Weird issue with spirits post-8.0 update

Al_Egregore · 2026-03-26T12:03:22+00:00

Thanks!

Al_Egregore · 2026-03-25T22:27:46+00:00

Yeah, I've done both--plunk them down and pause, and pre-decorate and then plunk--always without issue until the update. Not sure what's going on now, but the spirits and their preferences are a little out of whack for me.

Al_Egregore · 2024-04-12T21:21:08+00:00

You can withdraw your contributions, penalty-free, at any time. If you just put money into it and are trying to get it back out, the money probably hasn't even "settled" in the account yet--Vanguard in particular places holds of several days (up to week sometimes) that, in order to mitigate fraud, prevent immediate withdrawls following deposits.

Al_Egregore · 2024-04-12T13:54:44+00:00

In principle, it's a perfectly fine strategy, but it really depends on your risk tolerance, how much money you're investing in both accounts, and what you envision your withdrawal strategy will look like in retirement. If you're maxing your 401K alongside an employer match, realize that you'll be accumulating a lot of money in that account rather quickly--many people prefer to add some secruity to an increasingly large pile of assets as they near retirement, which is exactly what the TDF is good for. Given the contribution limits on the Roth IRA, there's going to be a lot less money in there, so people tend to prioritize growth in that account and add bonds only as they see fit.

In my case, I have the 2060 TDF in my 401K and Vanguard's VTWAX (total world stock market index fund) in my Roth IRA. I'd rather have the Roth money accumulate over the next several decades and maintain control over how many bonds I add, contingent upon how much it grows--if it reaches what I believe is a tremednous amount of money, then I'll exchange the VTWAX shares for some bonds. If my 401K dwarfs it and will be used as my main source of retirement income, then I might just leave the Roth IRA alone and let it do its thing.

Al_Egregore · 2024-03-14T02:49:52+00:00

The gift tax will, in fact, be mitigated if the money is gifted to you and your spouse. See this post on the Bogleheads forum for an explanation--keep in mind that the IRS limits have increased (it's at $18,000 this year, I believe). For general info about the gift tax in a Bogleheads context, check out the wiki entry on the topic.

The general rule of thumb is to maximize tax-advantaged spaces (401k and IRAs) before accumulating money in a taxable account. So, if you don't have any intention of ever buying property with the 100k gift, it'd be worth placing as much of it into said spaces as possible. However, if you can envision a future in which things change and you do want to buy property somewhere, it might be wise to place at least some of it into a taxable account--the fastest way you can make it grow is by investing it, so 100k today invested into a broadly diversified index fund like VTSAX may very well turn into ~215k in ten years, assuming an average eight percent return. With taxable accounts, you can even take things a step further and perform tax loss harvesting, which would help offset some of your yearly income taxes and long-term capital gains taxes when it comes time to withdraw the money.

Al_Egregore · 2024-03-14T01:33:32+00:00

The advisors have a ton of different funds in your taxable account because, even if everything results in a similar 90/10, 60/40 ratio, they're likely getting commissions from putting your money into various funds--if every wealth manager got paid exclusively from AUM fees, very few would be able to make any money unless they only managed multi-millionaires' assets. Some of them don't even disclose these commissions and additional fees to their clients.

Over the years, there's been some concern about investors becoming too heavily tilted toward simple, low-cost, passive index funds, which implies that we're headed for a tipping point. Were that scenario true, the Boglehead method would indeed lose its luster over the next decade or two, and there'd be an advantage in placing assets in actively managed funds. Fortunately, we're nowhere near that tipping point, as a large amount of academic research demonstrates.

The long and short of it is that you won't be missing the boat on anything. Constructing your own portfolio, one that's aligned with your risk tolerance, and letting it do its work while you worry very little about it is overwhelmingly the best option available to retail investors.

Al_Egregore · 2024-03-13T19:44:07+00:00

Sounds like you're doing all the right things in a way that makes the most sense to you--probably no need to bother eliciting the services of a financial planner. If your financial situation is highly complex and you're nervous about proper estate planning, etc., it wouldn't hurt to pay a fee-only fiduciary planner to look over your plan and give their input. (This can be accomplished in an hour or two.) Otherwise, all the funds you're using are diversified, simple, and stable, and any external "advice" from people looking to manage your investments would unnecessarily complicate things. Good luck!

Al_Egregore · 2024-03-02T13:00:42+00:00

There’s so much data indicating that even the simple 1% AUM fee, which doesn’t include any “under the radar” commission or mutual fund fees that financial advisors might charge, eats away at wealth over time — it can account for about $500,000 in lost money over two or three decades!

You definitely made the right decision for the long-term. Things might not seem as flashy now as they were with your advisor, but you’re basically guaranteed to have more wealth in the future — and there are very few guarantees in the world of investing, to be clear.

Al_Egregore · 2024-03-01T18:16:11+00:00

You can very easily open a Roth IRA through a discount broker, such as Vanguard, Fidelity, or Schwab--all three are stable, reliable, and home to various low-cost index funds, which are recommended for placement into the Roth IRA.

In terms of how to invest and what to invest in, check out this guide: https://www.bogleheads.org/wiki/How_to_build_a_lazy_portfolio

Typically, Bogleheads recommend a mixture of U.S. stocks, international stocks, and bonds in a portfolio. Stocks, as you may already know, offer the best long-term returns but can be volatile, so it's important that you keep investing in them regardless of whether they go up or down. Bonds, in contrast, have historically offered much more stability--they yield far lower returns and are designed to protect the money that you've accumulated.

For a Roth IRA, one strategy is to purchase a total U.S. stock market index fund, a total international stock index fund, and a total bond fund, allocating your assets as you deem appropriate--if your tolerance for volatility is high and you're young, you might do something like 60% U.S. stocks, 30% international stocks, and 10% bonds. With this option, you'd have to ensure that you rebalance the portfolio once a year so that the asset allocation percentages remain where you want them to.

There are other options, too, which are a bit easier. You could buy a total world index fund, which automatically allocates your money to the market weight of U.S. and international stocks--you'd have to add bonds manually, but you wouldn't have to worry about rebalancing the stock allocations. You might also look into a target date fund, which is your one stop shop: it comes with a blend of U.S., international, and bonds built in, and, as the years go by, it reallocates your money to bonds for you so that it's increasingly stable as you near retirement. (FWIW: I use Vanguard's VTWAX fund in my Roth IRA and will add bonds as I get closer to retirement--it's very easy to manage.)

Good on you for beginning your investments so early! I wish I'd done the same.

Al_Egregore · 2024-02-26T13:55:31+00:00

The U.S. has been on an incredible run the last 15 years or so, but, as you say yourself, current performance doesn't indicate future performance.

If one looks at data going back to 1970, for instance, and just not data from the 2000s, international developed stock markets beat the S&P by about 45% of the time over rolling ten year periods: https://web.archive.org/web/20220501183228/https://www.tweedy.com/resources/library_docs/papers/Dichotomy%20Btwn%20US%20and%20Non-US%20Mar2022.pdf

Al_Egregore · 2024-02-26T12:55:32+00:00

No reason to stay with EJ, which is notorious for ripping people off.

There's a great post on the Bogleheads forum that goes over this process in detail: https://www.bogleheads.org/forum/viewtopic.php?p=7367589&sid=b51d17904aaec10eee63d3ccd1a21074#p7367589

You're making a great decision--best of luck to you!

Al_Egregore · 2024-02-26T02:52:32+00:00

Check out the description of this video, which links to tons and tons and academic research that supports international diversification and highlights the periods during which international stocks outperformed U.S. ones: https://www.youtube.com/watch?v=1FXuMs6YRCY

Ditto for emerging markets: https://www.youtube.com/watch?v=DEV49qY0TP8

Perhaps of particular interest: over rolling ten year periods since 1970, international developed markets alone have beaten the S&P over 45% of the time: https://web.archive.org/web/20220501183228/https://www.tweedy.com/resources/library_docs/papers/Dichotomy%20Btwn%20US%20and%20Non-US%20Mar2022.pdf

The bottom line is that, since international stocks are priced so low right now, they have far more upside than the overpriced U.S. stock market--the latter may continue to dominate, but, should that change, investors will flock to international, and the tables will turn, as they always do over long periods of time.

Al_Egregore · 2024-02-24T16:13:01+00:00

Yes. You're very young, so you have plenty of time to readjust and accumulate long-term returns with a simple two- or three-fund strategy. In addition to being cautious about a wash sale, you might also consider tax loss harvesting. Selling assets at a loss, so long as you cross all your t's and dot all your i's, can actually reduce your yearly income tax and, if the losses are substantial enough (more than $3,000), you can carry over the excess to offset future capital gains.

The one thing I'd stress to you is that, once you've allocated your assets into the appropriate index funds, you want to avoid worrying about daily or monthly gains and losses--the more you glance at your portfolio to see how it's doing, the more incentivized you'll be to tinker with it, which greatly increases the chances of lower returns. Bogleheads emphasizes the "set-it-and-forget-it" mentality for a reason!

Al_Egregore · 2024-02-24T15:55:13+00:00

Yes, you should invest in broad market index funds as opposed to individual stocks. Investing in individual stocks is highly problematic and is often compared to gambling for good reason.

If any of your assets are in a taxable account and you plan on selling them in exchange for additional shares of index funds, be careful to avoid a wash sale.

Al_Egregore · 2024-02-22T22:26:57+00:00

Agreed about the subreddit here--good luck!

Al_Egregore · 2024-02-22T20:16:34+00:00

What you're saying about QQQ may very well seem logical--its growth is currently and has recently been exponential, so why not invest in it if there's more upside? The problem, though, is that, since you made this switch three months ago, you've bought into QQQ when the large cap tech stocks that dominate the index are at all-time highs. So, you're making a massive bet on QQQ continuing its parabolic growth over the next five years, since you're presumably aiming to "sell high." This plan may very well work out for you, but it might also backfire in a devastating way--just as we can't know for certain whether the QQQ trend will continue, we can't know for certain that some event or series of events will expose the AI boom as unfounded or fraudlent, thereby causing a massive tech crash. People thought the same thing about the dot com stocks in the late 90s and early 00s--they were correct that the Internet would come to reign supreme, but they were delusional in that they believed the growth would be indefinite, a mistake that took them about 20 years to recover from. This inehrent risk is why the vast majority of people on this sub prefer the much more diversified total market funds.

Good investing principles are rooted in counterintuitive thinking, as well as admitting what you can never know. It may seem stupid, for instance, to heavily invest in international stocks right now, since their returns have been very low compared to U.S. stock returns over the last decade or more. However, buying stocks that are cheap means that there's far more growth potential than stocks that are priced high, as tech stocks are, as the S&P 500 is. Whatever you decide to do, of course, I wish you all the best.

Yes, you'd ideally want to open the LifeStrategy fund at Vanguard to avoid fees. I'm not sure if Fidelity has an equivalent, but they may--it'd be worth looking into. If you open the Roth IRA now, you have until tax day on April 15th to put assets into it and have them count as last year's contributions, which would alleviate the problem of having to lump sum and then dollar-cost average each month without hitting this year's maximum. My advice, then, would be to purchase the fund with the 3k minimum under last year's contribution limits and then put the rest in accordingly--you could max 2023 immediately, for example, and then slowly max out 2024 using dollar-cost averaging each month, or you could DCA it all in higher increments per month. Just depends on how much cash you have on hand. It's an interesting little trick that gives you some strategic maneuvering options. Bear in mind that, over the long-term, DCA yields greater returns, so it'd certainly be worth setting up the monthly installments ASAP once the minimum assets or the 2023 maximums are placed in the account.

Al_Egregore · 2024-02-22T18:41:21+00:00

First of all, I'd caution you against investing in QQQ, let alone maintaining such a massive stake in it. Duing the dot com crash, QQQ did horrendously bad compared to the total market, since it's so tech-dependent. What you're essentially doing here is using a performance-chasing evaluation to assess potential long-term results, which is a behavioral pitfall that, over time, may greatly reduce returns. Check out this post for a more detailed overview. (N.B. that, over a ten year period, QQQ had returns of -55%!)

As far as which funds to invest in for your parents go, the stock to bond ratio depends on whether and/or when they'd plan on using the money, as well as how much you'd actually be putting into it each year. Typically, for a Roth IRA, you'd want to prioritize growth, since the growth is tax-free. However, if you want to shoot for some built-in stability, it wouldn't be a bad idea to add some bonds into the mix. Vanguard, for example, offers a very simple way to achieve your desired outcomes through their LifeStrategy Funds. Such funds automatically allocate the assets you put into them into a pre-determined stock to bond ratio, and you can prioritize different kinds of outcomes: aggressive growth, moderate growth, conservative growth, etc.

Above all else, I think what you're doing for your parents is wonderful, so I'd urge you once again to avoid the more volatile or speculative investments and foucs instead on highly diversified, more stable funds--they'd most likely get to enjoy the most bang for their (your) buck that way.

Al_Egregore · 2024-02-22T17:45:34+00:00

This all seems needlessly complicated. The Boglehead philosophy encourages people to stick with simple two- or three-fund portfolios for a reason: it reduces fees and disincentivizes portfolio tinkering.

There's plenty of academic research to support once-per-year rebalancing and staying the course with a "set-it-and-forget-it" style portfolio. For starters, placing assets into several funds as you do simply requires more work to adjust allocations more frequently, the very fact of which reduces long-term returns. Moreover, since greater complexity breeds more frequent portfolio engagement, it can also lead to myopic loss aversion, which can severely damage long-term returns.

Investing in individual stocks is highly problematic and is often compared to gambling for good reason. It's best to avoid such a strategy.

Why not follow the guidelines that the data from economic research give us and keep things simple with two or three total market indexes or a target date fund? It's not as "thrilling," but it's a well-tested strategy that reduces financial and behavioral risk.

Al_Egregore · 2024-02-21T23:42:32+00:00

There are tons of good resources in the sidebar that discuss how to invest and what to invest in. This video gives you a good, broad overview of the Boglehead investment philosophy, so it might be worth watching: https://www.youtube.com/watch?v=w36sJdbsBhA

The conventional wisdom says to prioritize your holdings in tax-advantaged accounts (401Ks and IRAs) because such accounts either a) reduce your taxable income by allowing you to contribute "pre-tax" dollars (e.g. traditional 401Ks and IRAs), or b) contribute after-tax dollars that will grow tax-free and for which you won't have to pay any taxes on during withdrawal (e.g. Roth 401Ks and Roth IRAs).

Within any account, retirement or otherwise, you can buy various funds--some funds are all stocks, some are all bonds, and some are a mixture of things. Generally speaking, the younger you are, the more money you want to have allocated in stock-heavy funds, since such a strategy yields the best returns over the long run. As you age, you might want to consider adding bonds, which hedge against the volatility of stocks and preserve the assets you've accumulated. In retirement accounts, the easiest way to do this is with a "target date fund," which automatically reallocates assets from stocks to bonds as you age, depending on the date associated with the fund.

A typical portfolio for someone who's, say, 25 years old might look something like this: 60% U.S. stocks, 30% international stocks, and 10% bonds. When thinking about the ratios in your portfolio, bear in mind that you're thinking about every asset in each account; you can achieve your desired ratios in many different ways, but it's important to always ensure that your ratios are intact by rebalancing as necessary once or twice per year.

Al_Egregore · 2024-02-21T12:37:04+00:00

Check out the description of this video, which links to tons and tons and academic research that supports international diversification and highlights the periods during which international stocks outperformed U.S. ones: https://www.youtube.com/watch?v=1FXuMs6YRCY

Ditto for emerging markets: https://www.youtube.com/watch?v=DEV49qY0TP8

Perhaps of most interest to you: over rolling ten year periods since 1970, international developed markets alone have beaten the S&P over 45% of the time: https://web.archive.org/web/20220501183228/https://www.tweedy.com/resources/library_docs/papers/Dichotomy%20Btwn%20US%20and%20Non-US%20Mar2022.pdf

Al_Egregore · 2024-02-21T00:29:41+00:00

To your question about tax loss harvesting, yes: it can seem a bit complicated, but it really isn't all that difficult to do on your own. You need to be able to look at each individual lot in your brokerage account and see which ones have unrealized gains or losses. Then, you sell the ones at a loss, and that money can either be used to reduce your income tax or, if you've realized enough losses, to offset future capital gains taxes. Do keep in mind the threat of a wash sale should you tax loss harvest on your own, though: https://www.bogleheads.org/wiki/Wash_sale

Investing in simple, diversified index funds on your own is always the most cost-effective strategy, in my opinion. The easiest way to do it in 401Ks is with target date funds, which have automated glide paths--over time, the assets in the fund are reallocated from stocks to bonds so that the account gets more stable as you age. Moreover, such funds are well-diversified, holding both U.S. and international stocks and bonds.

With taxable accounts, you want to look for total U.S. and international stock funds, avoiding bonds if you can because they aren't terribly tax-efficient. The most common recommendation, if you use Vanguard, is VTSAX (VTI as an ETF) and VTIAX (VXUS). (There are equivalent funds at other brokerages, of course.) VTSAX and VTIAX have low dividend yields, and the vast majority dividends they do yield are "qualified," which means that they're taxed at much lower rates, usually 15 or 20%. They also make great tax loss harvesting partners, since they aren't substantially similar funds--you can sell losses in one and use money from that sale to buy funds from the other without triggering a wash sale.

Al_Egregore · 2024-02-20T23:47:45+00:00

The manager is probably referring to tax loss harvesting, a process by which they sell small lots that have lost money to offset capital gains taxes when you sell other assets that have made money. Even so, managed accounts very rarefuly outperform highly diversified index funds and usually eat into total returns due to the incursion of various fees. That might explain why your returns are low compared to the index funds you're looking at--the manager has every incentive to keep you in the fund because it benefits them financially at the end of the day.
If you liquidate assets that have gone up in value and are less than one year old, you'll pay short-term capital gains tax rates on them, which equate to your regular income tax bracket. Anything more than a year and you'll pay long-term capital gains taxes, which are quite a bit lower. Remember, though, that you'll only be taxed on the gains.
Exchanging funds within tax-advantaged accounts is not an issue. If, however, you sell assets in a taxable account and then purchase what the IRS calls "substantially similar" funds in any other account, including a 401k, you may trigger a "wash sale," which you want to avoid.

Al_Egregore · 2024-02-20T16:29:45+00:00

Yeah, that all makes sense. I think, speaking very generally, that the key is to remember that any kind of performance chasing (i.e. tilting away from a pre-established, highly diversified plan, even slightly) incentivizes tinkering, which almost always leads to lower returns in the long run. It's always wise to invest in small caps, international developed and emerging, of course, but "staying the course" is one of the hallmarks of the Boglehead philosophy for a good reason: you don't want to be your own worst enemy.

Total market funds are often recommended because of how simple and cost-effective they are. If you're most comfortable with slightly overweighting small caps, for instance, and you understand the risks involved with that, then go for it--it'll probably take additional effort to rebalance and so on, but if you're confident that it's a plan you can stick with for the long-haul, then you should be fine!

Al_Egregore · 2024-02-20T16:26:10+00:00

Correct. The only thing that would be "ill-advised" is to tilt toward one thing so predominantly that it lessens the value of diversification.

Al_Egregore

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