WEBVTT - How Complicated Should Investing Be? (Bestie Ep) #1017 0:00:00.080 --> 0:00:03.360 Welcome to Had of Money. I'm Joel and I am Matt, 0:00:03.400 --> 0:00:27.960 and today we're asking the question how complicated should investing be? Yeah, So, 0:00:28.080 --> 0:00:30.400 speaking of investing, did you realize I didn't realize this 0:00:30.480 --> 0:00:33.120 until recently, until a couple of weeks ago, but we 0:00:33.400 --> 0:00:38.800 just exited the longest bear market since nineteen forty eight? 0:00:38.960 --> 0:00:41.040 Oh wow, isn't that crazy? That is crazy to think 0:00:41.040 --> 0:00:43.320 about it. So here's fail that long Agough ultimately it 0:00:43.400 --> 0:00:43.760 really did. 0:00:43.920 --> 0:00:45.800 And this is so the reason I'll bring this up 0:00:45.840 --> 0:00:47.879 is because I love the fact that we didn't even 0:00:47.960 --> 0:00:51.520 really notice that, and hopefully listeners didn't notice that either, 0:00:51.560 --> 0:00:55.120 because they were just continuing to invest like clockwork, continuing 0:00:55.160 --> 0:00:57.880 to plug money into the market. But oftentimes folks aren't 0:00:57.880 --> 0:01:01.440 doing that because they are over complicating things. They're making 0:01:01.440 --> 0:01:03.480 it a little too complex, is keeping them from their 0:01:03.520 --> 0:01:06.800 financial goals. And so we're going to try to make 0:01:06.840 --> 0:01:09.000 sure that does not happen from here on out if 0:01:09.000 --> 0:01:10.800 you're listening to this podcast. Yeah, and there's a couple 0:01:10.880 --> 0:01:14.000 things I think that might make sense to complicate a 0:01:14.000 --> 0:01:16.720 little bit on the investing front. But how complex you 0:01:16.800 --> 0:01:18.920 get and what you you know, what you choose to investor. 0:01:18.959 --> 0:01:20.720 We're going to talk about a bunch of different ways 0:01:21.280 --> 0:01:24.120 you can complicate things and maybe it's good, and then 0:01:24.160 --> 0:01:26.240 other ways in which you can overdo it. So that's 0:01:26.280 --> 0:01:28.760 the that you should completely avoid. That's the theme of 0:01:28.800 --> 0:01:31.959 this of this combo in this episode. What's this You 0:01:32.000 --> 0:01:34.360 wanted to talk about getting beers last night or something? Okay, 0:01:34.400 --> 0:01:36.440 So we got beers with a friend last night, Uh huh. 0:01:36.480 --> 0:01:40.959 And there's free parking all around where we hang but 0:01:41.000 --> 0:01:43.720 there's also a paid parking lot when all the free 0:01:43.720 --> 0:01:47.240 parking's taken really close to this particular establishment. Yes, And 0:01:47.440 --> 0:01:49.960 I was driving from across town and they were I 0:01:49.960 --> 0:01:52.080 couldn't find a free parking spot, and I did want 0:01:52.120 --> 0:01:55.000 to be a jerk and be late when when we'd 0:01:55.000 --> 0:01:57.720 had this hang plan for a little while. So I 0:01:57.720 --> 0:01:59.120 paid five bucks for parking. 0:01:58.960 --> 0:02:00.640 And I hate that. There's like not much I hate 0:02:00.640 --> 0:02:03.480 more than that. And so, but then we were walking 0:02:03.520 --> 0:02:06.160 to the car after hanging out, and he pointed out 0:02:06.160 --> 0:02:07.800 a couple of free spots. I didn't know about it. 0:02:07.800 --> 0:02:09.480 He's like, these are the this is the low hanging fruit. 0:02:09.520 --> 0:02:12.200 No one's ever spots. So hopefully I'll never have to 0:02:12.240 --> 0:02:12.640 do it again. 0:02:12.680 --> 0:02:15.120 Okay, So I got a couple of follow ups and okay, 0:02:15.160 --> 0:02:16.880 so when you were meeting up, yeah, like with a 0:02:16.919 --> 0:02:19.280 friend for beers, how late is too late because there's 0:02:19.280 --> 0:02:22.160 like a certain amount of window unless like you're it's 0:02:22.200 --> 0:02:24.359 a business meeting and like you're meeting a client. Obviously, 0:02:24.440 --> 0:02:26.200 if you're if you're on time, you're late, Like basically 0:02:26.240 --> 0:02:27.600 you need to get there early. But when it comes 0:02:27.639 --> 0:02:29.880 to like friend hangs, what's your window of time. 0:02:29.720 --> 0:02:33.120 I'd be in past ten minutes late, feels just oh yeah, rude, Okay, 0:02:33.160 --> 0:02:35.400 I totally if you're like three to five minutes late, 0:02:35.400 --> 0:02:36.160 it's it's probably not. 0:02:36.080 --> 0:02:38.079 A three to five which is why because I saw 0:02:38.120 --> 0:02:41.320 you walking into the place last night and I was like, 0:02:41.320 --> 0:02:42.799 oh crap, do I need to go ahead and pay 0:02:42.840 --> 0:02:44.520 for parking as well? And it was it was like 0:02:44.520 --> 0:02:46.160 four or five minutes after and so I was like, 0:02:46.200 --> 0:02:50.600 all right, I'm gonna circlecle the blog more time. And okay, 0:02:50.639 --> 0:02:52.760 so so you found a free spot five spot I 0:02:52.840 --> 0:02:55.200 paid like an idiot. So okay, what are your thoughts 0:02:55.240 --> 0:02:58.120 on how do you feel about questionable parking spots like 0:02:58.160 --> 0:03:01.280 spots that obviously if something is marked and it says 0:03:01.639 --> 0:03:03.760 no parking. I don't. You're not gonna park there. There's 0:03:03.800 --> 0:03:06.240 a good chance you might get towed whatever. Make somebody upset. 0:03:06.480 --> 0:03:09.480 But I guess I mentioned this because I feel like 0:03:09.639 --> 0:03:12.160 for years I have parked in spots that are like, oh, 0:03:12.639 --> 0:03:14.680 I'm not totally sure this is a legit spot. It 0:03:14.680 --> 0:03:17.200 doesn't say no parking, it's not right in front of 0:03:17.200 --> 0:03:19.399 a fire hydrant, there's no red curb that kind of thing. 0:03:19.960 --> 0:03:21.920 And I can't remember the last time I got a 0:03:21.919 --> 0:03:22.440 parking ticket. 0:03:22.480 --> 0:03:24.520 Yeah, it's a you gotta know what you're risking, right, 0:03:24.560 --> 0:03:26.440 and exactly I think I talk a risk I'm willing 0:03:26.480 --> 0:03:27.560 to take. A couple of years ago, when I was 0:03:27.600 --> 0:03:29.040 meeting a friend down by the airport, he was in 0:03:29.040 --> 0:03:31.040 town for a second. We grab beers and I parked 0:03:31.080 --> 0:03:34.680 in I think where like they the valet would park cars. 0:03:34.960 --> 0:03:37.120 But it was raining super hard, there was nobody out there, 0:03:37.160 --> 0:03:39.000 and there were plenty of spots, and so I risked 0:03:39.000 --> 0:03:40.560 it and I didn't get a ticket, which is great, 0:03:40.800 --> 0:03:42.920 but I also knew I might get a ticket or 0:03:43.040 --> 0:03:44.240 somebody might say something to me. 0:03:44.320 --> 0:03:46.600 Did you had you said something to the valet was there? 0:03:46.600 --> 0:03:48.040 When they're like a valet there and you're like. 0:03:47.960 --> 0:03:49.840 Hey, or is this an So I don't think there 0:03:49.840 --> 0:03:51.200 was anybody there, which is why I was like, all, 0:03:51.320 --> 0:03:53.960 I'm just gonna give it a shot. But yeah, well, 0:03:54.200 --> 0:03:56.480 paying for parking is a pet piat of mine. Every 0:03:56.520 --> 0:03:59.120 once in a you gotta know what you're willing to risk. Yeah, 0:03:59.160 --> 0:04:01.000 all right, let's mention the beer we're having on this episode. 0:04:01.000 --> 0:04:03.920 This one's called Symptom of Progeny. It's a golden sour 0:04:04.240 --> 0:04:06.320 ale that you picked up Matt at burial. 0:04:06.040 --> 0:04:07.520 So and not only did I pick one up for us, 0:04:07.520 --> 0:04:09.960 I actually picked up three additional bottles for Kate and 0:04:10.000 --> 0:04:12.280 I because we held this at the brewery and we 0:04:12.480 --> 0:04:15.200 liked it that much. At the time, I was thinking, 0:04:15.440 --> 0:04:18.240 this is a perfect barrel aged golden ale. So I'm 0:04:18.279 --> 0:04:19.560 looking forward to sharing it with you today. 0:04:19.600 --> 0:04:22.159 Same here. All right, Well, let's get to the subject 0:04:22.160 --> 0:04:25.159 of hand. Matt. We're talking about how complicated investing should be, 0:04:25.600 --> 0:04:27.440 and it just made me think back when we were 0:04:27.480 --> 0:04:29.960 renovating our home before we made the move to the Burbs, 0:04:30.440 --> 0:04:33.839 and I'd never really done that massive of a renovation 0:04:34.200 --> 0:04:36.799 and it was kind of fun to pick out specific 0:04:36.839 --> 0:04:40.040 finishes for all the stuff we were doing like the tile. 0:04:40.920 --> 0:04:45.240 Yeah, the tile in particular was top yea, and. 0:04:45.200 --> 0:04:47.760 It was just it was a fun endeavor up until 0:04:47.760 --> 0:04:50.039 a point, and then it started started to kind of 0:04:50.040 --> 0:04:53.680 get old after a while. Right, there were endless options 0:04:53.760 --> 0:04:56.520 of everything, and even picking out that tile, it took 0:04:56.560 --> 0:04:58.919 a lot of searching and looking to find the exact 0:04:59.240 --> 0:05:01.400 kind that we wanted. Then, so at a certain point 0:05:01.400 --> 0:05:03.680 in the process I kind of got decision fatigue, right, 0:05:04.240 --> 0:05:08.880 discussing paint colors and toilets even which who knew that 0:05:08.920 --> 0:05:10.920 you could really go down a rabbit hole of toilets, 0:05:10.920 --> 0:05:13.279 but yes you can, especially these days online. There's so many, 0:05:13.600 --> 0:05:16.240 so many different toilets you could get, and at some 0:05:16.240 --> 0:05:18.320 point you just stop caring which toilet suit your vibe 0:05:18.320 --> 0:05:21.200 the best right and investment choices I think can be 0:05:21.240 --> 0:05:25.400 similar to that kind of process of when you're renovating 0:05:25.440 --> 0:05:27.760 and all the choices you have, the choice overload. There's 0:05:27.800 --> 0:05:30.080 so many directions you can go in on the investing front, 0:05:30.240 --> 0:05:34.359 all sorts of options that you can consider, and I 0:05:34.360 --> 0:05:36.440 do think it for some things in life, more can 0:05:36.520 --> 0:05:40.279 be merrier, right, but it can also backfire, and things 0:05:40.320 --> 0:05:43.960 that could be fun or could be energizing ways in 0:05:44.000 --> 0:05:46.960 which more choice can be beneficial well as possible for 0:05:47.360 --> 0:05:49.960 it to go too far, especially especially when we're talking 0:05:49.960 --> 0:05:52.719 about building wealth. And so we would say, and something 0:05:52.720 --> 0:05:54.680 we talk about on the show regularly is that complicating 0:05:54.720 --> 0:05:57.240 things doesn't always make them better, and in fact, the 0:05:57.279 --> 0:06:00.640 opposite is typically true, and especially on the investing front. 0:06:00.720 --> 0:06:01.120 That's right. 0:06:01.200 --> 0:06:03.760 Yeah, So you even said the term decision fatigue, and 0:06:03.800 --> 0:06:07.120 that's when basically you are spending an inordinate amount of 0:06:07.120 --> 0:06:10.560 time trying to decide which of the many, many options 0:06:10.560 --> 0:06:12.880 you have available to you is going to suit you best. 0:06:13.000 --> 0:06:16.560 And when it comes to investing specifically, there are so 0:06:16.960 --> 0:06:20.480 many options, so many distractions that can keep us from 0:06:20.520 --> 0:06:23.359 investing the way that we should with the vast majority 0:06:23.360 --> 0:06:25.320 of our money. And you know, when there is that 0:06:25.480 --> 0:06:28.839 much noise, which is often coming from the talking heads 0:06:28.839 --> 0:06:32.400 in financial media, it is no wonder that we start thinking, 0:06:32.440 --> 0:06:35.200 Like we start asking ourselves, well, maybe I should be 0:06:35.200 --> 0:06:39.560 investing internationally, right, Like I should probably diversify more value 0:06:39.560 --> 0:06:42.839 stocks in my portfolio, invest in wine and art as well. 0:06:43.320 --> 0:06:46.520 I've heard that the returns on ESG funds they're pretty solid, 0:06:46.520 --> 0:06:48.760 So maybe that's the direction I should be going. But 0:06:48.839 --> 0:06:51.760 many of those questions and considerations, they don't actually help 0:06:51.800 --> 0:06:54.400 all that much, and in fact, they end up distracting 0:06:54.440 --> 0:06:56.520 us from from doing what it is that we should 0:06:56.560 --> 0:06:59.880 be doing. But that doesn't necessarily mean that we should 0:07:00.120 --> 0:07:02.440 barrier bury our heads in the sand. We think it 0:07:02.520 --> 0:07:04.800 is important to know what the other options out there 0:07:04.839 --> 0:07:08.440 are and then why it is that we should either 0:07:08.480 --> 0:07:10.520 consider them or ignore them all together. 0:07:10.600 --> 0:07:12.600 That's part of the reason we like Aldi Matt is 0:07:12.640 --> 0:07:16.000 because there's just fewer things, fewer choices right at your disposal. 0:07:16.280 --> 0:07:18.800 There's like one ketchup and so you just get the 0:07:18.920 --> 0:07:21.640 ketchup as you're walking by, and the simplicity, even though 0:07:21.800 --> 0:07:25.080 is it Berman's right, I think it's right lines yeah, 0:07:25.120 --> 0:07:26.800 And it's just nice to know, okay, cool, I need 0:07:26.840 --> 0:07:28.480 ketchup and I don't have to look at the price 0:07:28.520 --> 0:07:31.960 pronounce and different brand names and which one's on sale 0:07:32.040 --> 0:07:35.000 right now. You just grab the ketchup and it's so easy. 0:07:35.120 --> 0:07:36.600 So I think, yeah, we could stand to have a 0:07:36.600 --> 0:07:39.040 little more like al They in the way we think 0:07:39.040 --> 0:07:41.280 about investing. And part of the reason we're talking about 0:07:41.280 --> 0:07:44.480 this today is because when market conditions are good, there's 0:07:44.520 --> 0:07:46.560 even more of an inclination to shake things up, to 0:07:46.560 --> 0:07:49.200 start overthinking things. And you mentioned, hey, guess what, now, 0:07:49.240 --> 0:07:52.520 we've we've ended that longest bear run and we're in 0:07:52.520 --> 0:07:55.920 a bowld market right now. When we are in that 0:07:55.960 --> 0:07:59.000 bear market, though, when things are going badly, when the 0:07:59.000 --> 0:08:02.200 stock market is performing poorly, nobody wants to discuss smart 0:08:02.200 --> 0:08:04.800 investing methods. Everyone's just kind of like covering their head. 0:08:04.800 --> 0:08:06.480 They're grinning and bearing it. The assumption is that the 0:08:06.520 --> 0:08:08.080 market is going to continue to drop, and so why 0:08:08.080 --> 0:08:10.440 would you start investing if things are going to continue 0:08:10.840 --> 0:08:12.880 along the same path. Yeah, but then again, when things 0:08:12.880 --> 0:08:16.240 are going gangbusters, everybody's got an opinion, right. And so 0:08:16.440 --> 0:08:18.240 now that we are officially in this bowl market, we're 0:08:18.320 --> 0:08:21.520 up twenty percent from from those lows. We're seeing certain 0:08:21.560 --> 0:08:23.920 stocks popping in a big way, and I think more 0:08:23.960 --> 0:08:27.960 people are more inclined to start fiddling with their portfolio. 0:08:28.080 --> 0:08:31.240 It holds a greater allure right now when things are 0:08:31.280 --> 0:08:33.760 going up up into the right and the boring index 0:08:33.800 --> 0:08:36.600 fund route, it seems more intelligent, I think when the 0:08:36.640 --> 0:08:39.080 market is going down, but on the way up, it 0:08:39.200 --> 0:08:40.840 just it feels kind of like you should be making 0:08:40.880 --> 0:08:44.319 moves to amplify those gains, right, Why settle for average 0:08:44.400 --> 0:08:48.240 when certain things are popping off to greater degrees. But 0:08:48.440 --> 0:08:51.280 just because it's more exciting or just because it's more enticing, 0:08:51.640 --> 0:08:53.640 that doesn't mean it's the direction you should be heading in. 0:08:53.720 --> 0:08:56.200 That's right. Yeah. And also we're not just talking about 0:08:56.240 --> 0:08:58.600 the you know, that part of your portfolio that you 0:08:58.600 --> 0:09:01.719 want to speculate with that five percent or less that 0:09:01.760 --> 0:09:03.559 you'll hear us mention here on the show as a 0:09:03.600 --> 0:09:05.959 pressure relief valve. Now, we still think that this is 0:09:06.000 --> 0:09:08.840 a good rule of thumb, good thing to maintain. And 0:09:08.920 --> 0:09:11.200 for a lot of folks who do like to tinker, 0:09:11.400 --> 0:09:14.679 I think having a negligible amount of money that you 0:09:14.720 --> 0:09:17.520 can trade just for funzis helps them to stay the 0:09:17.559 --> 0:09:21.680 course and to keep doing the boring, old standard, bland 0:09:21.679 --> 0:09:25.400 thing with the bulk of their investment dollars. So eat 0:09:25.400 --> 0:09:28.640 your heart out with that small percentage of play investment dollars, go. 0:09:28.559 --> 0:09:30.720 To town, do the funkiest things you can. 0:09:30.640 --> 0:09:34.160 Think of the money though, that you're willing to completely lose. Right, 0:09:34.600 --> 0:09:36.760 But what we're talking about today is the other ninety 0:09:36.760 --> 0:09:40.840 five percent of your portfolio. A few specific temptations and 0:09:40.880 --> 0:09:43.120 then why it is that most of them should probably 0:09:43.120 --> 0:09:43.640 be avoided. 0:09:43.760 --> 0:09:45.400 Yeah, it's not that we have a problem with folks 0:09:45.480 --> 0:09:49.480 getting a little wild and a little speculative. It's just 0:09:49.840 --> 0:09:52.640 like five percent wild exactly. You just can't let it 0:09:52.679 --> 0:09:55.520 infect all the other areas that you're trying to do 0:09:55.880 --> 0:09:58.920 the boring, proven method of building wealth, right, and so 0:09:58.960 --> 0:10:01.040 totally if you leg it out of hand, I feel 0:10:01.040 --> 0:10:04.800 like it can kind of tank the majority of what 0:10:05.360 --> 0:10:07.440 of your assets that are going to be doing just 0:10:07.480 --> 0:10:10.600 the standard normal thing, which is investing in a total 0:10:10.720 --> 0:10:12.959 overall stock market kind of thing. Right, And we're also 0:10:13.240 --> 0:10:15.959 we're not going to focus too much on timing today, right, 0:10:15.960 --> 0:10:18.520 whether now is a good time to start investing if 0:10:18.520 --> 0:10:22.520 you haven't already, because for most people, dollar cost averaging 0:10:22.679 --> 0:10:25.920 is the best approach, right sticking your money into your 0:10:25.960 --> 0:10:29.040 four one K, your IRA, or your HSA your Health 0:10:29.040 --> 0:10:31.480 Save mus account, which we always talk about as being 0:10:31.840 --> 0:10:34.760 an awesome investment vehicle. Most people don't think of it 0:10:34.760 --> 0:10:35.000 that way. 0:10:35.080 --> 0:10:37.319 Talked about it on Monday. Yeah, we've been hitting it 0:10:37.320 --> 0:10:39.160 more lately. Yeah, Yeah, it's a good thing. It is 0:10:39.200 --> 0:10:41.679 because people need to know that. And if you're investing 0:10:41.760 --> 0:10:44.120 in each of those vehicles like clockwork. Every time you 0:10:44.160 --> 0:10:46.600 get paid without giving in a second thought. This is 0:10:46.600 --> 0:10:48.560 the best way to go, right. And so when it 0:10:48.559 --> 0:10:51.520 comes to timing, it's not something that we're fans of, 0:10:51.600 --> 0:10:53.840 and in fact, it's really easy to screw that up 0:10:53.840 --> 0:10:56.360 and actually shoot yourself in the foot as you're trying 0:10:56.400 --> 0:10:59.840 to time your entrance into the market in a given 0:11:00.160 --> 0:11:03.840 through year. But this strategy, the dollar cost averaging strategy, 0:11:03.840 --> 0:11:06.920 it works because you're able to remove your emotions from 0:11:06.920 --> 0:11:09.760 the equation, and our emotions can get the best of us. 0:11:10.000 --> 0:11:12.280 But that being said, if you really want to optimize 0:11:12.400 --> 0:11:15.920 for the highest returns, the data show that lump some 0:11:16.040 --> 0:11:18.400 investing at the beginning of the year or as soon 0:11:18.440 --> 0:11:20.360 as you're able to fund a retirement account is the 0:11:20.360 --> 0:11:22.000 way to go. And I guess the reason we talk 0:11:22.040 --> 0:11:25.040 about dollar cost averaging is and not lump some, it's 0:11:25.120 --> 0:11:27.360 just because that's how most people get paid. That's the 0:11:27.360 --> 0:11:29.800 way it makes most sense. But most folks aren't sitting 0:11:29.840 --> 0:11:31.240 on like a massive. 0:11:30.880 --> 0:11:35.480 Pile, you know. But if you are, if you do 0:11:35.559 --> 0:11:37.959 have the money in January to fully fund your roth 0:11:38.000 --> 0:11:40.560 IRA or something like that, go for it. Go to town. 0:11:40.559 --> 0:11:42.480 That's a better thing. To do than do the doing 0:11:42.480 --> 0:11:45.320 the dollar cost averaging approach. It's just that specifically, with 0:11:45.360 --> 0:11:48.080 something like a four toh one K, it makes sense 0:11:48.120 --> 0:11:51.720 to deploy it every single paycheck. So really the timing 0:11:51.720 --> 0:11:53.959 that we're talking about is the sooner the better, and 0:11:54.000 --> 0:11:55.440 the more regular the better too. 0:11:55.559 --> 0:11:58.000 Yeah, and I mean, I do think it's worth maybe 0:11:58.000 --> 0:12:00.880 trying to work towards that lump some kind of mindset 0:12:00.880 --> 0:12:03.280 if you're able to slowly over time over the years, 0:12:03.360 --> 0:12:05.880 kind of get ahead of it, right, So as opposed 0:12:05.880 --> 0:12:07.920 to you get paid, do you invest a portion of 0:12:07.960 --> 0:12:10.640 that but stockpiling that ahead type, So if you're able 0:12:10.640 --> 0:12:12.240 to max that out, make that payment that year, but 0:12:12.280 --> 0:12:15.319 then slowly over time you build up essentially like a 0:12:15.360 --> 0:12:17.960 little war chest, so that when the new year does 0:12:18.040 --> 0:12:20.160 hit and you are able to invest in those retirement 0:12:20.160 --> 0:12:23.400 accounts for the next year. The ability to make that 0:12:23.480 --> 0:12:26.280 happen sooner rather than later, it does over the long 0:12:26.320 --> 0:12:29.240 haul return you higher returns. But then when it comes 0:12:29.280 --> 0:12:32.040 to the actual securities or the actual investments that we're making, 0:12:32.320 --> 0:12:35.720 there's also a lot of nuance involved. Some things are 0:12:35.960 --> 0:12:38.199 going to be more negotiable than others, and some of 0:12:38.200 --> 0:12:40.040 the things we're going to mention today might actually be 0:12:40.240 --> 0:12:43.840 worth considering. So we'll talk about some of those alongside 0:12:43.880 --> 0:12:46.240 some ways that folks are attempted to invest their money 0:12:46.320 --> 0:12:47.840 right now that we think are going to be a 0:12:47.840 --> 0:12:51.360 distraction at best, but it actually could be damaging your 0:12:51.360 --> 0:12:52.679 future returns at worst. 0:12:52.840 --> 0:12:56.839 Yeah, and it feels like we have more investment options 0:12:56.880 --> 0:12:58.679 at our disposal than ever before. So it's like the 0:12:58.720 --> 0:13:01.240 opposite of all the like I was talking about, Matt. Now, 0:13:01.240 --> 0:13:03.400 it's just like plethora of this range, and not just 0:13:03.480 --> 0:13:06.400 inside of our four oh one K, but then even 0:13:06.559 --> 0:13:10.520 all of these exterior alternative investment possibilities that we could 0:13:10.559 --> 0:13:13.120 partake in that we're getting pitched right and left in 0:13:13.120 --> 0:13:16.240 different places, whether it's a newsletter that you read, or 0:13:16.280 --> 0:13:21.800 whether it's commercials that you see or social media advertisements. 0:13:20.400 --> 0:13:22.439 Just talking with friends. I feel like it's a conversation 0:13:22.559 --> 0:13:25.160 I have more often as I've gotten older. Folks, and 0:13:25.240 --> 0:13:28.280 rightly so, are more interested in investing. But just because 0:13:28.320 --> 0:13:30.400 folks are talking about it doesn't mean that it's something 0:13:30.400 --> 0:13:32.960 that you that you should be considering, because but it's. 0:13:32.800 --> 0:13:36.240 All enticing and it's like, yeah, your eyes can get 0:13:36.240 --> 0:13:37.760 as wide as saucers. You're like, wait, I can't invest 0:13:37.800 --> 0:13:39.760 in that or this or that. That's amazing, But then 0:13:39.920 --> 0:13:42.000 you I think a lot of people lose the plot 0:13:42.080 --> 0:13:43.920 if they start to go down that rabbit hole, and 0:13:44.000 --> 0:13:46.360 maybe they miss out on the main course. So yeah, 0:13:46.960 --> 0:13:50.320 let's talk about some of those added investing complications, when 0:13:50.360 --> 0:13:52.160 to say yes, when to say no. We'll get to 0:13:52.200 --> 0:13:53.400 more on that right after this. 0:14:02.800 --> 0:14:04.800 All right, we are back and we're talking about the 0:14:04.920 --> 0:14:08.840 many different forms that investing can take. And we're gonna 0:14:08.960 --> 0:14:13.080 kick this off with international stocks, because this is one 0:14:13.280 --> 0:14:15.800 I feel like it's kind of gained some steam lately. Joel. 0:14:15.960 --> 0:14:20.080 Neither you nor I have much exposure to international stocks ourselves, 0:14:20.440 --> 0:14:23.360 and we actually feel pretty good about our decision. But 0:14:23.360 --> 0:14:25.440 there are a lot of smart folks out there who 0:14:25.720 --> 0:14:28.840 have a different take. And again, yeah, it's a topic 0:14:28.840 --> 0:14:31.880 worth discussing because we get the question from listeners sometimes 0:14:31.920 --> 0:14:35.280 as well. But Jack Bogel, he's the founder. 0:14:35.080 --> 0:14:36.240 Of Van Guard. 0:14:36.320 --> 0:14:38.040 He's a pretty brilliant dude. 0:14:38.120 --> 0:14:39.920 Passed away what a year or two ago, Yeah. 0:14:39.960 --> 0:14:42.360 Went all that long ago. But he was famously not 0:14:42.480 --> 0:14:46.240 a big fan of international diversification for a number of reasons, 0:14:46.520 --> 0:14:48.840 and the truth is, so many of the companies that 0:14:48.920 --> 0:14:52.440 you own in either a total stock Market index fund 0:14:52.640 --> 0:14:56.280 or an SMP five hundred index fund, they do business overseas. 0:14:56.760 --> 0:14:59.240 And that was, honestly, that was Bogel's main argument. Something 0:14:59.320 --> 0:15:02.520 like forty percent of s and P five hundred revenues 0:15:03.000 --> 0:15:06.040 come from other countries come from overseas, and so folks 0:15:06.040 --> 0:15:09.720 who have diversified to more international holdings they haven't done 0:15:09.760 --> 0:15:10.200 as well. 0:15:10.840 --> 0:15:12.880 But of course past results. 0:15:12.520 --> 0:15:15.320 Are not indicative of future returns, and so we're not 0:15:15.360 --> 0:15:17.800 saying that like, oh, yeah, things, you should only be 0:15:17.960 --> 0:15:20.800 investing in US companies. This isn't like a Even though 0:15:20.800 --> 0:15:24.280 we love America for many reasons, we think that our 0:15:24.320 --> 0:15:27.680 country is a very fertile ground that comes to starting 0:15:27.720 --> 0:15:30.440 new industries and the ability for companies to get ahead, 0:15:30.600 --> 0:15:33.000 that doesn't necessarily mean that over the long haul that 0:15:33.040 --> 0:15:36.280 international stocks may not do better than the total US 0:15:36.360 --> 0:15:37.160 stock market. Yeah. 0:15:37.160 --> 0:15:39.000 Well, and the truth is our country is really only 0:15:39.000 --> 0:15:41.120 four percent of the world's population, but we have our 0:15:41.120 --> 0:15:44.040 stock market. The global wealth is something close to a 0:15:44.120 --> 0:15:46.880 quarter of it. So it turns out then when you 0:15:46.880 --> 0:15:50.200 look at the numbers, international stocks are relatively inexpensive these days. 0:15:50.480 --> 0:15:52.560 Which is part of the reason we're probably seeing more 0:15:52.560 --> 0:15:55.000 headlines about them in front of the show. Ben Carlson 0:15:55.000 --> 0:15:57.160 Matt who's just a brilliant mind of love reading his blog, 0:15:57.400 --> 0:16:00.160 he recently articulated his use on why folk should have 0:16:00.200 --> 0:16:04.320 more international stock exposure, and he said, global diversification is 0:16:04.320 --> 0:16:07.560 about accepting good enough returns to avoid the potential for 0:16:07.680 --> 0:16:10.600 terrible returns at an inopportune time. And I think it's 0:16:10.600 --> 0:16:12.360 a really good way of thinking about it. You're not 0:16:12.400 --> 0:16:15.680 necessarily if you do choose to invest internationally, doing it 0:16:15.720 --> 0:16:19.280 because you're looking for outsized mega returns or anything like that, 0:16:19.640 --> 0:16:22.200 and you might see better returns over the next decade, 0:16:22.280 --> 0:16:25.840 who knows, But yeah, I think investing internationally it's not 0:16:25.920 --> 0:16:29.240 a necessity. But given the outperformance that the US stock 0:16:29.240 --> 0:16:32.520 market has seen recently in the past decade plus, international 0:16:32.520 --> 0:16:35.160 stocks do look cheaper and more attractive right now. This 0:16:35.240 --> 0:16:38.000 is one of those things where I think you can 0:16:38.080 --> 0:16:41.320 complicate your life a little bit and add international stocks 0:16:41.360 --> 0:16:43.800 to your portfolio. But it's also not a have to. 0:16:44.160 --> 0:16:45.960 Yeah. I think Ben's argument it's more from like a 0:16:46.000 --> 0:16:50.000 wealth preservation standpoint, as opposed to him saying that like 0:16:50.080 --> 0:16:52.400 oh things are going to be gangbusters overseas in the 0:16:52.400 --> 0:16:52.920 coming decade. 0:16:52.960 --> 0:16:55.520 And some folks would point to Japan, whose stock market 0:16:55.640 --> 0:16:58.800 was rocket and rolling in the nineteen eighties, and I 0:16:58.800 --> 0:17:01.800 think finally just got to nineteen eighty levels like in 0:17:01.880 --> 0:17:04.920 recent weeks. So multiple decades, yeah, so like last decades really, 0:17:04.920 --> 0:17:08.000 which you know could happen if you're too heavy into 0:17:08.200 --> 0:17:08.760 one country. 0:17:08.840 --> 0:17:11.480 Yeah. But so even if you do want some international exposure, 0:17:11.480 --> 0:17:15.320 don't go overboard and don't make massive changes quickly, like 0:17:15.359 --> 0:17:18.160 all at once. I would consider keeping your portfolio as 0:17:18.160 --> 0:17:20.760 it is, keep it intact, but then start investing any 0:17:20.960 --> 0:17:24.159 new dollars into either target date funds or into another 0:17:24.480 --> 0:17:28.399 international fund like Vanguard's Total World Market Fund. That ticker 0:17:28.520 --> 0:17:30.520 symbol for that one is VT. And what's great about 0:17:30.520 --> 0:17:34.240 those two, well, especially Vanguards, the costs are so incredibly low. 0:17:34.920 --> 0:17:36.320 That's one of the things you get with Vanguard. 0:17:36.359 --> 0:17:39.200 You get that international international exposure, but you're barely paying 0:17:39.200 --> 0:17:40.600 more than what you pay for just an S and 0:17:40.600 --> 0:17:41.640 P five hundred andX fund. 0:17:41.680 --> 0:17:43.560 It is a little bit more on the target date funds, 0:17:43.560 --> 0:17:46.560 but they're I think it's fair because you are getting 0:17:46.600 --> 0:17:49.200 an added benefit with those target date funds as it's 0:17:49.240 --> 0:17:50.879 changing its allocation over the years. 0:17:50.880 --> 0:17:53.000 And this is and it truly is the most set 0:17:53.000 --> 0:17:53.840 it and briget it approach. 0:17:53.960 --> 0:17:56.479 Yeah, well exactly, because I mean, I don't know if 0:17:56.480 --> 0:17:58.199 we were planning even to talk about bonds, but a 0:17:58.200 --> 0:17:59.959 big part of that too is it changes how much 0:18:00.160 --> 0:18:02.920 of its holdings are in bonds, because when you're looking 0:18:03.000 --> 0:18:05.199 really really far out, like bonds are more conservative and 0:18:05.240 --> 0:18:08.320 so they're there oftentimes is a hedge two stocks. But 0:18:08.400 --> 0:18:10.879 then especially with the target date funds that are that 0:18:10.880 --> 0:18:12.879 we're quickly approaching, say like at twenty thirty fund, you're 0:18:12.920 --> 0:18:15.680