What is a Boglehead? I recently received this inquiry in response to my mention of the Sacramento Area Bogleheads, Chapter #61, in a blog post about several of us having lunch at Veg Café & Bar in Midtown Sacramento after a recent Sacramento Area Bogleheads meeting.
In response, I tweeted back a link to the Bogleheads wiki – but for those of you who been wondering but did not ask – this is for you!
Bogleheads follow a small number of investment principles that have been shown over time to produce risk-adjusted returns far greater than those achieved by the average investor. In short – they are very easy to understand and to implement – and they work!
These ideas come from the investing philosophy of Vanguard-founder John Bogle. The following is my greatly condensed version of these principles, along with some of my own commentary. You will find more detail on the Bogleheads.org Wiki.
- Develop a workable plan
- Invest early and often
- Never bear too much or too little risk
- Never try to time the market
- Use Index funds when possible
- Keep costs low
- Minimize taxes
- Invest with simplicity
- Stay the course
The foundation of financial independence and/or retirement security is to establish a sound financial lifestyle and plan. Among other things you will want to avoid bad debt. Already have bad debt? Well, your plan should include paying it off and not incurring new bad debt.
The fact is that most people will need to save a significant portion of their income every month to have enough money for a comfortable retirement. Living below your means is key.
The ideal time to start saving on a regular basis is early in life so that investment returns can benefit from compounding over a longer term. The best way to do this is to “pay yourself first” via automatic deductions from your paycheck.
Missed the “early in life” boat or have you had a financial setback? You won’t regret starting now as opposed to later or never.
It is important to have an appropriate mix of stock and bonds. Your asset allocation should reflect your risk tolerance, and your risk tolerance depends upon your individual circumstances. You want an asset allocation that allows you to sleep at night and not panic and sell during or after a market crash.
Bogleheads as a general rule gravitate to widely diversified stock funds as opposed to individual stocks. Investing this way guarantees that you will receive the average return of all investors. Being average is a good thing!
Buying a fund after it has done well, or selling a fund when it has done poorly (i.e. buy high and sell low) is guaranteed to produce poor results.
Index funds are the most cost effective way to diversify. Diversification lowers risk – and low costs matter!
The simpler your portfolio the better. Adopt a reasonable investment plan and stick with it. Rebalance when needed.
That is it in a nutshell.
The Bogleheads Forum
The Bogleheads Forum, investing advice inspired by John Bogle, is the place to go when you have questions after you have read the wiki, or if you would like advice on specific issues. For example, after you develop your draft investment plan you may want to ask forum participants for feedback and suggestions. When doing so – please utilize the requested format in order to receive the most helpful feedback.
You could not ask for a nicer and more helpful group of people. The forum is monitored so you will not find trolls, etc. You will want to take note of the forum rules and those topics not welcome on the forum. Forum moderation has been key to its success – the end result of a forum that embraces civil discussion and one that has stood the test of time.
You will find on the Bogleheads Forum the following categories:
- Investing – Help with Personal Investments – Have a question about your personal investments? No matter how simple or complex, you can ask it here.
- Investing – Theory, News & General – Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.
- Personal Finance (Not Investing) – Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills.
- Personal Consumer Issues – Questions on how we spend our money and our time – consumer goods and services, home and vehicle, leisure and recreational activities.
- Local Chapters and Bogleheads Community – Local Chapters, Wiki, and general Bogleheads community discussion, news, events, and announcements.
- Forum Issues and Administration – Discussions about the forum and contents.
Interested in reading one or more of the Bogleheads recommended books on investing? Placing your order on Amazon through the Bogleheads.org website link won’t cost you anything but the small fee it generates it will help support the site.
Sacramento-Area Bogleheads, Chapter 61
I have been a long-time Boglehead, but it is only within the last two years that a local chapter was formed. Our current meeting schedule is once a month on the 2nd Saturday of each month. Greg, our meeting coordinator, keeps everything running smoothly. Thanks Greg!
We are a small group – but we have a nice mix of members – those just starting out on their investing journey, others who are working towards financial independence and/or retirement and members who are already retired.
Members suggest topics they would like to see covered in upcoming meetings, and volunteer to research and present a topic now and again.
Like the on-line forum, but more personal, chapter members bring up issues they would like input on, share with other chapter members their experiences, and offer encouragement as needed. The dialogue with like-minded individuals is priceless.
Recognize yourself as a Boglehead from the description – but did not know you were? Not yet a Boglehead but want to be?
For more information about the Sacramento Area Bogleheads or to reserve a seat at the next meeting contact Greg, the Sacramento Area Bogleheads chapter coordinator, at Sacramento.Bogleheads@gmail.com.
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