Incredible episode ! My skills as investor is basic but I understand the high level thinking, diversify into multiple indexes once you reach a critical mass in funds. I am following S&P 500 index (50%), Nasdaq 100 index for growth (30%) Dow Jones dividend index (SCHD - 10%) and finally some small cap value (AVUV 10%). Tracking to my retirement in 10 years.
Great discussion as always. I felt this was a great opportunity to explain with examples that how VTSAX only portfolio is not close to efficient frontier and how it can be made closer to efficient frontier. Multiple reference of 15 minute work per year could have been elaborated more on exactly what one would need to do every year with an example portfolio. Many folks in FIRE community subscribe to VTSAX and chill so in my view this topic could deserve 3 to 5 episode series as it can impact someone's net worth by more than 200%. I listened to Paul Merriman's episode as well but I am unclear to know how far I am from efficient frontier and what should I be doing to get closer to it. Thanks Paula and Joe!
Jason is obviously under the age of 40 (probably 37) and his limited lifespan of investing and has never dealt with full real-estate market cycles. Syndications are also very illiquid and are subject to requests for more $$$ if you want to save an investment if the market turns bad. For Bond specialization, read Howard Mark's books like Mastering The Market Cycle. As for books: 1) Psychology of Money - Morgan Housel 2) Foold By Randomness- Nassim Taleb 3) Millionaire Mission - Brian Preston For investing help, DON’T read: Rich Dad Poor Dad or anything by Dave Ramsey or Suze Orman.
For clarification as to Dollar Cost Averaging (DCA): You DCA to put $$ into things like your IRA related to work, so you're regularly investing when the $$ becomes investable (every 2 weeks), but if you get a lump some, say a bonus or inheritance, statistically, you're better off lump-summing it into the market, but psychologically, you might prefer to break it into 3 - 4 lumps, because if it's for long term, it likely wont be a big deal, but might make you feel better and less anxious.
I know this is a podcast on investing but high school kids need something that first addresses finances. Something a long the lines of Ramit's I'll Teach You to Be Rich.
I didn't even know what a Roth IRA was back then. All I did was save a little here and there, but nothing serious. Looking back, it was such a missed opportunity
I actually did set one up in my late 20s, and honestly, it's been a game-changer. The tax-free growth is huge. But the real key was having a solid plan for it. You can't just throw money in and expect magic
That's what I'm starting to realize now. You need to balance your investments, right? A Roth IRA is great, but if you're not managing it properly-like diversifying between stocks, bonds, or even real estate-it might not perform as well as you'd expect
Exactly. A lot of people think, 'Oh, l've got a Roth IRA, so I'm good to go,' but it's not that simple. You've got to have the right mix, and that's where a wealth manager really comes in handy. Mine actually helped me balance my investments early on, which I think is why my account has grown so much
That's something I wish l'd done earlier too. Who do you work with? Because l've been managing mine on my own, but I feel like I'm just winging it at this point
I work with Joseph Nick Cahill. He's been in the game for over 20 years and really knows his stuff. When I first started, I had no clue how to allocate my investments. He helped me find the right balance between aggressive growth stocks and safer options like bonds.
Some people says you should not rinse your mouth after brushing your teeth. Give the toothpaste time to take effect, then rinse after some time, or not at all.
For beginners, if you are really trading in the crypto space and you do not have a reliable mentor. Then you will definitely get liquidated in 90% of your trades. Yes, that is the sad truth. I remember when I first started in crypto in 2019 but later in 2020 I ended up selling it because I lost a lot trading on my own without guidance. Got back into crypto early 2023 with $100k and in a short period of time I made $732k. Thanks Chusmon Anderson.
Robert Kyosaki went off the deep end after Rich Dad Poor Dad (or is it after the first part of the book?). While the book is good, it is harmful to make high school students that he should be followed in what he's doing today. Edit: LOL I commented while listening, and as soon as I posted, you guys went there.
Not me I am still chilling. I suggest VTI, the ETF version as it is better at tax. I will be chilling for 15 more years, and assuming a market high at that time, I will move 100% into VMFXX.
VOO was doing better when I compared the past few years, and I reallocated appropriately. And Vanguard made some smart moves with their VXUS positions within other Vanguard funds - they sold VXUS big time before it dropped. Except for dividends, VXUS hasn't moved over the last 5 years.
40:47: When you do a roll an IRA over you are not limited having the earnings remain in a 401k or IRA. You can roll over everything (including the earnings) to the Roth but you will also need to pay the extra tax on the earnings up front. There are some additional caveats to rolling over a traditional IRA to a Roth that you should discuss with a CPA. 1) If you have money that is sitting in an IRA like money from a previous employer, you can only roll over a percentage of the after tax amount. So if your after tax contribution is 1% of your IRA, only 1% of your roll over will be characterized as after tax which may leave you with considerable year end tax consequences. 2). You may have options within your 401k to supercharge the Roth contributions. First, select the Roth 401k if it is available. 2nd, you and your employer may be able to add up to 60k total in a 401k. The commonly advertised 401k limits is just for the pretax contributions. After that first limit your contributions become after-tax. Your 401k administrator may give you the option to do an automatic rollover right after the contribution. Depending on how much your employer allows you to contribute, you may be able to make 30k+ worth of Roth protected contributions within an employer plan. Effectively making it the mega backdoor Roth conversion. The only caveat to this is it limits your ability to access IRA earnings when considering an IRA to Roth conversion ladder 🪜 for early retirement planning.
Yea, I think this is the flaw in his talk. He compares a specific investment VTSAX vs a theoretical “other” group of investments and does not give the ticker symbol for the alternative
@lucaswhite2681 right I thought I missed it but I understand in general, he's saying there are other options outside of VTSAX but didn't understand if they were referring to another "more specialized" index specifically
Joe is talking about using the Efficient Frontier to design your index fund allocation. One example: Paul Merriman’s 4 Fund Portfolio, which will get you closer to the Efficient Frontier, as compared to an all-VTSAX portfolio. If you search this channel for “Paul Merriman,” you can hear a detailed interview about the 4 Fund Portfolio concept. But that said, Joe is also emphasizing that we shouldn’t blindly follow Paul Merriman as some type of “guru.” Instead, the broader concept is to recognize that Merriman’s 4 Fund Portfolio is simply a model - one of many - that is designed to get you closer to the Efficient Frontier. Ultimately, getting closer to the Efficient Frontier is the true goal.
@@affordanything thank you for the clarity. I'm not familiar with this at all or the 4 fund portfolio but I will look into the resources you mentioned. Thank you
Happy to help! Here are two episodes that you might enjoy: Paul Merriman video interview on the 4-Fund Strategy: th-cam.com/video/Yxo80JuwAUQ/w-d-xo.htmlsi=aIdpCMq5qyk3-yWj This is an older episode, and it's audio-only (from 2 years ago, before we started recording video), but Joe gives a beginner explanation of the Efficient Frontier: th-cam.com/video/Tz59b5H5puw/w-d-xo.htmlsi=lGlMUOt1HW7tOk75
Oh, that horizontal line comes from my laptop, which was placed at an angle in front of the camera. I’m shooting by myself, without a camera operator, and didn’t realize that the bottom frame of the shot could pick up the laptop.
Youre doing great paula. Dont mind my snarky comment. I also just left a voice recording on your website. I hope you answer it in the coming weeks. Thank you. @@affordanything
10 years ago I was gonna go all vtsax and chill. But I figured I had an edge working in technology and could get better returns investing in what I knew. Vtsax returned 173% in 10 years. I went 4 tech stocks in my entire retirement. Up about 2000% mostly due to Amazon and Tesla. In my regular investment account went all Bitcoin and it's up about 50000% in 10 years. I'm glad I went with my expertise and bet on myself especially being somewhat young I could handle the risk.
Incredible episode ! My skills as investor is basic but I understand the high level thinking, diversify into multiple indexes once you reach a critical mass in funds. I am following S&P 500 index (50%), Nasdaq 100 index for growth (30%) Dow Jones dividend index (SCHD - 10%) and finally some small cap value (AVUV 10%). Tracking to my retirement in 10 years.
Great discussion as always. I felt this was a great opportunity to explain with examples that how VTSAX only portfolio is not close to efficient frontier and how it can be made closer to efficient frontier. Multiple reference of 15 minute work per year could have been elaborated more on exactly what one would need to do every year with an example portfolio. Many folks in FIRE community subscribe to VTSAX and chill so in my view this topic could deserve 3 to 5 episode series as it can impact someone's net worth by more than 200%. I listened to Paul Merriman's episode as well but I am unclear to know how far I am from efficient frontier and what should I be doing to get closer to it. Thanks Paula and Joe!
Jason is obviously under the age of 40 (probably 37) and his limited lifespan of investing and has never dealt with full real-estate market cycles. Syndications are also very illiquid and are subject to requests for more $$$ if you want to save an investment if the market turns bad.
For Bond specialization, read Howard Mark's books like Mastering The Market Cycle.
As for books:
1) Psychology of Money - Morgan Housel
2) Foold By Randomness- Nassim Taleb
3) Millionaire Mission - Brian Preston
For investing help, DON’T read: Rich Dad Poor Dad or anything by Dave Ramsey or Suze Orman.
For clarification as to Dollar Cost Averaging (DCA):
You DCA to put $$ into things like your IRA related to work, so you're regularly investing when the $$ becomes investable (every 2 weeks), but if you get a lump some, say a bonus or inheritance, statistically, you're better off lump-summing it into the market, but psychologically, you might prefer to break it into 3 - 4 lumps, because if it's for long term, it likely wont be a big deal, but might make you feel better and less anxious.
The Wealthy Barber and Automatic Millionaire are my 2 books.
"I will teach you to be rich" is my honorable mention.
How exactly do you apply the efficient frontier to one's portfolio?
I know this is a podcast on investing but high school kids need something that first addresses finances. Something a long the lines of Ramit's I'll Teach You to Be Rich.
Paula’s fan club - like here. Click transfer from toilet (epic comment), so relatable 🤓🤭😅 great content
I didn't even know what a Roth IRA was back then. All I did was save a little here and there, but nothing serious.
Looking back, it was such a missed opportunity
I actually did set one up in my late 20s, and honestly, it's been a game-changer. The tax-free growth is huge. But the real key was having a solid plan for it. You can't just throw money in and expect magic
That's what I'm starting to realize now. You need to balance your investments, right? A Roth IRA is great, but if you're not managing it properly-like diversifying between stocks, bonds, or even real estate-it might not perform as well as you'd expect
Exactly. A lot of people think, 'Oh, l've got a Roth IRA, so I'm good to go,' but it's not that simple.
You've got to have the right mix, and that's where a wealth manager really comes in handy. Mine actually helped me balance my investments early on, which I think is why my account has grown so much
That's something I wish l'd done earlier too. Who do you work with? Because l've been managing mine on my own, but I feel like I'm just winging it at this point
I work with Joseph Nick Cahill. He's been in the game for over 20 years and really knows his stuff.
When I first started, I had no clue how to allocate my investments. He helped me find the right balance between aggressive growth stocks and safer options like bonds.
Please what is the name for the Real state ETF??
Some people says you should not rinse your mouth after brushing your teeth. Give the toothpaste time to take effect, then rinse after some time, or not at all.
For beginners, if you are really trading in the crypto space and you do not have a reliable mentor. Then you will definitely get liquidated in 90% of your trades. Yes, that is the sad truth. I remember when I first started in crypto in 2019 but later in 2020 I ended up selling it because I lost a lot trading on my own without guidance. Got back into crypto early 2023 with $100k and in a short period of time I made $732k. Thanks Chusmon Anderson.
He mostly uses Telegrams, using the username ✊✊✊✊
@Anderson6x9
that's he name
Anderson6x9
that's he name
Anderson6x9 👍👍👍
✊✊✊
Thank you for the information... I will contact him as soon as possible. I also want to gain good knowledge and stop losing.
Robert Kyosaki went off the deep end after Rich Dad Poor Dad (or is it after the first part of the book?). While the book is good, it is harmful to make high school students that he should be followed in what he's doing today. Edit: LOL I commented while listening, and as soon as I posted, you guys went there.
Not me I am still chilling. I suggest VTI, the ETF version as it is better at tax. I will be chilling for 15 more years, and assuming a market high at that time, I will move 100% into VMFXX.
Sophistication adds complexity
VOO was doing better when I compared the past few years, and I reallocated appropriately. And Vanguard made some smart moves with their VXUS positions within other Vanguard funds - they sold VXUS big time before it dropped. Except for dividends, VXUS hasn't moved over the last 5 years.
40:47: When you do a roll an IRA over you are not limited having the earnings remain in a 401k or IRA.
You can roll over everything (including the earnings) to the Roth but you will also need to pay the extra tax on the earnings up front.
There are some additional caveats to rolling over a traditional IRA to a Roth that you should discuss with a CPA.
1) If you have money that is sitting in an IRA like money from a previous employer, you can only roll over a percentage of the after tax amount. So if your after tax contribution is 1% of your IRA, only 1% of your roll over will be characterized as after tax which may leave you with considerable year end tax consequences.
2). You may have options within your 401k to supercharge the Roth contributions. First, select the Roth 401k if it is available.
2nd, you and your employer may be able to add up to 60k total in a 401k. The commonly advertised 401k limits is just for the pretax contributions. After that first limit your contributions become after-tax. Your 401k administrator may give you the option to do an automatic rollover right after the contribution. Depending on how much your employer allows you to contribute, you may be able to make 30k+ worth of Roth protected contributions within an employer plan.
Effectively making it the mega backdoor Roth conversion.
The only caveat to this is it limits your ability to access IRA earnings when considering an IRA to Roth conversion ladder 🪜 for early retirement planning.
Thank you.
Love The Goal!
Maybe I missed the context, but is Joe suggesting 15 more minutes of choosing another index vs VTSAX? Or diversifying in general?🤔
Yea, I think this is the flaw in his talk. He compares a specific investment VTSAX vs a theoretical “other” group of investments and does not give the ticker symbol for the alternative
@lucaswhite2681 right I thought I missed it but I understand in general, he's saying there are other options outside of VTSAX but didn't understand if they were referring to another "more specialized" index specifically
Joe is talking about using the Efficient Frontier to design your index fund allocation.
One example: Paul Merriman’s 4 Fund Portfolio, which will get you closer to the Efficient Frontier, as compared to an all-VTSAX portfolio.
If you search this channel for “Paul Merriman,” you can hear a detailed interview about the 4 Fund Portfolio concept.
But that said, Joe is also emphasizing that we shouldn’t blindly follow Paul Merriman as some type of “guru.”
Instead, the broader concept is to recognize that Merriman’s 4 Fund Portfolio is simply a model - one of many - that is designed to get you closer to the Efficient Frontier.
Ultimately, getting closer to the Efficient Frontier is the true goal.
@@affordanything thank you for the clarity. I'm not familiar with this at all or the 4 fund portfolio but I will look into the resources you mentioned. Thank you
Happy to help! Here are two episodes that you might enjoy:
Paul Merriman video interview on the 4-Fund Strategy:
th-cam.com/video/Yxo80JuwAUQ/w-d-xo.htmlsi=aIdpCMq5qyk3-yWj
This is an older episode, and it's audio-only (from 2 years ago, before we started recording video), but Joe gives a beginner explanation of the Efficient Frontier:
th-cam.com/video/Tz59b5H5puw/w-d-xo.htmlsi=lGlMUOt1HW7tOk75
This Dutch angle is......different.
Oh, that horizontal line comes from my laptop, which was placed at an angle in front of the camera.
I’m shooting by myself, without a camera operator, and didn’t realize that the bottom frame of the shot could pick up the laptop.
Also, thank you for teaching me what a “Dutch angle“ is in filmmaking! I Googled it after reading your comment.
Youre doing great paula. Dont mind my snarky comment. I also just left a voice recording on your website. I hope you answer it in the coming weeks. Thank you. @@affordanything
10 years ago I was gonna go all vtsax and chill. But I figured I had an edge working in technology and could get better returns investing in what I knew. Vtsax returned 173% in 10 years. I went 4 tech stocks in my entire retirement. Up about 2000% mostly due to Amazon and Tesla. In my regular investment account went all Bitcoin and it's up about 50000% in 10 years. I'm glad I went with my expertise and bet on myself especially being somewhat young I could handle the risk.
Sure Jan😂
@@Kornheiser10sometimes you gotta go all in but it could of turned out different if there wasn't a little luck involved
oh wow...Paula looks pretty different these days.
❤ is in the air 🫢🫢
High Yield dividends FTW
Paula 😍
VT and chill...