Here's one piece of advice I try to remember: Every time you trade stocks, the person on the other side of the trade is likely an institution or a pro who knows a whole lot more about the market than you do. Tread carefully and know your limitations.
I was motivated to become more DIY after some less than stellar experiences with full service brokers back in the bad old days. Then when folks like Jack Bogle and Charles Schwab started making it easier for individual investors to handle their own finances, I got interested. And then when the internet came along and made it all so much easier and faster, I was fully onboard.
AMT---the Alternative Minimum Tax. It induces a small migraine every time. The kicker is that, as per the instructions, I'm often told I have to fill it out and then, after jumping through all the hoops, it tells me I don't have to pay it anyway!
We have four kids and, with the help of regular saving in custodial accounts and then 529 accounts when they became available, put them all through college so that they graduated with no debt. They've appreciated that, especially once they got out in the world and encountered more and more friends and acquaintances still burdened by student loans. That said, we were pretty strict with them as far as budgets while they were in school, and encouraged them to work during summers and sometimes during the school year to add additional funds. Three of our kids attended the University of Texas and paid in state tuition, When they graduated, they had some college money left over, as UT is both a fine school and a real bargain for residents. Our fourth child attended USC, which is also a great school but private and expensive. When he graduated, there was very little left over!
I don't have the knowledge to decide which individual bonds are most appropriate for my situation, so funds and ETFs are an easy choice. And the bonus is that the risk is spread out so much more widely.
When I was young I invested too much of what discretionary income I had in rent houses, and not enough in the stock market. I missed out on some very valuable compounding.
For many years now I've roughly split our investments between Vanguard and Charles Schwab. I love Vanguard for its history and values, its ownership structure (the company is owned by its funds, so the fund shareholders actually own the company), and especially its Portfolio Watch feature (by Yodlee) wherein you can list all your investments, whether held at Vanguard or elsewhere, and automatically have an up-to-date analysis of your total portfolio (stock/bonds/cash; domestic/foreign; growth/value; large cap/small cap; etc., etc.). I love Schwab for its history of helping the DIY investor, its low fees, and above all, its customer service. You can typically reach someone on the phone quickly, and it's a knowledgeable person who actually wants to help you, even if your issue is a little complicated. It might simplify my life a bit to consolidate but I like having access to the features of both, and psychologically there may be a small comfort in not having all my eggs in one basket!
I have about 17% of my bond allocation in foreign bonds, and all of that is in Vanguard Total International Bond. It's currency-hedged, which keeps the price more stable, as opposed to Vanguard's Total International Stock, which isn't. I've always thought of Vanguard as pretty conservative but here's what they say about foreign bonds: "Adding some currency-hedged, foreign bonds could potentially increase your portfolio diversification. An allocation of about 20% to 50% of your bonds in a low-cost, currency-hedged, international bond fund is a reasonable approach to capture the diversification benefits." 20% - 50% seems like a pretty hefty allocation to me!
I'm at around 34% and have been at that percentage for some time. My foreign exposure is mainly via Vanguard Total International Stock, which isn't currency-hedged, while their Total International Bond is. The explanation Vanguard gave me is that they want the benefit (and will accept the risks) of currency swings in their international stock offering, but they want more stability in the bond fund in keeping with its role as ballast in a portfolio.
Comments:
Here's one piece of advice I try to remember: Every time you trade stocks, the person on the other side of the trade is likely an institution or a pro who knows a whole lot more about the market than you do. Tread carefully and know your limitations.
Post: What’s the wisest financial advice you’ve ever been given?
Link to comment from April 14, 2021
I was motivated to become more DIY after some less than stellar experiences with full service brokers back in the bad old days. Then when folks like Jack Bogle and Charles Schwab started making it easier for individual investors to handle their own finances, I got interested. And then when the internet came along and made it all so much easier and faster, I was fully onboard.
Post: How did you get started as an investor?
Link to comment from April 14, 2021
AMT---the Alternative Minimum Tax. It induces a small migraine every time. The kicker is that, as per the instructions, I'm often told I have to fill it out and then, after jumping through all the hoops, it tells me I don't have to pay it anyway!
Post: Which aspect of the tax code do you hate the most?
Link to comment from April 14, 2021
We have four kids and, with the help of regular saving in custodial accounts and then 529 accounts when they became available, put them all through college so that they graduated with no debt. They've appreciated that, especially once they got out in the world and encountered more and more friends and acquaintances still burdened by student loans. That said, we were pretty strict with them as far as budgets while they were in school, and encouraged them to work during summers and sometimes during the school year to add additional funds. Three of our kids attended the University of Texas and paid in state tuition, When they graduated, they had some college money left over, as UT is both a fine school and a real bargain for residents. Our fourth child attended USC, which is also a great school but private and expensive. When he graduated, there was very little left over!
Post: Should affluent parents insist their children pay a portion of college costs?
Link to comment from April 14, 2021
I don't have the knowledge to decide which individual bonds are most appropriate for my situation, so funds and ETFs are an easy choice. And the bonus is that the risk is spread out so much more widely.
Post: Should you buy bond funds or individual bonds?
Link to comment from April 12, 2021
When you have neither the time nor the interest in doing it yourself.
Post: When does it make sense to hire a financial advisor?
Link to comment from April 12, 2021
When I was young I invested too much of what discretionary income I had in rent houses, and not enough in the stock market. I missed out on some very valuable compounding.
Post: What do you consider your greatest financial mistakes?
Link to comment from April 12, 2021
For many years now I've roughly split our investments between Vanguard and Charles Schwab. I love Vanguard for its history and values, its ownership structure (the company is owned by its funds, so the fund shareholders actually own the company), and especially its Portfolio Watch feature (by Yodlee) wherein you can list all your investments, whether held at Vanguard or elsewhere, and automatically have an up-to-date analysis of your total portfolio (stock/bonds/cash; domestic/foreign; growth/value; large cap/small cap; etc., etc.). I love Schwab for its history of helping the DIY investor, its low fees, and above all, its customer service. You can typically reach someone on the phone quickly, and it's a knowledgeable person who actually wants to help you, even if your issue is a little complicated. It might simplify my life a bit to consolidate but I like having access to the features of both, and psychologically there may be a small comfort in not having all my eggs in one basket!
Post: Which banks, brokerage firms and other financial companies would you recommend to friends?
Link to comment from April 5, 2021
I have about 17% of my bond allocation in foreign bonds, and all of that is in Vanguard Total International Bond. It's currency-hedged, which keeps the price more stable, as opposed to Vanguard's Total International Stock, which isn't. I've always thought of Vanguard as pretty conservative but here's what they say about foreign bonds: "Adding some currency-hedged, foreign bonds could potentially increase your portfolio diversification. An allocation of about 20% to 50% of your bonds in a low-cost, currency-hedged, international bond fund is a reasonable approach to capture the diversification benefits." 20% - 50% seems like a pretty hefty allocation to me!
Post: Should U.S. investors own foreign bonds?
Link to comment from April 5, 2021
I'm at around 34% and have been at that percentage for some time. My foreign exposure is mainly via Vanguard Total International Stock, which isn't currency-hedged, while their Total International Bond is. The explanation Vanguard gave me is that they want the benefit (and will accept the risks) of currency swings in their international stock offering, but they want more stability in the bond fund in keeping with its role as ballast in a portfolio.
Post: What percentage of a stock portfolio should be invested abroad?
Link to comment from April 5, 2021