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EdLaFave

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    https://educatorsfightingforfairness.wordpress.com

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    Orlando, Fl

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  1. EdLaFave

    Fire Savers Race To Retirement

    I read his first 3 or 4 posts where he spoke from two different personas (MMM and the Skeptic). I fully understand he is trying to be an interesting showman and intentionally outrageous. I just don’t like it. I like my finances the same way I like my physics, math, and science. Teach me the facts, explain why it is useful, and show me how to apply it. If you attempt to play on my emotions (especially without thoroughly arguing/proving the facts), promise the world, or present yourself as some kind of savior...then I’m instantly going to dislike you and not trust you. It’s a hardwired physiological response. I also believe he is wildly out of touch with the circumstances of tens of millions (maybe more) of Americans. In the Playing With Fire trailer he said he accidentally built a cult. After reading those posts it seems hardly accidental. He seemed destined to be ignored or develop a cult like following...his presentation didn’t allow for many other outcomes. These quotes illustrate why I feel this way.. You will suddenly be able to fly freely through the world, free from having to work for a living, able to start living life as you choose, doing exotic things like spending time raising your young children, taking a 3-week vacation each month, or just enjoying understated shows of leisure like sweeping your driveway in pajamas at 11am on a sunny Thursday morning. Everyone can do it. But most people think they can’t because they’re still stuck in the Matrix. They blame “the economy” or other external factors, when really the only problem is they aren’t listening hard enough to Mr. Money Mustache. But there also a fine line between staying afloat and rising up quickly to become very wealthy. What if the person breaking even above found a way to save $10 a day instead of spending $25 more than she made each month? Even if you work in Wal-Mart, you make more money than I did, you get to walk around in a huge fancy store, and you can save almost everything you earn if you don’t get ridiculous and waste it all.
  2. EdLaFave

    Potential crash?

    One of the metrics I keep track of is my profits. I’m down 80k from my high watermark and I’m psychologically preparing to lose another 100k during 2019. If we hit a downturn I’ll be studying the emotional affect it has on me. So far I feel nothing about losses as long as I think about them in terms of dollars. However, if I think of losses in terms of how it affects my FIRE date (assuming a 5 year decline/recovery cycle), then I feel some real negative emotions. It’ll be an interesting ride and I look forward to seeing what affect a potential recession has on other investors. I will be staying the course simply because there isn’t another viable option.
  3. EdLaFave

    Potential crash?

    Took a quick glance at the market and we are in correction territory. I guess we will find out soon enough if we are heading towards bear market territory. If you believe in such things, the shiller p/e is a shade above 29, which is historically high and gives us plenty of room to fall. Once again, I feel like we are in the beginnings of a downturn.
  4. EdLaFave

    Fire Savers Race To Retirement

    Today is the first time I read MMM’s blog and I was surprised by just how much I disliked it. Now I understand some of the people criticizing FIRE. I’m looking forward to that FIRE documentary though. @sschullo, any idea when that is coming out?
  5. EdLaFave

    How To Teach Your Kids About Money

    Two reasons. When people hold concentrated risk, it is always interesting to see how it turned out. I love the threads on investment forums where somebody goes all in Tesla or shorts the S&P500. Having concrete comparison results makes the gamble more interesting. Also it sounded like you were happy with the performance when you had it and maybe a bit envious of the returns after you sold it. It looks like you should have felt the opposite...unhappy with the returns when you had it and happy you avoided subpar future returns when you sold it. Although I can’t say that for sure because my calculations used insufficient data (dividend data and time span data). At any rate, we agree. Total market index funds....buy them, hold them, and love them.
  6. EdLaFave

    How To Teach Your Kids About Money

    The holding period isn’t explicit, but an investment in Vanguards S&P500 index fund nearly tripled in nominal terms from Jan 1998 to Dec 2015 (18 years). From Jan 2016 until now the S&P500 is up 42.3% compared to the listed 3M gain of 20.5%. ...although in both of these calculations it doesn’t sound like you’ve accounted for dividends in the individual stock whereas the S&P500 calculations do. So the 3M stock probably did better than described above. ...either way, what’s done is done and you’re so clearly right that concentrated risks are to be avoided with the use of total market index funds.
  7. EdLaFave

    How To Teach Your Kids About Money

    What did they mean by that? My parents didn’t have money, which means they couldn’t teach me anything. I suspect children born into wealth have a huge head start on learning about money.
  8. I frequently day dream about a society that only steps away from personal free time to pursue activities that are truly necessary (healthcare, education, housing, utilities, food, art, safety, technology, etc). I suspect it would require an entirely different economic system. I suspect there will be more people than jobs and I suspect many won’t have the necessary skills or aptitude. I suspect we aren’t sufficiently civilized to deal with that possibility...I suspect we’d see movements to “cut the dead weight among us.” I imagine we’d have more success if virtually all of the work was done by robots...but maybe we’d just see even more wealth in the hands of whoever owns the robots. ...my view of people is dark. This thought experiment almost always turns to a dystopian future.
  9. EdLaFave

    WE are STUFFED... With too much stuff

    The stuff you buy ends up owning you. A minimalist friend told me that their rule of thumb is to get rid of anything and to refuse to buy anything that: 1) Isn’t regularly used (maybe at least once a month) 2) Isn’t generating additional happiness/health/wealth. People think I’m crazy, but do we really need much more than clothing, shoes, toothbrush, dishes, phone/computer, tv/monitor, blanket, pillow, transportation, and a place to live?
  10. EdLaFave

    Big Change At Vanguard

    Option 1: Keep all of your available assets invested and add to your portfolio whenever you have surplus income. As a result, your portfolio always reflects your ideal asset allocation. Option 2: Keep a significant portion of your portfolio in cash and slowly invest the cash over a fairly significant time period (a year?). Your portfolio will initially be far more conservative than your desired asset allocation until it gradually falls in line. I’d argue option 1 isn’t employing a scheme, they’re just keeping a constant asset allocation. I’d argue option 2 is employing a risk mitigation scheme, which results in a drastically different and variable asset allocation for a period of time. In my mind these two approaches are sufficiently different that we can’t accurately say they’re both doing the same thing even if they both invest regularly. Sure, they aren’t in 100% direct conflict. I suppose one would have to use leverage to short the market to be in direct conflict, but their philosophies are sufficiently different in my view. If somebody needs to employ an inferior and illogical investment scheme to handle a very rare event (windfall) and if that scheme has a limited duration (a year?)...then I suppose they aren’t committing the worst sin, which is why I’ve never argued strongly that somebody shouldn’t do it. My passionate argument is more reserved for a semantic pet peeve and illogical behavior. However, I worry the need for the mental gymnastics stems from a portfolio that is too risky for them to handle. I use market timing to refer to any investment scheme that causes you to change your portfolio based on your perception of the market or your beliefs/fears/greed regarding the market’s fluctuations. Perhaps other people use a different definition. There are certainly more harmful forms of market timing than DCA. At least DCA has a fixed time window and doesn’t encourage taking risky/concentrated positions. I’ve felt the same way my whole life.
  11. EdLaFave

    Big Change At Vanguard

    DCA isn’t a method of calculation, it’s an investment technique. Words evolve and eventually mean whatever people use them to describe. In my view people are destroying the meaning of DCA just as they have the word “literally”. In my view, Wikipedia has correctly defined DCA. In my view, we don’t need a special term to describe investing on a regular basis whenever you have surplus income. That is by default, plain old investing. To withhold cash from the market for some future time out of fear the market will decline is called market timing. Within that subcategory there are lots of schemes of which DCA is just one. We really don’t need a term to describe non-market timers just like we don’t really need a term to describe non-diabetics (although perhaps there is one). That risk exists regardless of whether you have new money or existing money. Basing future actions on exactly how you got into a particular situation isn’t logical because you are where you are regardless of how you got there. To think otherwise brings us errors like the sunk cost fallacy. If I spent the last 10 years slowly building up a million dollar portfolio then there is a chance that tomorrow the market will begin a huge decline. If I inherited a windfall, spent the last six months DCAing, and now have a million invested there is an equal chance that tomorrow the market will begin a huge decline. If I inherited a windfall today then there is an equal chance that tomorrow the market will begin a huge decline. ...in each scenario, I have to decide today (and every day) what percentage of my assets should be invested in the market. Each scenario is absolutely identical. People would correctly criticize me as a self-destructive market timer if I moved my portfolio into cash with the intention of spending 6 months DCAing and they’d simultaneously and incorrectly consider me a reasonable investor if I kept an inheritance in cash and slowly dripped it into the market over six months. If people plan to behave differently in functionally identical scenarios, it reflects a misunderstanding of reality on their part. DCAing does provide risk mitigation, but using DCAing to mitigate risk isn’t reasonable. That’s what bonds are for and if the risk profile of your portfolio is too high for you to stomach 100% of your assets being invested then your asset allocation is inappropriate and you need more bonds. You don’t need to keep arbitrary percentages of your portfolio uninvested for arbitrary periods of time. You don’t need a portfolio with an arbitrary asset allocation that changes at arbitrary times to arbitrary degrees.
  12. EdLaFave

    Potential crash?

    Alright everyone, as they say, I’ve predicted 30 of the last 2 down markets...so is this the moment we begin our return to more (historically) normal prices for stocks? (purely rhetorical because nobody knows anything, this is just meant to commiserate with anybody feeling the pain of losses) The past couple months have been tough. I hope we’re all riding it out well!
  13. I don’t blame the author too much, but I was repeatedly told I couldn’t access my 401k penalty free until an advanced age and it discouraged the notion of FIRE or the use of a 401k. Luckily the FIRE and investing community provided the correct information.
  14. I wish the authors of these articles would be more knowledgeable. They incorrectly say it isn’t possible to withdraw money from your IRA/401k penalty free if you retire early.
  15. I totally understand why somebody wouldn’t get involved and I wouldn’t try to change their mind. However, for me personally, I think people are guaranteed to act unreasonably in certain circumstances. I don’t like the idea of allowing that improper reaction to stop other people/me from doing the right thing and sharing helpful/accurate information. I prefer to limit the fallout of an unreasonable/illogical reaction to the individual person having that reaction.
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