I began investing in mutual funds when I was 23 and set aside 15% of my salary to do this. My wife, though we hadn't met yet, was doing the same as me.

Other than rebalancing, we've never sold. Not in 2000, 2001, 2008, or any other time. We are now early 40s and contemplating an early retirement by early 50s. We save about 23% of our gross these days.

Simple, cheap, boring, stress free...and highly successful.

Index funds...I look for lowest management fees and avoid actively managed funds. I've shifted from a 90/10 equity to bond mix to a 75/25 mix over the last ten years.

I return market average year in and year out.

The most important years of returns were from age 23 to age 29. That's because few people invest during those years. By the time most people start thinking of retirement as they turn 30 ish, we already had a full decade under our belts. The snowball affect on our portfolio kicked in as we hit mid 30s.

It's for this reason I often marvel at folks with as much money in pins that they have.

Sound just like us.

I make a pretty handsome income, but my wife earns about 20% more.

And we're both savers and investors.

For the win.

Whysnow,

Set an equity to bond ratio based upon your age and comfort level, invest in mutual funds that meet that ratio, and then set it and forget it.

Investing is only complicated if you make it so.

Never triy to time the markets, just leave your investments the way they are based upon the ratio that you set.

During the course of my MBA work I concluded that options are not suited for individual investors. Rather, they serve as insurance policies for institutional investors.

Naturally, folks are free to do as they wish.

On insurance, we have term policies that expire when the kids are eighteen or so.

The most important insurance policy we carry is an umbrella policy. Several millions in coverage can be had for a few hundred dollars, an important investment.

When it comes to ANY investment, I find that the harder it is to explain how you earn your risk premium, the more likely it is that the only real profit to be made is earned at the time of the transaction...and pocketed by the seller.

As for filling a claim on our umbrella...I truly hope that day never comes. But if it does, a lifetime of careful planning won't be wiped out. That's the point of insurance..not to turn a profit.

The problem with trading stocks is that in order to keep up with the aggregate market return over the course of 40+ years, you have to constantly be looking for the next trade.

The discussion on here to this point is a perfect example. It's a lot of work.

I don't agree that there is a bad side of the trade when talking stock. It is not zero sum.

When talking options trades, I agree. That is zero sum and there is a corresponding loser for each winner.

Otherwise, Rai, I agree with what you posted.

As we are in our early 40s, I've started to transition our portfolio to a higher bond weight. Over the last five or so years, I've moved us closer to 25% bonds. Mostly I've done this by weighting new contributions heavily to bonds.

However, I gave it a big shove over the summer with a rebalance. Just in time for bond prices to take a dump.

That's how it goes sometimes when you recalibrate. You don't like bond funds until the next equity melt down...which is absolutely going to happen. I just don't know if it will be tomorrow or five years from now.

As we approach 50, I will probably let it go up to 30%, but no higher.

Are you certain this wasn't a taxable event?

I have a problem with a stock purchase as zero sum. It simply is NOT.

This is not an option trade where there is truly a loser of money that pays for the gains of the winner. THAT is zero sum. And the time component forces each trader's hand.

Not the same as the buyer and seller of a stock. There does not need to be a losing side on a stock sale. A stock can be lower than the purchase price and pay a dividend and there is no compunction to sell on time.

Please stop describing stock trades as zero sum. This is infuriating to me. If you are as accomplished as an analyst as you claim, you know darn well stock trades are not zero sum. There are folks on here looking to learn about investing that are going to come away thinking they are. Don't do them that disservice.

I'm familiar with creating short positions by selling naked. But we both know this is a form of trade that is different than typical selling when the underlying asset is owned.

Determine the asset ratio suited to your age and risk tolerance.

Determine how much income you need to generate based on your expenses. Are you making that in retirement taking in the above criteria?

Timing the markets is folly. It's been proven over and over again.

Set your mix per the above and then do it.

I was born in 1973, middle of Gen X. I have found the market to be outstanding since I began investing in 1997...again, buy, hold, never sell. Ignore the noise and maintain correct investment ratio. Don't trade.

I like the 2.5% to 3% estimate for a safe withdrawal rate as far as planning goes, so I will echo what you said above.

Whether you include social security in the model or not is up for debate. I've generally assumed it to be zero for my planning.

Including primary residence is fine for net worth calculations. But home equity is too illiquid to mean much which is why I prefer to exclude it and only look at portfolio value.

No offense taken.

Never sell means, to me, not selling/trading based on market noise. Other than rebalancing, my view is there should be little reason to sell during the accumulation years.

I will add that, while crap can always hit the fan, living below your means is a great way to smooth out the bumps.

Not reinvesting dividends (i.e. dividend income) is the same as withdrawing them.

Actually, it's about 95%.

Ahh, firecalc. I love that website. You're talking my language now. Happiness is 98.9% chance of success.

Safe withdrawal rate pertains to taking a percentage of the portfolio at a rate that can be maintained in perpetuity.

It's irrelevant whether that is in the form of dividends, principal, or a combination thereof...ignoring tax efficiency of course.

Nice gain. 20%.

The problem, though, is finding a new place to park that money. And repeating.

I've done nothing but be invested in the market during this timeframe. I've seen an 11% gain simply given the market increase. But, I've also not paid any capital gains tax, as you will be doing.

That knocks your return down to 17%.

And you still have to find a new investment as I said (HD in this case). Because you are working single investments, your Risk is massively higher than mine.

This isn't a criticism, just something to highlight between our strategies.

My goal is 3.5% safe withdrawal rate.

Unless the leech is AMAZING in the sack...

Firecalc is a fine tool for sure.

I'm not trying to preserve principal, I'm looking to have constant spending power until age 95. The portfolio test passes if it goes to zero at age 95.

Invest the 25k in an index fund, please.

I have never sold any mutual funds in twenty plus years of investing. Rebalance a bit, but no selling. I don't trade. I still own the shares I bought at 23.

Some will argue about this method, my reply is to sit back and smile.

Invest, don't trade.

So when you get out of the market and into cash, how do you know when to get back in?

For that matter, how do you know when to get out in the first place?

When you sell a big gaining stock, do you immediately have another in mind to buy? How do you find the winners consistently?

Exactly.

Which is why I continue to preach low cost funds, buy and never sell, stay the course regardless of what the market is doing, etc.

Complicated trades to score a few thousand or tens of thousands of dollars is not appealing to me and not sustainable as a long term strategy.

Investing is simple and requires very little work. I never understood the desire to make it complicated.

So after you pay taxes on gains, do you expect the return on the home improvements to exceed what your investments will return? If not, I'd think a HELOC would be better...or save up what you need in cash if the work isn't critical, that's the most prudent option.

The great thing about index funds is the diversity and distributed risk that means few instances where I need to worry about 20%+ losses.

How do you know the market is over priced?

What happens if you're not in the market on the 20% of days that yield 80% of the returns?

In my view, you're not missing anything. I've shared this view for the last 20+ years of investing.

I predict our portfolio will again closely match whatever the S&P does.

Our 2017 return was a little over 20%.

My biggest effort was clicking 'buy' for each monthly purchase of additional fund shares.

Simplicity!

Ditto.

We are about 25% domestic bonds, but we have a single stock holding in my wife's company that had outsized gains.

You've identified the problem with investors timing the market and not being fully invested all the time per whatever asset ratio is appropriate for you.

How do you know when it's a buying opportunity and what gains are you missing while waiting?

There are people that have been waiting for a correction since 2016, I would not want to have missed the gains since then.

You cannot time the market regardless of whatever timeline you want to use.

No offense, but could you provide some details on your professional and educational background that support your views.

Especially the "stock that loses money" for decades bit, I don't understand how that works.

Honestly, I'm still wanting to hear how the market is the biggest long term scam ever.

I've been buying and holding index funds since I was 23. I'm 44 now and I haven't been scammed yet. I've also never sold.

My investments are worth much more than when I started two decades ago. And that includes the dot com bubble, 9/11, and the 2008 mess. My money wasn't stolen from me via Wall Street during any of those gyrations.

???

The correct answer is to determine first what asset allocation you are comfortable with for your entire portfolio. Is it 90/10, 70/30, other?

Once you know that, it's simply a matter of doing an occasional rebalance once or twice a year if things skew.

If you rebalance, do so in a tax advantaged account so as not to incur taxes.

If you've read my posts, you will well know I advocate low cost index funds with a bond and equity mix that aligns with your age and risk tolerance. I've never been on the band wagon of bitcoin, nor do I believe the run up in the broad market is sustainable. But I don't advocate selling because I cannot predict the future. I do not advocate chasing high risk at any cost, but have always said to buy broadly and stay the course. I did not sell in 1999, 2008, and I'm not selling now.

I am, however, in my mid 40s and considering retiring in my very early 50s. You can draw whatever conclusions you like about that and how the investment strategy I've used since I was 23, and outlined above, got me here.

I share this because I want others to know that investing is remarkably simple, making it complicated is what costs most private investors money. Living below your means is also very important.

I will also add that there are a few basic ways to invest.

One is doing detailed analysis of a company, determining there is value, and buying a position. And eventually selling. This process needs to be repeated again and again and requires a high level of talent and intelligence. I doubt most private investors are doing this. Buffet is an example of somebody who has managed to do this over a lifetime.

If you're not doing the above, you are most likely simply placing what is little more than a wager, buying and selling when it feels right to you. Timing. This is not sustainable and will eventually lead to under performance.

Or, you buy everything, hold it forever, and accept average market return...outperforming almost all active investors over time.

Ultimately, I don't care what any of you do, but I wish you best success. Good luck.

With all due respect, if this small drop has that kind of outsized impact on your retirement...i would question whether your strategy is appropriate or situation as secure as you believe.

That's not how the equities market works. There is no such thing as risk free return. A stable and predictable equities market carries no risk and won't happen.

Stable returns and income are available to investors, but at much lower rates.

[sigh]

I typed a reply, but then I erased it and wrote this instead.

I continue to abide by my strategy of doing nothing except making incremental purchases the first trading day of the month.

It meant I began to respond to the implied Wall Street = casino thing when I realized I no longer care if people want to think this. So rather than continue to debate this ridiculous notion, I deleted my reply and decided it's easier to let people believe whatever the heck they want at their own detriment.

bogleheads, great forum

Dave is great for getting people on track, but I would add that the funds he hawks have very high fees.

We bought some in 2008. Outside of company stock awards from our employers, it's the only stock we own. It has done well, though most of the gains came since 2009.

Sounds about right.

I'm guessing you're adding ~80k or so per year and assuming a RoR around 6 or 7%?

With a 3.5% withdrawal rate, you should pull 175k a year off of it in perpetuity.

I'll say it again... investing is SIMPLE.

Pick a few low cost funds (index, bond, and foreign), pick a ratio of the three consistent with your age and risk tolerance, contribute monthly.

Done.

No trading. No complexity.

The first rule of advisor club is let the client believe it's complicated.

It's also easy to think investing is easy, or you're smart, when the markets have been on a long run up.

It's a lot harder to stick to the plan with conviction when everything is red.

That's where the money is made...sticking to plan when it's going poorly.

You're better off going to a casino if this is your view and approach.

Or... just send me your money and I'll flip a coin. If it comes up heads, I'll mail you back a check for 10x the original amount. Tails, I keep what you sent.

Honestly...i don't think option trading is in your best interest.

For those using an active trading strategy, I'm curious if this makes up the lion's share of your overall investment portfolio.

I've mentioned my preferences for passive investing and have followed this strategy since I was 23 or 24. I became intrigued by options while doing my MBA work but never used them.

For those that actively trade, how do your returns compare against a benchmark such as the S&P500 taking into account dividends and total return?

Over 1 year, 5, 20, and longer?

I'll be honest, I'm skeptical that anyone here is matching, let alone beating, the S&P long term. And if you're not, what motivates you to keep trying and accepting reduced returns?

I'm reminded of Buffets wager with a hedge fund manager trying to beat the S&P, it didn't go that well if you all recall. The wager ended in 2017 with Buffet and the S&P trouncing the experts.

Don't forget to include short term capital gains tax, at whatever your tax rate is, when figuring out your total return.

A holder of S&P only pays on the dividend, not the entire capital gain that comes with the churn.

True, but the tax hit is not apples to apples between these two strategies.

My point was just that some strategies incur higher taxes than others with a non trivial impact on returns.

But I don't agree that ignoring taxes when investing is a smart idea. It's all about minimizing taxes where possible.

Especially if your managing 6 or 7 figures or preserving wealth.

In any case, many roads to Dublin.

As much as I despise days like this, it reinforces for me why I simply buy and hold and buy.

Nothing to think about or do as buying day is always the 1st day of the month.

Or maybe the Fed statement about neutral rates had something to do with it...

What is your objective with this investment? Is this part of a larger portfolio? What is your current investing mix? How old are you? What is your risk tolerance and how will this investment fit into your larger strategy?

I fail to understand how other posters are able to offer up advice without asking these sorts of questions.

My advice is to seek out something other than a pinball forum for investing guidance.

Fair enough, yet none of them asked the questions I posed, so...

We've been buying and holding for almost 25 years now. I hate days like yesterday because my strategy requires that I do nothing. My monthly investment day is always the first business day of the month, so I didn't submit a buy on more mutual funds since I already bought in August.

I won't hit refresh on Quicken for awhile, I know about how much the portfolio dropped without having to verify. It's probably close to my yearly salary.

Are you thinking of 87? I remember the headlines in the newspaper being in giant print, then forgot about it while I went to play on my Nintendo.

The hard part of active trading is selling the winners, then picking new ones.

Repeatedly.

For 30+ years.

I spent a fair bit of time studying options as part of my MBA. My conclusion is that they're a fine insurance policy for institutions, high risk for the individual trader. I avoid them.

My basic dislike of options lies in the fact that they're zero sum and have no "real" value. That's just my view of them. I won't dispute that the leveraged nature of them creates a lot of potential gains, but I suspect a lot of people that play with them are setting themselves up for a fall.

They do have a place and use, though. No question about that.

Because the derivatives contracts are zero sum, there is no intrinsic value that increases. Your loss is exactly offset by somebody else's gain, and vice versa.

This is not the same as a holding that is underpinned by an asset that can have an intrinsic increase in value. If I sell a stock for a gain, it's not offset by an equal loss to the buyer.

I certainly wish you success, but I heard this argument 20 years ago as well.

I post about this only because I have a little buy and hold investing experience and can speak to the success of that strategy over decades.

Every sure fire strategy is a winner until the next unexpected black swan. To quote WOPR from the movie Wargames, the only winning move is not to play.

Buy and Hold is boring and you simply ride the market, but over long time horizons it simply works.

You're correct, I don't understand them. Please, carry on.

Yes it does. Very large portfolios can be built like this. Just takes some patience and ability to think ahead.

On a tangent, our total return in 2019 was about 27%. That was based on a 70/25/5 portfolio mix of mutual funds, the 5% being cash or cash equivalents.

The S&P return was 29%.

I have executed zero trades for probably close to 15 years; only fund purchases with some modest rebalancing. This is obviously a passive strategy versus the active strategy being discussed.

Our portfolio dollar gain in 2019 was about 2.7x our combined gross income, primarily a function of LBYM over 25 years.

I'm not sure if I can suss out my exact returns over that time period, but i want to say we have averaged 9% a year over the last 5 years.

I arrive at that number based on our net worth increasing by 88% since Jan 2015 and correcting for the new money we added during that time.

I am still anticipating full financial independence between 52 and 54. I need an average 5.5% return over the next five years plus our contributions to do that.

Many roads to Dublin, good luck in 2020.

EDIT
I think my 9% average over the last 5 years is about right. The S&P returned about this average over the same time and while we have 25% bonds, I do have a large equity holding that has been a heavy outperformer.

Correct.

I'll tell you something though, when you have a year like 2019 and your portfolio appreciates more than 2.5 times what you and your spouse grossed...it starts to get REALLY hard to stay focused at work.

I'm finding my tolerance for the BS, sycophants, and V.P. wannabes that will say and do anything to climb the next rung to be quickly approaching zero. While they're chasing the next promotion and sacrificing crazy hours to get it, I'm sitting back and watching our bottom line appreciate by itself.

That has always been my goal of investing in the market coming out of college, to work only for as long as I needed to and having the flexibility to stop when I felt like it. It's what keeps me focused when I see the 30 something douchebag that got promoted above his abilities come rolling to work in a new Benz a few months after the fact (happened) and why I have just one pin.

I've seen markets meltdown before, 2000 was ugly and 2008 was scary in a different way. So I know 2020 could be the opposite and I'll be glad for that income, because we've not hit our number yet.

My point here is this...have a clear goal in mind with your investing and remember that money is a tool; the most important thing it can buy you is options.

I remember seeing that post and making the conscious decision to say nothing.

So, I never heard of Stocktwits before but had to check it out.

It took me back to the late 90s, and the Yahoo Stock message boards...where every dumbass pump and dumper was plying their trade and fanning the flames of HUGE wins, and BIG NEWS coming shortly.

Man, glad I passed that phase early and quickly.

I see the spirit carries on.

Just a note, Vanguard does not benchmark those funds against the S&P500.

Sure. Let's say I'm invested 100% in bonds and I return 5% in 2019.

One could say I returned less than the S&P which returned over 25% in 2019.

But that would be a meaningless comparison, like saying the basketball team consistently outscored the hockey team.

The Vanguard funds you mention are not measured against the S&P because the holdings they are made of do not reflect the S&P.

Instead, you want to compare the performance against the fund's benchmark, net of mgmt fee, to guage how the fund is doing within its category.

Most passive funds are just under the benchmark each year. As one would expect, they just mimic.

Active funds are paying managers their salaries (fees) to do better. I avoid them.

I enjoyed reading this post.

Why? Because it took me back to the days of 1999 when everybody was getting rich, day trading, going public, burning cash and growing fast, dot comming, B2B, new market, P/E 200 new normal, giving stock tips, and making fast money.

Lenny Dykstra trade of the day anyone? Good times.

Thankfully, I learned my lesson quickly and cheaply and never looked back.

But it brings a smile to my face when I see people still playing this game because they're new and got it figured out.

Meanwhile, I've just quietly accumulated, and accumulated, and accumulated...by doing nothing but buying every month for 25 years. No deviation. No selling.

Maybe I can make more money by placing tiny little ads in newspapers...

Ask yourself this question...if somebody has truly perfected a trading system and they're making 100% GAINS ON EVERY TRADE, LOOK AT MY STATEMENT!!!! ....how long will it take somebody else to employ the same strategy on a very large scale, rendering it ineffective?

Answer? On Wall Street, no time at all.

So would you openly share it? Of course not. If it worked, really worked, you would create vast trading gains very quickly. Selling access to it? For fractions of pennies on the dollar relative to what you can make actually employing it?

Please.

If I had a system that I was fully confident worked in such a manner, I would be all in all the time. You could accumulate gains exceedingly quickly. Charging people a few dollars to watch me? Come on, man...

You and I both know the answer to this question.

You need to remember that oil and gas is used for more than just energy. I realize most people just think of gasoline, but oil is the starting material for chemicals that serve as starting material all over industry.

Plastics, fabrics, rubber, pharmaceuticals, packaging, medical supplies, and I could go on and on ad nausum. And the plants making that stuff don't run on solar, they burn fossils for steam generation

Millennials may like green energy, but liking it doesn't change the reality of modern life. That infrastructure isn't changing anytime soon.

As one of the trumpeters of the buy, hold, buy and stay the course strategy...I will chime in that I have done nothing. Same as 2001 and 2007.

Still sickening when you measure the one day decrease in six figures, I'm not enjoying this.

Actually, a lot of studies and models of this type of situation suggests just the opposite...keeping borders open and allowing commerce to continue is the better option.

At the risk of trolling, I'd really love an update from this trading expert...

This is the first trading day of the month, so I bought the usual (for us) monthly amount.

I missed the last 20 pages.

I'll chime in with what I've done market wise.

A very painful nothing. I did buy the usual amount on Mar 1st.

This is the part of the "set allocation, buy, hold, do not deviate" strategy I believe in that is stomach churning.

I've done this 2 times in the past, 2001 and 2008. I suspect it will not be the last time.

This also when having close to a year of expenses in a cash account can lower stress a bit.

Oil companies are more than just pulling oil out of the ground. Many of them process the oil. With demand in the tank, they're certainly hurting.

Just checking in...as most know, I'm the buy, hold, buy, hold, hold, and stay the course dude.

Our total portfolio is down about 10% even.

I also wanted to add that as of yesterday, our portfolio was about 35% bonds, balance equity funds. Though we are a tad heavy in my wife's company stock grants.

I own BRKB. They are required to report change in investment value as part of their profit and loss, even though Warren has said in his annual letter that it's stupid as a metric.

I'm not worried.

Before today's close, our portfolio was down about 5.6% from Jan 1st 2020.

That is a 70/30 index fund portfolio with a do nothing but buy regularly strategy.

I don't know what we're down at the low, maybe 25% or so?

All I can think is...what a massive wealth transfer we just saw. Lots of people selling in a panic on the way down and perhaps now thinking of getting back in. Locking in their losses and handing over their money in the process.

I don't view stocks as zero sum over the long term. But in the short term like this, yeah it's almost zero sum like options are.

I'm not saying this won't get bad again. I'm only suggesting the best strategy is not to play. I didn't. I think it was the right move. Just stay with the plan...but I was not loving it a month or two ago.

Just to clarify, I don't view any of this as some sort of coordinated plan or conspiracy to steal wealth. But I do think the natural tendency of small investors to panic and not stick to their game plan during these situations serves only to enrich those stepping in.

I work very hard to be neither and just ride it out.

Having cash on hand also helps.

Based on the morning futures, it's beginning to look more and more like a 3 month wealth transfer.

The unpleasant woman Suze Orman was bragging about how much cheap stock she bought while giving very different advice to her adherents during all this.

I'm happy to say that nobody profited off of me via panic selling.

Let me be clear, I'm not suggesting in ANY way that the reaction and precautions and seriousness of Covid19 are being overstated. I believe the quarantine and stay at home enacted by States and other nations is appropriate.

I'm simply pointing out that the reactions of small investors to sell into the panic enriched others unwilling to follow said panic.

Stay the course is usually sound advice and I follow it.

At the risk of sounding like a jerk, if you're asking these questions you've no business in the Options market.

Incredibly, as of close yesterday, my 70/30 fund portfolio is -4.1% from the high and -1.4% from Jan 1st.

I continue to be amazed by those that shun science. None of them high falutin, book learnin fancy folks goin to tell them folks to wear masks.

FWIW, this is the type of extended family I grew up with.

Covid19 has everything to do with what is happening in the market. Actions and lack of action by the population to treat it seriously will only continue to detail the economy.

Give careful consideration to how you'll pay tax on RSUs when they vest. You will have the option of paying cash or taking net shares, the latter meaning you allow the broker to sell some shares at time of vesting to cover the expected tax liability.

If you think the company is only getting stronger, net shares may be a poor choice.

Unfortunately, this is what we did with my wife's RSUs when she started getting them over a decade ago. At the time it didn't seem like a big deal. But as of today, the shares we liquidated to cover the tax piece would have added another 100k to the pot. Fortunately we kept the rest.

We had no idea then the company was going to perform as it has.

Better in what sense?

How does the bond position fit into your larger portfolio strategy and acceptable risk level?

I think a lot of inexperienced and 'investing uneducated' folks read posts in threads like this one and get a lot of inappropriate advice, bad ideas, and then make bad decisions.

When I see posts asking about trading options, but not understanding basics like contract size, or asking if there is 'something better' than XYZ investment, all I see is somebody on the precipice of making a bad decision.

A pinball forum is not the sort of place where I'd be seeking financial advice if I were asking these sorts of questions.

It's like going to a car dealership and asking if they have anything better.

Not necessarily.

These are Admiral shares. Vanguard does auto conversion from investor shares to Admiral once you meet a holding threshold in the investment. Admiral are even lower cost.

VBLAX is a new Admiral class that was created not long ago.

It's very possible his true cost basis is much lower if was converted from investor shares.

I read that. Poor guy.

Let's be clear, those strategies are very advanced. For most, it's nearly gambling. Options were originally intended to function as a form of insurance or risk mitigation on an underlying investment.

A lot of people that play with them don't really understand them.

Looking at the Robin hood response, I'm wondering if the guy may have actually been net positive on that trade.

I'll be honest, if it had been me, I would have been in a panic as well.

Therein is the rub on certain options contracts, the potential for unlimited downside. Naked calls are no joke.

With all due respect, I simply do not agree with this advice and believe it in error.

I've been a passive investor since I was 23 and am heading into my late 40s. I was passive in 2000, 2001, 2008, and now 2020.

My results stand on their own and my 25 year passive strategy has proven itself as valid.

At the moment, our portfolio is worth between 25 and 30 times our annual expenses.

I've never missed a run up, never caught a falling knife, never sold at a loss, never paid taxes on trading churn, and never lost sleep trying to decide if I needed to jump in or out.

Investing and wealth building are a lot easier than financial advisors and active traders would have you believe.

That I agree with.

Perhaps it's my own bias, when I hear 'passive investor', I automatically assume we are talking about a well diversified portfolio that just sits there and emulates an index.

It depends entirely on why you're selling.

I haven't posted to this thread since... I'm not sure when.

But as the resident buy monthly, just Hold, never sell, stick with index funds investor, I wanted to give my update for 2020.

By doing absolutely nothing this year, my portfolio total return is ~15.2%.

This was a good year.

The question is, how many people sold just to jump back in.

I've said it before, will repeat again... many folks here are making investing WAY more complicated than it needs to be.

The constant barrage of ticker symbols that people *feel* are due for a big move must be exhausting.

I think saving 20% to 30% of a paycheck is entirely reasonable.

To max 401 and IRA on the basis of saving 30% requires an 85k income. Most engineers can earn this after a few years of work, many other fields as well...but I'm most familiar with engineering.

It does not require a huge salary. It does require living below your means.

I would strongly encourage you to consider dumping money into an HSA and investing it a tad conservatively if you're not already. Don't use it for today's medical expenses, use it post retirement.

Like you, we both max our 401ks and IRAs and are well over the Roth limit. The HSA is another fine tax shelter.

I've also learned it's a good idea to use my taxable investment accounts to hold those funds that don't pay out dividends, instead... I've set my portfolio mix so those fund reside in sheltered accounts.

As you say, it requires a High Deductible health plan. For my family, this makes sense. It has been a huge boon for us over the last decade.

I often state that I don't sell, I only buy...index funds not stocks.

We invest to retire early. At 47, our portfolio is currently 30X our expenses. I anticipate we can retire in <5 years if we wish. That brings a tremendous amount of freedom and freedom from worry. We could retire now if we wanted to curb our spending, but I'd rather not do that.

We use salary to pay for things we want, not liquidated portfolio holdings. We live below our means to accommodate that. So no, I don't sell investments to pay for stuff. We live off salary.

This is why I don't have a collection of pins in my gameroom even though I could. Because not losing sleep over stuff like Covid layoffs is pretty nice.

That's the fruit of our labor... security and independence.

Having a lot of money does not preclude one from being a tool. If anything, it increases the probability.