I talked with my banker today, a young guy, who used to work for a major stockbroker. He moved into banking after the frustration of seeing people not make the most of their 401k opportunities.
I asked him what advice he’d give to a young person just starting out. It’s pretty good advice for any of us.
Not everyone is thrilled about making investing decisions, but what if you did something?
I know a guy who usually takes the easy path and he did the same thing with investing.
In fact he only made 4 important decisions.
A simple idea made Jack Bogle special.
Some ideas are complex — quantum theory, for instance.
Some ideas are silly– drinking this kind of sugared burp water will make me irresistible to the opposite sex.
Some ideas are appealing but wrong — sadly we haven’t invented warp drive.
Jack Bogle had a very simple idea and he was right.
Doesn’t everyone want to make money in the stock market? Apparently not, see 10 Ways to Lose Money in the Stock Market. But, if you want to make money in the stock market, the deck is stacked for you
If you wanted to lose money in the stock market, how would you do it?
This is a challenge, as the S&P returned 5.3% per year over the past 15 years (yes, even counting the dreaded 2008).
While it seems nearly impossible to lose money, a lot of work has been put into giving you ways to reliably lose money (although I’d plead with you not to use any of them).
We’re in the season now, aren’t we? The season of telling your employer your benefit choices for next year.
In belated celebration of Ted Benna Day let’s think through the 401k. The 401k is kind of like the Social Security system except that:
Unless you’re sure that the in-the-red Social Security system is going to become much more generous than it is right now, you should use your 401k to maximize your chances for a good financial future.
On August 31, the First Index Trust mutual fund began operations. It was tiny and disrespected. Now it’s the largest one in the world.
Here’s how that fund changed the investing world, why that’s important to you, and why you should celebrate Jack Bogle Day.
All of this came about because Jack Bogle was creative and determined. Read Jack Bogle’s biography and admire his business jiu-jitsu that enabled him to produce the revolutionary index fund. Better yet, take advantage of what he built.
In January 1994 Frank Armstrong began serializing an investing book. He had an interesting premise, that the conventional wisdom on investing was wrong. Admittedly his only proof of that was that the conventional wisdom hadn’t worked. In principle, the things he said should have been known. Every brokerage and mutual fund had access to the same data he used. The difference is that he let the data teach him, instead of trying to find some once in a blue moon event in the data to justify his preferences. He was way ahead of his time, pursuing big data. He crunched the numbers to find the mutual fund managers who delivered top returns year after year. His great discovery:
Years ago, with the amazing John Elway injured midgame, it didn’t seem likely the Broncos could win. The next day the headline about the backup quarterback who saved the day read, “Gary Who?” His promised ride even forgot to give the hero of the day a ride home after the game. These days Gary Kubiak has managed to get people to remember his name. Let’s try to do the same for Ted Benna.
In 1980 Ted Benna pondered the Byzantine details of the tax code and decided that, while the IRS goal was to limit perks of company executives, he could interpret the obscure 401(k) provision to create a retirement plan for the average worker. Even better, he had the idea of companies making matching contributions. 36 years later, 94% of companies offer 401(k)s. Amid endless talk and inaction about saving Social Security, it would be unfortunate to forget that Ted Benna saved the American retirement. These days, instead of a “defined benefit” pension, which gets redefined down by the lucrative practice of companies going bankrupt, most of us have a 401k. Your 401k is your money in your investments under your control. It’s not an asset of your employer’s, subject to their continuing existence. It’s not something the management company can take. It’s yours. (True, any matching contributions not yet vested aren’t yours yet, but don’t quibble.)