WEBVTT - How Complicated Should Investing Be? #689 0:00:00.080 --> 0:00:03.400 Welcome to Had of Money. I'm Joel and I am Matt, 0:00:03.440 --> 0:00:07.600 and today we're asking the question how complicated should investing be? 0:00:27.400 --> 0:00:30.600 Yeah, So, speaking of investing, did you realize I didn't realize. 0:00:30.320 --> 0:00:32.320 This until recently, until a couple of weeks. 0:00:32.120 --> 0:00:37.000 Ago, but we just exited the longest bear market since 0:00:37.240 --> 0:00:40.519 nineteen forty eight? Oh wow, isn't that crazy? I'm just 0:00:40.520 --> 0:00:42.559 crazy to think about it. So here's feel that long ago. 0:00:42.680 --> 0:00:45.199 Ultimately it really did. And this is so the reason 0:00:45.240 --> 0:00:46.920 I'll bring this up is because I love the fact 0:00:47.000 --> 0:00:50.400 that we didn't even really notice that, and hopefully listeners 0:00:50.520 --> 0:00:53.400 didn't notice that either, because they were just continuing to 0:00:53.479 --> 0:00:56.520 invest like clockwork, continuing to plug money into the market. 0:00:56.520 --> 0:01:00.240 But oftentimes folks aren't doing that because they are over 0:01:00.280 --> 0:01:02.800 complicating things. They're making it a little too complex, is 0:01:02.880 --> 0:01:05.760 keeping them from their financial goals. And so we're going 0:01:05.840 --> 0:01:08.119 to try to make sure that does not happen from 0:01:08.120 --> 0:01:10.280 here on out if you're listening to this podcast. Yeah, 0:01:10.280 --> 0:01:12.720 and there's a couple things I think that might make 0:01:12.800 --> 0:01:15.360 sense to complicate a little bit on the investing front. 0:01:15.440 --> 0:01:18.080 But how complex you get and what you you know, 0:01:18.120 --> 0:01:19.679 what you choose to investment. We're going to talk about 0:01:19.680 --> 0:01:23.160 a bunch of different ways you can complicate things and 0:01:23.240 --> 0:01:25.160 maybe it's good, and then other ways in which you 0:01:25.200 --> 0:01:28.040 can overdo it. So that's the that you should completely avoid. 0:01:28.200 --> 0:01:30.640 That's the theme of this of this combo in this episode. 0:01:30.840 --> 0:01:33.440 What's this You wanted to talk about getting beers last 0:01:33.520 --> 0:01:35.440 night or something? Okay, So we got beers with a 0:01:35.440 --> 0:01:38.040 friend last night, Uh huh. And there's free parking all 0:01:38.080 --> 0:01:42.000 around where we hang but there's also a paid parking 0:01:42.040 --> 0:01:45.120 lot when all the free parking's taken really close to 0:01:45.160 --> 0:01:48.600 this particular establishment. Yes, And I was driving from across 0:01:48.600 --> 0:01:51.320 town and they were I couldn't find a free parking spot, 0:01:51.520 --> 0:01:52.920 and I did want to be a Jurrik and be 0:01:53.080 --> 0:01:55.600 and be late when when we'd had this hang plan 0:01:55.680 --> 0:01:58.480 for a little while, so I paid five bucks for 0:01:58.520 --> 0:01:59.560 parking and I hate that. 0:01:59.640 --> 0:02:02.000 There's like not much I hate more than that. And 0:02:02.040 --> 0:02:04.200 so but then we were walking to the car after 0:02:04.720 --> 0:02:07.040 hanging out, and he pointed out a couple of free spots. 0:02:07.120 --> 0:02:08.480 I didn't know about it. He's like, these are the 0:02:08.560 --> 0:02:10.680 this is the low hanging fruit. No one's ever spots. 0:02:10.880 --> 0:02:12.639 So hopefully I'll never have to do it again. 0:02:12.680 --> 0:02:15.160 Okay, So I got a couple of follow ups then, 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 --> 0:02:27.639 you need to get there early. But when it comes 0:02:27.680 --> 0:02:29.680 to like friend hangs, what's your window of time? 0:02:30.120 --> 0:02:32.120 Think i'd be in past ten minutes late? Feels just 0:02:32.160 --> 0:02:34.760 oh yeah, rude, Okay, I totally if you're like three 0:02:34.760 --> 0:02:36.160 to five minutes late, it's it's probably not. 0:02:36.280 --> 0:02:38.240 Three to five, which is why because I saw you 0:02:38.280 --> 0:02:41.320 walking into the place last night and I was like, 0:02:41.360 --> 0:02:42.800 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 0:02:44.560 --> 0:02:46.200 four or five minutes after and so I was like, 0:02:46.200 --> 0:02:50.640 all right, I'm gonna circle the blog more time. And okay, 0:02:50.639 --> 0:02:52.640 So I so you heard a free spot firee spot. 0:02:52.680 --> 0:02:54.880 I paid like an idiot. So okay, what are your 0:02:54.880 --> 0:02:57.960 thoughts on how do you feel about questionable parking spots 0:02:58.040 --> 0:03:00.720 like spots that obviously if something is marked and it 0:03:00.760 --> 0:03:03.600 says no parking. I don't. You're not gonna park there. 0:03:03.600 --> 0:03:05.520 There's a good chance you might get towed whatever, make 0:03:05.560 --> 0:03:09.160 somebody upset. But I guess I mentioned this because I 0:03:09.160 --> 0:03:11.400 feel like for years I have parked in spots that 0:03:11.440 --> 0:03:13.959 are like, oh, I'm not totally sure this is a 0:03:14.040 --> 0:03:16.800 legit spot. It doesn't say no parking, it's not right 0:03:16.840 --> 0:03:18.760 in front of a fire hydrant, there's no red curb, 0:03:18.800 --> 0:03:21.239 that kind of thing. And I can't remember the last 0:03:21.240 --> 0:03:23.360 time I got a parking ticket. Yeah, it's a you 0:03:23.400 --> 0:03:25.520 gotta know what you're risking, right, and exactly I think 0:03:25.520 --> 0:03:26.919 I took a risk I'm willing to take a couple 0:03:26.919 --> 0:03:28.240 of years ago, when I was meeting a friend down 0:03:28.280 --> 0:03:29.640 by the airport, he was in town for a second. 0:03:29.639 --> 0:03:32.079 We grab beers and I parked in I think where 0:03:32.120 --> 0:03:34.280 like they the valet. 0:03:33.960 --> 0:03:36.200 Would park cars. But it was raining super hard, there 0:03:36.240 --> 0:03:38.240 was nobody out there, and there were plenty of spots, 0:03:38.280 --> 0:03:40.000 and so I risked it and I didn't get a ticket, 0:03:40.000 --> 0:03:42.320 which is great, but I also knew I might get 0:03:42.360 --> 0:03:44.280 a ticket or somebody might say something to me. 0:03:44.320 --> 0:03:46.480 Did you had you said something to the valet? Was 0:03:46.480 --> 0:03:48.000 there when they're like a valet there and you're. 0:03:47.880 --> 0:03:49.600 Like, hey, or is this a thing? So I don't 0:03:49.600 --> 0:03:51.080 think there was anybody there, which is why I was like, 0:03:51.120 --> 0:03:53.960 all right, I'm just gonna give it a shot. But yeah, well, 0:03:54.200 --> 0:03:56.720 paying for parking is a pet pia mine. Every once 0:03:56.720 --> 0:03:59.120 in a while, 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 --> 0:04:03.960 This one's called Symptom of Progeny. It's a golden sour 0:04:04.280 --> 0:04:06.120 ale that you picked up Matt at burial So. 0:04:06.160 --> 0:04:07.480 And not only did I pick one up for us, 0:04:07.520 --> 0:04:10.000 I actually picked up three additional bottles for Kate and 0:04:10.040 --> 0:04:12.280 I because we had 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 --> 0:04:18.280 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. 0:04:19.640 --> 0:04:22.120 Same here. All right, Well, let's get to the subject 0:04:22.160 --> 0:04:25.200 of hand. Matt. We're talking about how complicated investing should be, 0:04:25.600 --> 0:04:27.920 and it just maybe think back when we were renovating 0:04:27.920 --> 0:04:29.960 our home before we made the move to the Burbs, 0:04:30.480 --> 0:04:33.839 and I'd never really done that massive of a renovation 0:04:34.240 --> 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 --> 0:04:43.040 Yeah, the tile in particular was. 0:04:43.279 --> 0:04:47.040 Top and it was just it was a fun endeavor 0:04:47.400 --> 0:04:49.800 up until a point, and then it started started to 0:04:49.839 --> 0:04:52.320 kind of get old after a while. Right, there were 0:04:52.440 --> 0:04:55.760 endless options of everything, and even picking out that tile, 0:04:55.960 --> 0:04:58.279 it took a lot of searching and looking to find 0:04:58.279 --> 0:05:00.880 the exact kind that we wanted. Then, so at a 0:05:00.960 --> 0:05:03.680 certain point in the process I kind of got decision fatigue, right, 0:05:04.279 --> 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, 0:05:10.960 --> 0:05:13.280 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 0:05:16.279 --> 0:05:18.320 point you just stop carring which toilet suit your vibe 0:05:18.360 --> 0:05:21.200 the best right And investment choices I think can be 0:05:21.240 --> 0:05:25.440 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 0:05:27.839 --> 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 --> 0:05:36.480 do think it for some things in life, more can 0:05:36.520 --> 0:05:40.320 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 0:05:47.400 --> 0:05:49.960 it to go too far, especially especially when we're talking 0:05:49.960 --> 0:05:52.479 about building wealth, and so would we would say, And 0:05:52.520 --> 0:05:54.039 something we talk about on the show regularly is that 0:05:54.120 --> 0:05:57.040 complicating things doesn't always make them better, and in fact, 0:05:57.200 --> 0:06:00.640 the opposite is typically true, and especially on the investing front. 0:06:00.760 --> 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. 0:06:13.040 --> 0:06:16.599 And when it comes to investing specifically, there are so 0:06:16.960 --> 0:06:20.520 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 0:06:23.400 --> 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 0:06:28.880 --> 0:06:32.440 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 0:06:35.240 --> 0:06:39.120 investing internationally, right, Like I should probably diversify. 0:06:38.600 --> 0:06:41.400 More value stocks in my portfolio, invest. 0:06:41.120 --> 0:06:43.880 In wine and art as well. I've heard that the 0:06:43.920 --> 0:06:47.120 returns on ESG funds they're pretty solid, So maybe that's 0:06:47.120 --> 0:06:49.440 the direction I should be going. But many of those 0:06:49.520 --> 0:06:52.400 questions and considerations they don't actually help all that much, 0:06:52.440 --> 0:06:55.200 and in fact, they end up distracting us from from 0:06:55.200 --> 0:06:57.640 doing what it is that we should be doing. But 0:06:57.839 --> 0:07:01.159 that doesn't necessarily mean that we should bury our heads 0:07:01.160 --> 0:07:03.320 in the sand. We think it is important to know 0:07:03.680 --> 0:07:06.640 what the other options out there are and then why 0:07:06.760 --> 0:07:09.840 it is that we should either consider them or ignore 0:07:09.840 --> 0:07:10.520 them all together. 0:07:10.640 --> 0:07:12.640 That's part of the reason we like Aldi, Matt is 0:07:12.640 --> 0:07:16.040 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 --> 0:07:21.600 ketchup as you're walking by, and the simplicity even know 0:07:21.640 --> 0:07:25.720 what is it? Burman's lines, Yeah, and it's just nice 0:07:25.720 --> 0:07:27.600 to know, Okay, cool, I need ketchup, and I don't 0:07:27.600 --> 0:07:30.679 have to look at the price pronounce and different brand 0:07:30.720 --> 0:07:32.920 names and which ones on sale right now. You just 0:07:33.040 --> 0:07:35.760 grab the ketchup and it's so easy. So I think, yeah, 0:07:35.760 --> 0:07:37.800 we could stand to have a little more like Aldi 0:07:38.040 --> 0:07:40.440 in the way we think about investing. And part of 0:07:40.480 --> 0:07:42.520 the reason we're talking about this today is because when 0:07:42.560 --> 0:07:45.720 market conditions are good, there's even more of an inclination 0:07:45.800 --> 0:07:48.640 to shake things up to start overthinking things, and you mentioned, hey, 0:07:48.640 --> 0:07:52.040 guess what, now we've ended that longest bear run and 0:07:52.240 --> 0:07:55.680 we're in a bold market right now. When we are 0:07:55.680 --> 0:07:58.120 in that bear market, though, when things are going badly, 0:07:58.800 --> 0:08:01.080 when the stock market is performing poorly, nobody wants to 0:08:01.080 --> 0:08:04.520 discuss smart investing methods. Everyone's just kind of like covering 0:08:04.520 --> 0:08:05.720 their head. They're grinning and bearing it. 0:08:05.760 --> 0:08:07.400 The assumption is that the market is going to continue 0:08:07.400 --> 0:08:09.280 to drop, and so why would you start investing if 0:08:09.320 --> 0:08:11.640 things are going to continue along the same path. 0:08:11.720 --> 0:08:14.680 Yeah, But then again, when things start going gangbusters, everybody's 0:08:14.720 --> 0:08:17.000 got an opinion, right. And so now that we are 0:08:17.040 --> 0:08:19.360 officially in this bowl market, we're up twenty percent from 0:08:19.440 --> 0:08:22.440 from those lows. We're seeing certain stocks popping in a 0:08:22.440 --> 0:08:25.760 big way, and I think more people are more inclined 0:08:26.040 --> 0:08:29.040 to start fiddling with their portfolio. It holds a greater 0:08:29.160 --> 0:08:32.040 allure right now when things are going up up into 0:08:32.040 --> 0:08:35.200 the right and the boring index fund route, it seems 0:08:35.200 --> 0:08:37.640 more intelligent, I think when the market is going down, 0:08:38.000 --> 0:08:40.040 but on the way up, it just it feels kind 0:08:40.040 --> 0:08:42.560 of like you should be making moves to amplify those gains, right, 0:08:42.720 --> 0:08:46.520 Why settle for average, when certain things are popping off 0:08:46.760 --> 0:08:49.960 to greater degrees. But just because it's more exciting or 0:08:50.040 --> 0:08:52.480 just because it's more enticing, that doesn't mean it's the 0:08:52.520 --> 0:08:54.480 direction you should be heading in. That's right, Yeah. 0:08:54.480 --> 0:08:57.240 And also we're not just talking about the you know, 0:08:57.320 --> 0:08:59.280 that part of your portfolio that you want to speculate 0:08:59.320 --> 0:09:02.360 with that five percent or less that you'll hear us 0:09:02.360 --> 0:09:05.120 mention here on the show as a pressure relief valve. Now, 0:09:05.120 --> 0:09:07.040 we still think that this is a good rule of thumb, 0:09:07.280 --> 0:09:09.800 good thing to maintain. And for a lot of folks 0:09:09.880 --> 0:09:13.400 who do like to tinker, I think having a negligible 0:09:13.480 --> 0:09:15.960 amount of money that you can trade just for funzis 0:09:16.240 --> 0:09:18.880 helps them to stay the course and to keep doing 0:09:19.480 --> 0:09:23.080 the boring, old standard, bland thing with the bulk of 0:09:23.160 --> 0:09:26.160 their investment dollars. So eat your heart out with that 0:09:26.200 --> 0:09:28.679 small percentage of play investment dollars. 0:09:28.440 --> 0:09:30.760 Go to town, do the funkiest things you can. 0:09:30.640 --> 0:09:34.280 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 0:09:36.800 --> 0:09:38.000 five percent of your portfolio. 0:09:38.480 --> 0:09:40.280 A few specific. 0:09:39.800 --> 0:09:42.400 Temptations, and then why it is that most of them 0:09:42.400 --> 0:09:43.640 should probably be avoided. 0:09:43.760 --> 0:09:45.480 Yeah, it's not that we have a problem with folks 0:09:45.480 --> 0:09:49.560 getting a little wild and a little speculative. It's just 0:09:49.880 --> 0:09:52.600 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 0:09:59.000 --> 0:10:01.120 totally if you leg it out hand, I feel like 0:10:01.160 --> 0:10:05.440 it can kind of tank the majority of what of 0:10:05.480 --> 0:10:07.560 your assets that are going to be doing just the 0:10:07.600 --> 0:10:11.320 standard normal thing, which is investing in total overall stock 0:10:11.320 --> 0:10:13.520 market kind of thing. Right. And we're also we're not 0:10:13.520 --> 0:10:16.240 going to focus too much on timing today, right, whether 0:10:16.679 --> 0:10:18.600 now is a good time to start investing if you 0:10:18.640 --> 0:10:22.839 haven't already, because for most people, dollar cost averaging is 0:10:23.000 --> 0:10:26.120 the best approach, right sticking your money into your four 0:10:26.200 --> 0:10:29.200 one K, your IRA, or your HSA your Health Save 0:10:29.240 --> 0:10:32.000 mus account, which we always talk about as being an 0:10:32.040 --> 0:10:35.040 awesome investment vehicle. Most people don't think of it that way. 0:10:35.120 --> 0:10:37.360 Talked about it on Monday. Yeah, we've been hitting it 0:10:37.360 --> 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 0:10:41.800 --> 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 it a second thought. This is 0:10:46.640 --> 0:10:48.560 the best way to go, right, And so when it 0:10:48.600 --> 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 --> 0:10:56.400 and actually shoot yourself in the foot as you're trying 0:10:56.440 --> 0:10:59.840 to time your entrance into the market in a given 0:11:00.040 --> 0:11:03.840 on through year. But this strategy, the dollar cost averaging strategy, 0:11:03.840 --> 0:11:06.880 it works because you're able to remove your emotions from 0:11:06.920 --> 0:11:09.800 the equation, and our emotions can get the best of us. 0:11:10.040 --> 0:11:12.240 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 --> 0:11:20.400 as you're able to fund a retirement account is the 0:11:20.400 --> 0:11:22.040 way to go. And I guess the reason we talk 0:11:22.040 --> 0:11:25.079 about dollar cost averaging is and not lump some, it's 0:11:25.120 --> 0:11:27.319 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 --> 0:11:32.920 on like a massive pile when this. 0:11:32.960 --> 0:11:35.720 You know. But if you are, if you do have 0:11:35.760 --> 0:11:38.200 the money in January to fully fund your roth IRA 0:11:38.440 --> 0:11:40.480 or something like that, go for it. Go to town. 0:11:40.600 --> 0:11:42.480 That's a better thing to do than do the doing 0:11:42.520 --> 0:11:45.360 the dollar cost averaging approach. It's just that specifically, with 0:11:45.400 --> 0:11:47.840 something like a four to oh one k, it makes 0:11:47.880 --> 0:11:51.400 sense to deploy it every single paycheck. So really the 0:11:51.440 --> 0:11:53.640 timing that we're talking about is the sooner the better, 0:11:53.800 --> 0:11:56.480 and the more regular the better too. Yeah, and I mean, 0:11:56.520 --> 0:11:58.920 I do think it's worth maybe trying to work towards 0:11:59.000 --> 0:12:01.520 that lump some kind of mindset. If you're able to 0:12:01.840 --> 0:12:04.000 slowly over time over the years, kind of get ahead 0:12:04.000 --> 0:12:07.040 of it, right, So as opposed to you get paid, 0:12:07.040 --> 0:12:09.640 do you invest a portion of that but stockpiling that 0:12:09.679 --> 0:12:11.200 ahead time, So if you're able to max that out, 0:12:11.280 --> 0:12:13.600 make that payment that year, but then slowly over time 0:12:13.880 --> 0:12:16.520 you build up essentially like a little war chest, so 0:12:16.559 --> 0:12:18.640 that when the new year does hit and you are 0:12:18.760 --> 0:12:21.320 able to invest in those retirement accounts for the next year. 0:12:22.120 --> 0:12:25.000 The ability to make that happen sooner rather than later, 0:12:25.160 --> 0:12:28.000 it does over the long haul return you higher returns. 0:12:28.200 --> 0:12:29.400 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, 0:12:32.360 --> 0:12:35.920 there's also a lot of nuance involved. Some things are 0:12:35.960 --> 0:12:38.240 going to be more negotiable than others, and some of 0:12:38.240 --> 0:12:40.080 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 --> 0:12:52.760 future returns at worst. 0:12:52.840 --> 0:12:56.880 Yeah, and it feels like we have more investment options 0:12:56.920 --> 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 --> 0:13:03.440 it's just like plethor 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 --> 0:13:10.560 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 0:13:13.160 --> 0:13:16.240 different places, whether it's a newsletter that you read, or 0:13:16.320 --> 0:13:20.360 whether it's commercials that you see or social media advertisements, 0:13:20.400 --> 0:13:21.120 just talking with friends. 0:13:21.120 --> 0:13:23.400 I feel like it's a conversation I have more often 0:13:23.520 --> 0:13:26.199 as I've gotten older. Folks and rightly so, are more 0:13:26.200 --> 0:13:29.160 interested in investing. But just because folks are talking about 0:13:29.160 --> 0:13:31.040 it doesn't mean that it's something that you that you 0:13:31.040 --> 0:13:34.439 should be considering, because but it's all enticing and it's like, yeah, 0:13:35.640 --> 0:13:36.680 your eyes can get as wide. 0:13:36.520 --> 0:13:37.920 As saucer as you're like, wait, I cant invest in 0:13:37.920 --> 0:13:40.040 that or this or that. That's amazing, but then you 0:13:40.480 --> 0:13:42.160 I think a lot of people lose the plot if 0:13:42.200 --> 0:13:44.240 they start to go down that rabbit hole, and maybe 0:13:44.280 --> 0:13:47.200 they miss out on the main course. So yeah, let's 0:13:47.200 --> 0:13:50.440 talk about some of those added investing complications, when to 0:13:50.440 --> 0:13:52.360 say yes, when to say no. We'll get to more 0:13:52.400 --> 0:13:53.400 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 0:14:09.000 --> 0:14:13.080 kick this off with international stocks, because this is one 0:14:13.280 --> 0:14:15.840 I feel like it's kind of gained some steam lately. Joel. 0:14:15.960 --> 0:14:20.040 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 0:14:23.400 --> 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 0:14:28.880 --> 0:14:31.880 worth discussing because we get the question from listeners sometimes 0:14:31.920 --> 0:14:36.280 as well. But Jack Bogel, he's the founder of Van Guard. 0:14:36.320 --> 0:14:38.120 He's a pretty brilliant dude. 0:14:38.120 --> 0:14:39.720 Passed away what a year or two ago. 0:14:39.600 --> 0:14:42.280 Yeah, went all that long ago. But he was famously 0:14:42.320 --> 0:14:45.760 not a big fan of international diversification for a number 0:14:45.760 --> 0:14:48.000 of reasons. And the truth is, so many of the 0:14:48.000 --> 0:14:51.680 companies that you own in either a total stock market 0:14:51.760 --> 0:14:55.200 index fund or an SMP five hundred index fund. They 0:14:55.240 --> 0:14:58.360 do business overseas, and that was, honestly, that was Bogel's 0:14:58.360 --> 0:15:01.280 main argument. Something like forty percent of s and P 0:15:01.480 --> 0:15:05.240 five hundred revenues come from other countries come from overseas, 0:15:05.400 --> 0:15:08.920 and so folks who have diversified to more international holdings 0:15:09.120 --> 0:15:12.480 they haven't done as well. 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 --> 0:15:17.880 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 0:15:24.360 --> 0:15:27.680 country is a very fertile ground that comes to starting 0:15:27.720 --> 0:15:30.480 new industries and the ability for companies to get ahead, 0:15:30.640 --> 0:15:33.000 that doesn't necessarily mean that over the long haul that 0:15:33.040 --> 0:15:36.320 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 0:15:39.040 --> 0:15:41.120 four percent of the world's population, but we have our 0:15:41.160 --> 0:15:44.040 stock market. The global wealth is something close to a 0:15:44.120 --> 0:15:46.800 quarter of it. So and it turns out then when 0:15:46.840 --> 0:15:49.680 you look at the numbers, international stocks are relatively inexpensive 0:15:49.680 --> 0:15:52.200 these days, which is part of the reason we're probably 0:15:52.200 --> 0:15:54.360 seeing more headlines about them in front of the show, 0:15:54.360 --> 0:15:56.440 Ben Carlson Matt Who's just a brilliant mind of love 0:15:56.480 --> 0:15:59.400 rereading his blog, he recently articulated his ues on why 0:15:59.440 --> 0:16:02.720 folk should have more international stock exposure, and he said, 0:16:03.040 --> 0:16:06.880 global diversification is about accepting good enough returns to avoid 0:16:06.920 --> 0:16:10.200 the potential for terrible returns at an inopportune time. And 0:16:10.240 --> 0:16:12.000 I think it's a really good way of thinking about it. 0:16:12.080 --> 0:16:14.960 You're not necessarily if you do choose to invest internationally, 0:16:15.320 --> 0:16:18.600 doing it because you're looking for outsized mega returns or 0:16:18.600 --> 0:16:21.400 anything like that, and you might see better returns over 0:16:21.440 --> 0:16:24.920 the next decade, who knows, But yeah, I think investing 0:16:24.920 --> 0:16:28.640 internationally it's not a necessity. But given the outperformance that 0:16:28.680 --> 0:16:31.000 the US stock market has seen recently in the past 0:16:31.040 --> 0:16:34.400 decade plus, international stocks do look cheaper and more attractive 0:16:34.480 --> 0:16:36.600 right now. This is one of those things where I 0:16:36.640 --> 0:16:39.800 think you can complicate your life a little bit and 0:16:40.040 --> 0:16:43.280 add international stocks to your portfolio. But it's also not 0:16:43.360 --> 0:16:44.360 a have to. Yeah. 0:16:44.360 --> 0:16:46.200 I think Ben's argument it's more from like a wealth 0:16:46.240 --> 0:16:50.200 preservation standpoint, as opposed to him saying that like, oh, 0:16:50.280 --> 0:16:52.960 things are going to be gangbusters overseas in the coming decade. 0:16:53.080 --> 0:16:55.720 Some folks would point to Japan, whose stock market was 0:16:56.640 --> 0:16:59.000 rocket and rolling in the nineteen eighties, and I think 0:16:59.080 --> 0:17:01.840 finally just got back to nineteen navy levels like in 0:17:01.880 --> 0:17:04.880 recent weeks. So multiple decades, yeah, so like last decades really, 0:17:04.920 --> 0:17:08.040 which you know could happen if you're too heavy into 0:17:08.240 --> 0:17:08.800 one country. 0:17:08.880 --> 0:17:11.480 Yeah. But so even if you do want some international exposure, 0:17:11.520 --> 0:17:15.359 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 --> 0:17:20.800 it is, keep it intact, but then start investing any 0:17:21.000 --> 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 0:17:30.560 --> 0:17:34.240 those two, well, especially Vanguards, the costs are so incredibly low. 0:17:34.960 --> 0:17:36.359 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 0:17:40.640 --> 0:17:41.640 P five hundred x fund. 0:17:41.720 --> 0:17:43.560 It is a little bit more on the target date funds, 0:17:43.600 --> 0:17:46.600 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 --> 0:17:50.880 changing its allocation over the years. 0:17:50.880 --> 0:17:53.000 And this is and it truly is the most set 0:17:53.040 --> 0:17:53.879 it and bring out approach. 0:17:53.960 --> 0:17:56.479 Yeah, well exactly, because I mean, I don't know if 0:17:56.520 --> 0:17:58.199 we were planning even to talk about bonds. But a 0:17:58.200 --> 0:18:00.000 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 as 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 --> 0:18:12.920 we're quickly approaching, say like at twenty thirty fund, you're 0:18:12.920 --> 0:18:15.680 going to see a much higher percentage of the allotment 0:18:15.720 --> 0:18:19.840