • Stocks -- Part XVI: Index Funds are really just for lazy people, right?
    • ► January (5)
      • Social Security: How secure and when to take it
      • Fighting giraffes, surreal landscapes, dancing with unicorns and restoring a Vanagon
      • My plan for 2013
      • VITA, income taxes and the IRS
      • How to be a stock market guru and get on MSNBC
  • ► 2012 (53)
    • ► December (6)
      • See you next year....until then: The Origin of Life, Life on Other Worlds, Mechanical Graveyards, Great Art, Alternative Lifestyles and Finding Freedom
      • Stocks -- Part XV: Target Retirement Funds, the simplest path to wealth of all
      • Stocks -- Part XIV: Deflation, the ugly escort of Depressions.
      • Stocks Part XIV: Deflation, the ugly escort of Depressions.
      • Stocks -- Part XIII: The 4% rule, withdrawal rates and how much can I spend anyway?
      • How I learned to stop worrying about the Fiscal Cliff and you can too.
    • ► November (2)
      • Rent v. owning: A couple of case studies in Ecuador
      • So, what does a month in Ecuador cost anyway?
    • ► October (4)
      • See you in December....
      • Meet me in Ecuador?
      • The Podcast: You can hear me now.
      • Stocks -- Part XII: Bonds
    • ► September (6)
      • Stocks -- Part XI: International Funds
      • The Smoother Path to Wealth
      • Case Study #I: Putting the Simple Path to Wealth into Action
      • Tales of Bolivia: Calle de las Brujas
      • Stocks -- Part X: What if Vanguard gets Nuked?
      • Travels in South America: It was the best of times....
    • ► August (1)
      • Home again
    • ► June (4)
      • Yellow Fever, closing up shop for the summer and heading to Peru y Bolivia
      • I could not have said it better myself...
      • Stocks -- Part IX: Why I don't like investment advisors
      • Happy Birthday, jlcollinsnh; and thanks for the gift Mr. MM!
    • ► May (6)
      • Stocks -- Part VIII: The 401K, 403b, TSP, IRA & Roth Buckets
      • Mr. Money Mustache
      • The College Conundrum
      • Stocks -- Part VII: Can everyone really retire a millionaire?
      • Stocks -- Part VI: Portfolio ideas to build and keep your wealth
      • Stocks -- Part V: Keeping it simple, considerations and tools
    • ► April (6)
      • Stocks -- Part IV: The Big Ugly Event, Deflation and a bit on Inflation
      • Stocks -- Part III: Most people lose money in the market.
      • Stocks -- Part II: The Market Always Goes Up
      • Stocks -- Part 1: There's a major market crash coming!!!! and Dr. Lo can't save you.
      • You can eat my Vindaloo, mega lottery, Blondie, Noa, Israel Kamakawiwo 'Ole, art, film and a ride on the Space Shuttle
      • Where in the world are you?
    • ► March (7)
      • How I lost money in real estate before it was fashionable, Part V: Sold! and the taxman cometh.
      • How I lost money in real estate before it was fashionable, Part IV: I become a Landlord.
      • How I lost money in real estate before it was fashionable, Part III: The Battle is Joined.
      • How I lost money in real estate before it was fashionable, Part II: The Limits of the Law.
      • How I lost money in real estate before it was fashionable, Part I: Impossibly Naive.
      • You, too, can be conned
      • Armageddon and the value of practical skills
    • ► February (6)
      • Rent v. Owning Your Home, opportunity cost and running some numbers
      • The Casanova Kid, a Shit Knife, a Good Book, Having No Regrets, Dark Matter and a bit of Magic
      • What Poker, Basketball and Mike Whitaker taught me about Luck
      • How to Give like a Billionaire
      • Go ahead, make my day
      • Muk Finds Success in Tahiti
    • ► January (5)
      • Travels with "Esperando un Camino"
      • Beanie Babies, Naked Barbie, American Pickers and Old Coots
      • Selling the House and Adventures in Staging
      • The bashing of Index Funds, Jack Bogle and a Jedi dog trick
      • Magic Beans
  • ► 2011 (22)
    • ► December (1)
      • Dividend Growth Investing
    • ► November (2)
      • The Mummy's head, Particle Physics and "Knocking on Heaven's Door"
      • "It's Better in the Wind" or why I ride a motorcycle
    • ► October (1)
      • Lazy Days and School Days
    • ► July (2)
      • The road to Zanzibar sometimes goes thru Ecuador...
      • Johnny wins the lotto and heads to Paris
    • ► June (16)
      • Chainsaws, Elm Trees and paying for College
      • Stuff I’ve failed at: the early years
      • Snatching Victory from the Jaws of Defeat
      • The. Worst. Used. Car. Ever.
      • Top Ten reasons your future is so bright it hurts my eyes to look at it
      • The Most Dangerous Words Your Customer Can Say
      • How not to drown in The Sea of Assholes
      • What we own and why we own it
      • The Ten Sales Commandments
      • My ever so formal and oh so dry CV
      • How I failed my daughter and a simple path to wealth
      • The Myth of Motivation
      • Why you need F-you money
      • My short attention span
      • Why I can’t pick winning stocks, and you can’t either
      • The Monk and the Minister

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