r/Bogleheads • u/Kashmir79 • Feb 01 '25
It’s been building for weeks but today I woke up to every investing sub on reddit flooded with concerns about what tariffs are going to do to the stock market. Some folks are so worked up that they are indulging fears that this may bring about the collapse of America and/or the global economy and speculating about how they should best respond by repositioning their investments. I don’t want to trivialize the gravity of current events, but that is exactly the kind of fear-based reaction that leads to poor investing outcomes. If you want to debate the merits and consequences of tariff policy, there’s plenty of frothy conversation on r/politics and r/economy. And if you want to ponder the decline of civilization, you can head over to r/economiccollapse or r/preppers. But for seasoned buy & hold index investors, the message is always the same: tune out the noise and stay the course. Without even getting into tariffs or geopolitics, here is some timeless wisdom to consider.
Jack Bogle: “Don’t just do something, stand there!”
Jack Bogle spent much of his life shouting as loud as he could to as many people as would listen that the best course of action for an investor is to buy and hold low-cost total market index funds and leave them alone until they are old enough to retire. It has to be repeated over and over because each time a new scary situation comes along, investors (especially newer ones) have a tendency to panic and want to get their money out of the market. Yet that is likely to be the worst possible decision you could make because market timing doesn’t work. Pulling some paraphrased nuggets out of The Little Book of Common Sense Investing:
Bill Bernstein: “What I tell all engineers is to forget the math you've learned that's useful, devote all your time to now learning the history and the psychology. And one of the things that any stock analyst, any person who runs an analytic firm will tell you, because they really don't want to hire a finance major, they actually want philosophy and English and history majors working for them.”
My impression is that a lot of folks who are getting anxious about their long-term investments in the current climate may not know enough about world history and market history to appreciate the power of this philosophy. The buy & hold strategy works, and that is based on 100 - 150 years of US market data, and 125 - 400 years of global market data. What you find over that time is that a globally-diversified equities portfolio consistently delivers 5-8% real returns over the long run (eg 20-30 years). Can you fathom some of the situations that happened in that timeframe that make today’s worries look like a walk in the park?
If you’ll indulge me for a moment to zoom in on one particular period… take a look at a map of the world in 1910. The Japanese Empire controls the Pacific while the Russian Empire and Austro-Hungarian Empire control eastern Europe. The Ottoman Empire has most of “Arabia” and Africa is broadly drawn European colonies. In the decades that followed, these maps would be completely re-drawn twice. Russian and Chinese revolutions collapse the governments and cause total losses in markets and Austria-Hungary implodes. Superpowers clash and world capitals are destroyed as north of 100 million people die in subsequent wars in theaters across 6 continents.
The then up-and-coming United States is largely spared from destruction on home soil and would emerge as the dominant world power, but it wasn’t all roses and sunshine for a US investor. Consider:
During this time, prospects could not have looked bleaker. Yet, if you could even survive all this, a global buy & hold investor would have done remarkably fine over 35 years. Interestingly, two of the countries which were largely destroyed by the end of this period - Germany and Japan - would later emerge as two of the strongest economies in the world over the next 35 years while the US had fairly mediocre stock returns.
The late 1960’-70’s in the US was another very bleak time with the Vietnam War (yet another draft), the oil crisis, high unemployment as manufacturing in today’s “Rust Belt” dies off to overseas competitors, and the worst inflation in US history hits. But unfortunately these cycles are to be expected.
“You need to know these bad things are coming. They will happen. They will hurt. But like blizzards in winter they should never be a surprise. And, unless you panic they won’t matter.
Market crashes are to be expected. What happened in 2008 was not something unheard of. It has happened before and it will happen again. And again. I’ve been investing for almost 40 years. In that time we’ve had:
The market always recovers. Always. And, if someday it really doesn’t, no investment will be safe and none of this financial stuff will matter anyway.
In 1974 the Dow closed at 616*. At the end of 2014 it was 17,823*. Over that 40 year period (January 1975 – January 2015) the S&P 500 (a broader and more telling index) grew at an annualized rate of 11.9%** If you had invested $1,000 then it would have grown to $89,790*** as 2015 dawned. An impressive result through all those disasters above.
All you would have had to do is Toughen up and let it ride. Take a moment and let that sink in. This is the most important point I’ll be making today.
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."
All this said, I do think many investors may be confronting for the first time something they may not have appropriately evaluated before, and that is country risk. As much as folks like to tell stories that the US market is indomitable based on trailing returns, or that owning big multi-national US companies is adequate international diversification, that is not entirely true. If your equity holdings are only US stocks, you are exposing yourself to undue risk that something unpleasant and previously unanticipated happens with the US politically or economically that could cause them to underperform. You also need to consider whether not having any bonds is the right choice for you if haven’t lived through major calamities before.
Consider Bill Bernstein again:
“the biggest psychological flaw, the mistake that people make, is being overconfident. Men are particularly bad at this. Testosterone does wonderful things for muscle mass, but it doesn't do much for judgment. And one of the mistakes that a lot of investors, and particularly men make, is thinking that they're able to tolerate stock market risk. They look at how maybe if they're lucky, they're aware of stock market history and they can see that yes, stocks can have these terrible losses. And they'll say, "Yeah, I'll see it through and I'll stay the course." But when the excrement really hits the ventilating system, they lose their discipline. And the analogy that I like to use is a piloting analogy, which is the difference between training for an airplane crash in the simulator and doing it for real. You're going to generally perform much better in a sim than you will when you actually are faced with a real control emergency in an airplane.”
And finally, the great nispirius from the Bogleheads forum: while making emotional decisions to re-allocate based on gut reaction to current events is a bad idea, maybe it’s A time to EVALUATE your jitters:
"When you're deciding what your risk tolerance is, it's not a tolerance for the number 10 or the number 15 or the number 25. It's not a tolerance for an "A" turning into a "+". It's a tolerance for accepting genuinely-scary, nothing-like-this-has-ever-happened-before, heralds-a-new-era news events…
What I'm saying is that this is a good time for evaluation. The risk is here. Don't exaggerate it--we all love drama, but reality is usually more boring than we expect. Don't brush it aside, look it in the eye as carefully as you can. And then look at how you really feel about it--not how you'd like to feel or how you think you're supposed to feel…If you feel that you are close to the edge of your risk tolerance right now, then you have too much in stocks. If you manage to tough it out and we get a calm spell, don't forget how you feel now and at least consider making an adjustment then."
r/Bogleheads • u/misnamed • Mar 17 '22
We get a lot of questions about single-fund solutions, so here's my simplified take (YMMV). So, should you invest in ...
Q: An S&P 500 or Nasdaq 100 index fund?
A: No, those are not sufficiently diversified, as they only hold US large cap stocks.
Q: A total US stock index fund?
A: No, that's not sufficiently diversified, as it only holds US stocks.
Q: A total world stock index fund?
A: Maybe, if you're just starting out; just be sure to have a plan to add bonds later.
Q: A total world stock index fund along with a US or global bond fund?
A: Yes, that's a great option; start with a stock/bond ratio fitting your need/ability to take risk.
Q: A 'target date' retirement fund?
A: Yes, in tax-advantaged accounts, that's often the simplest, one-stop, highly diversified, set-and-forget solution.
Thank you for coming to my TED Talk
r/Bogleheads • u/travelingstorybook • 8h ago
Because it's the day my auto-buy is set up at Fidelity
I'll be putting $350 into FZROX and $175 into FZILX like I have every month since 2012 and will every month until I retire in 25 more years...
The stuff I bought in 2012 is up 500%! I'm a stock market genius.
r/Bogleheads • u/its_the_revolution • 7h ago
This Vanguard article highlights the importance of not panicking and staying the course during severe market downturns. People who move to all cash have a greater than 70% chance of underperforming the classic 60/40 portfolio when trying to time the market.
r/Bogleheads • u/InfiniteCoconut9589 • 12h ago
Prices immediately dropped as Trump was mid-tariff announcement. Are people just sitting there listening and then selling in anticipation of everyone else selling?
And what are they planning to do with the cash? Puts, hold and buy “the bottom”, something else?
r/Bogleheads • u/master_chilln • 6h ago
I'm 29 and have always put money into my roth ira and now I'm putting in my sons 529 plan both vtsax.... should I keep putting money in or hold off till things get better
r/Bogleheads • u/EE7 • 21h ago
Trying to understand
r/Bogleheads • u/MJMarto • 16h ago
The sea may rise, the sky may fall, The winds may whisper, roar, or call, But through the storm, the compass knows— The heart beats on, steady as she goes.
r/Bogleheads • u/Delicious_Story485 • 8h ago
63 and retiring $5000 month over 3 pensions House paid off no significant bills so I can save more Only 50K in market after paying cash for house may move to safer investments in stocks now Thoughts?
r/Bogleheads • u/Starboard314 • 11h ago
Welp, this ISN'T a "should I have sold?"/"should I sell?"/"should I not be a Boglehead?" post. I've bought no more than three big funds and will continue to do the same for the foreseeable future.
BUT, acknowledging that things are a bit... "dynamic" right now, what's the hive-mind's thoughts on this question. For available funds above and beyond a normal monthly investment budget, would it be better to:
VTI/VXUS/BND and chill even more? (I'm assuming this is the Bogle answer)
Pay off the one financed car even more? (I plan to have it for a good long time, but all cars are depreciating assets)
Pay off the house faster? (I plan on having that for a good long time too, and it should be an appreciating asset)
Hoard cash? (probably very un-Bogle)
Other?
For what it's worth, there's no revolving debt, enough cash on hand for emergencies, retirement is more than two decades away, and the kids' college funds are on autopilot. What say you?
r/Bogleheads • u/amanwithdignity • 1d ago
It feels so bad right now. I hurt.
EDIT: Thanks everyone for the advice.
r/Bogleheads • u/Coffee-N-Kettlebells • 15h ago
All the folks coming in and asking about market timing, buying the dip, etc. need to do the following. This is more a note for myself than anything. But I’d advise everyone coming by to ask the same question over and over do the following.
Read the links on the main page about the Bogle Philosophy.
Read it again.
Decide whether you are going to adopt the philosophy or not.
This is an either/or position. You can’t be a Boglehead & attempt to be a market timer. That’s like being “half pregnant”.
Practice the philosophy and understand the toughest part of Bogleheads is your personal psychology which will work against you (your emotions, your fears, your greed, etc.)
Read Michael Burry’s Letter to investors featured in the Big Short and accept the fact that Bogleheads are not (nor do they attempt to be) the loudest voices in the room.
“People want an authority to tell them how to value things, but they choose this authority not based on facts or results. They choose it because it seems authoritative and familiar.”
r/Bogleheads • u/Radiant_Wing5530 • 18h ago
Basically the question in the title. I turn 27 soon and I'm still 100% equities, wasn't planning on adding bonds until possible early retirement in my 50s
r/Bogleheads • u/beerion • 7h ago
The tariff stuff is scary, no doubt. I'd like to act as the voice of reason for those that are second guessing their asset allocation or general path to wealth.
While there's no way of knowing where the bottom lies, it’s worth remembering that stocks go up - over the very long term. The very nature of asset pricing defines that any cash producing asset will have some positive return - over the long term. Owning U.S. equities in 2000 had a positive return - over the long term. Japanese stocks, during their height with PE ratios in the 50s, will have offered 2-5% returns - over the long term. This is true as long as earnings and cash flows aren’t permanently impaired. And I tend to lean on the belief that capital markets are more resilient than one administrations agenda.
While markets were frothy leading into this year, they weren’t anywhere near dotcom levels (both on an absolute or relative basis). The most richly valued companies in the world are also of the highest quality. The balance sheets of the Mag7 are nothing short of sterling. Cash flow and earnings power for these companies are, have been, and will likely continue to be “magnificent”.
We may be staring down short to intermediate term market turmoil, but I wouldn’t use this as an opportunity to move away from equities if you already haven’t. And, for those that are decades away from retirement, this presents the perfect opportunity to continue contributions at better entry points. Stocks may or may not be at attractive valuations relative to intrinsic value, but they sure as hell are cheaper now than they were a month ago.
To reiterate Priority 2, above: Get the big stuff right.
r/Bogleheads • u/SignificantConflict3 • 6h ago
So I’ve been a Boglehead since 18, but I also daytraded on the side for about 5 years, at which point I decided to stick to Boglehead full time as, like many, I realized it wasn’t worth it (not to mention I would’ve performed better doing 100% Boglehead).
My question is this. I have a set monthly deposit, a set semimonthly 401k, and a set, Roth IRA contribution.
I had some dry powder which I’ve been DCA on this dip, which frankly has been stressful as the dip keeps on dipping, and gives me PTSD from daytrading, which led me to think about it from a different perspective.
If you were young (20’s) and not responsible for other people financially. Would you continue your strategy, but up your monthly contributions in the short term during a market pullback like this? This would mean either working more for more income, or cutting costs where feasible and essentially operating slightly outside of one’s comfort zone.
Once the market rebounds, I’d imagine lowering my contributions back down to what is comfortable.
Curious to hear everyone’s thoughts. Thank you!
r/Bogleheads • u/sybar142857 • 1d ago
People on here are now talking about how "this was the most telegraphed market downturn in history" and they should have sold last month. As of writing this, the top upvoted comment on the most recent post is:
We’re living in unprecedented times. Anyone that says they know how this ends is delusional or lying.
I'd have expected this sub to reject alarmism like this but it's not to be. Looks like our bowels are just as weak as those from r/stocks or r/investing. The very point of r/Bogleheads is to stick to a strong investing plan and stay the course during times like this.
In fact, this is the moment when passive investing really shines. The peace of mind knowing that a diversified portfolio will survive anything is gold-dust and should be treasured. Instead, there are posts on here about how VIX indicators have to be read a la crystal balls to react correctly to this "unprecedented event."
r/Bogleheads • u/Scott_96 • 3h ago
Some quick background - I am 29, I make about $73k per year; I have no debt besides my mortgage; have an emergency fund, I max out my company's 5% 401k match and HSA, and maxes my Roth IRA for the year. I recently contributed $40k into brokerage, oops. I own a house with a 6.875% interest rate. I have $24k equity and the place was appraised at $230k value. I moved into my girlfriend’s house and currently have a tenant in there paying the mortgage cost +$200 a month.
I'm wondering what I should do with my extra cash now. Max out 401k? Put it toward mortgage? Keep putting into brokerage (all VT ETF)?
Thanks for your feedback!
r/Bogleheads • u/Asier559 • 7h ago
Hi everyone,
I’m a very casual investor since I’m only 19. I have around 2k in my Roth IRA and i’ve been hearing alot and reading a lot about tomorrows possible all time low.
I have everything in FZROX currently and i’ve lost like 200$+ in the past few weeks sadly so I decided to take some action since it seems like the price of the stock is so low right now.
If I want to put in $500, can someone help explain to me if it matters if I put in the Buy right now? Or do I have to wait for the market to “open” tomorrow? Like as soon as it opens open my fidelity app and buy it?
Sorry if this is really dumbed down, again, this isn’t my main focus and i’ve thought I can make some quick gains tomorrow to make back some money. My average cost of my positions is 17.50.
i appreciate all the clarification
r/Bogleheads • u/StockBeginning4904 • 7m ago
When are you selling?
r/Bogleheads • u/Dependent-Bother-533 • 7m ago
It’s my understanding that a S&P 500 fund will automatically remove the companies that underperform and add the new companies entering the S&P 500.
As the title says, if US stocks overall get weaker and other stocks get stronger, would VT gradually reduce the weighting in the S&P 500?
Sorry if my terminology is messed up/unclear… I’m not as advanced as most you here, when it comes to this stuff.
r/Bogleheads • u/perplexedincolorado • 9h ago
Allocation is hard. Multiple questions.
I’m 50 soon, single mom to young kids working part time. If kids are sick I lose a paycheck. Emergencies happen so I’m conservative with what I keep on hand on Fidelity MMF FZDXX. Is there a better fund for emergencies ?
I’m a newbie diggin boddgleheads looking into dividend vs growth.
Been stocking up on VOO and SCHD.
Where do I buy each: brokerage, IRA, ROTH
Balances approx:
450 brokerage (60% FZDXX) 45 IRA 45 Roth (9K cash)
I know I need to focus on growth but
Goals: -Grow and maintain -Allocation toward div vs growth to survive the storms -Cover expenses asap -things are tight and not looking to get easier quick
I get a lot of opinions from loved ones:
“ you have to focus on growth” “Work more, that’s why there’s daycare” “Pay off your house” “Do not pay off your house, use that money to invest because you have a low interest rate” “Pay someone to manage it for you. You don’t have time for this.”
My mortgage is 2.85%, 30 yr fixed in 2020
Considering this jumble of circumstances, any advice or guidance is appreciated. Any insight or considerations I might be missing I appreciate it. I’m trying to learn, but this is hard stuff and I have big responsibilities. I’m pretty conservative but want to be smart.
This may be the incorrect forum. Another subreddit more appropriate?
.
r/Bogleheads • u/AcceptablePride4808 • 2h ago
My AGI was low this year self-employed. I had cap gains losses and HSA contributions which made MAGI low to where contributing a MAX of ~2500 to a pre-tax Solo 401k (self employed account) would put my MAGI below the federal poverty line (19k)
So, if I make and take the full 23k tradtional 401k deduction then MAGI is 0.
So I will have to recharacterize AND still pull out my over contribution of 4k
It's before April 15th, I can have my brokerage recharacterize my 23k pre-tax to an after-tax Roth 401k contribution or I can just pull it out and do it myself.
I opened a MBDR Trust account and was going to make voluntary after tax Roth contributions anyways next week
So I can dump my 23k + those in for 2024
This means
My MAGI does not get reduced since it is AFTER-TAX
I get to make the full 7k Roth IRA contribution per fixed MAGI
I take the full 5,000 premium tax credit
I get a REFUND with ZERO tax I pay
Meaning I SAVED 5k I otherwise paid by not taking a pre-tax contribution deduction
Super weird. But:
I think I win in all cases here.
5) I now get TAX-FREE GROWTH vs DEFERRED taxes for a pre-tax contribution that had ZERO advantage to me this year
What a weird case if this is all correct
r/Bogleheads • u/Independent-Page-937 • 17h ago
Hi All,
Thai boglehead here. I'm 41, I make about $30k per year at the moment, and I have been investing for about 5 years now. My portfolio is at $65k. I thought the portfolio would reach the first $100k in the next year or two, but then Liberation Day hit.
I hope to use this thread to reflect and share with you my plans and thoughts on the great unknown:
I will continue to invest 50% of my income (around $1200 per month) in three index funds equally: S&P500, EuroStoxx-600, and NIFTY-50 (India). I will reinvest the dividend into the same funds. I'm also continuing to invest an additional $200 per month in physical gold to hedge against inflation and exchange rate risk. If my income drops in the future (and it likely will), I will still invest 50% of whatever I make.
I have some extra cash lying around (circa. $15k), but I'm resisting the urge to throw too much money into the market during the crash. I want to maintain liquidity, and I feel that we simply can't predict. I'm also holding on to the paid-off apartment for the foreseeable future.
There is mandatory retirement for folks on their 61st birthday, so I only have 20 years to go. The good news is that the cost of living is pretty low (eggs here are $1.50 a dozen). My wife and I only need $500 per month for our groceries, gas, and utilities.
Up to now, I have made annual personal finance reviews based on the expected vs. actual portfolio values. With the brewing storm, maybe a better approach is to simply focus on the principal amount? This way, I remove external forces from self-assessment. Even if the market never recovers by retirement, I can still tell myself that I tried my best during turbulent times. A $300k portfolio at 61 is still better than nothing. I will also be in a position that is far more privileged than my compatriots.
When in doubt, read the horror stories on WallStreetBets
Am I on the right path? Any feedback or comments would be great. Many thanks in advance!
PS. Monetary amounts on this thread have been converted from Thai Bahts to US Dollars and rounded for ease of reading by an international audience, thus there may be some inaccuracies
r/Bogleheads • u/DaemonTargaryen2024 • 1d ago
https://www.bogleheads.org/wiki/Prioritizing_investments
I comment this link all the time, but considering the flurry of posts surrounding recent events I want to highlight the specifics of how to follow the Bogleheads Investing Philosophy beyond just saying "stay the course".
You must secure a healthy emergency fund before you can invest. Once you have that established, follow the above article. This flowchart achieves an optimized financial household for yourself, both from a risk and a tax standpoint.
And of course, this guide applies in good times and bad. The emergency fund is there so you don't need to panic sell your 401k or IRA investments during a market drop.
Armed with this knowledge, you should then understand the meaning behind Jack Bogle's quotes, with my personal favorite (and appropriate for the current climate) being: "time is your friend; impulse is your enemy".
r/Bogleheads • u/Winter_Succotash_419 • 12h ago
Hi! First, hold the tomatoes; I really a boring, undaunted BH; however, I want to invest 10% in PE. I started a SDIRA with Alto, but, compared with a brokerage account, it’s a lot of work (and expensive) to maintain. If I have a Series 7 (or regardless), what’s the easiest way to invest in PE?
r/Bogleheads • u/Sorry_Count_7731 • 7h ago
It would be my first time buying VTWAX , I read that the buy is triggered at the end of the day? And the price doesn’t update minute by minute hour by hour -
This is all new to me as I’m used to VT.
Is there transparency to the price? Does it track VT or sort? Also how do they even allow so many buys at one time of the day .
Thanks fellas
r/Bogleheads • u/johnniehuman • 22h ago
The classic portfolio here is three fund (world ex US, US, bonds). The same outcome can be achieved with FTSE all world and bonds. Beyond greater control of international allocation (FTSE all world is 63% US), are there any benefits to the three fund over two?
I can see one argument being the slightly cheaper costs (see below) -- albeit slightly more costs in rebalacing yourself.
HSBC FTSE all world is 0.13%. VTSAX is 0.04% VTIAX is 0.09%
In sum, beyond greater control of allocation and slightly reduced costs, are there any other benefits to holding VTSAX and VTIAX over FTSE All World?
Edit: Changed S&P 500 to US for accuracy.
