This article is composed by Bogleheads® forum member digarei.
The heat of summer and a yearning for diversion from the ordinary and familiar compel many of us to schedule our vacations during the months of July and August. Bogleheads turned out in large numbers to meet in south Florida and Minneapolis; elsewhere, not so much.
I would normally count myself among the vacationers but this is a transitional year for me, experiencing for the first time the joy of ‘maxing out’ contributions and preparing for another life event as alluded to in our last meeting.
So, the August meeting was scheduled against cautions that the dog days of summer would claim the attentions of so many members that we had best close up shop until the fall—or reserve a “Table for 1”: in finer restaurants there is often a deuce or corner booth positioned to convey a sense of privacy or importance yet providing a clear view of other guests’ comings and goings. People-watching for uncoupled observers and celebrities dining alone. Orson Welles, say?
No need for any of that, however.
SABH’s fifth meeting was held in the patio garden at ‘Aioli Bodega Espanola’ restaurant, 18th and L Streets, Sacramento. Seven (7) persons attended and stayed for lunch afterwards. The group was happy to welcome for the first time two experienced investors, both nearing or in retirement. One made the drive up from Stockton.
Our modest size allowed more time for discussion on the subjects at hand, as well as elaboration of some interesting tangential points. A recent post by BH forum member Bertilak was introduced as an example of a well organized Investment Policy Statement (IPS) for someone in or very close to retirement. Since our meeting, it has been updated twice. See the latest version here: A Retiree’s Investment Policy Statement (IPS)
Several members talked about their own IPS statements, some written, a few not written down but “all in my head”. Whatever works! However, one advantage of having a written plan was underscored by Bertilak: make it simple enough and concise so that your spouse or significant other can follow it with some reasonable hope of achieving the financial goals set within or by preserving the value of the portfolio. It may not fit on a 3×5 card (the post was inspired by an article on this subject from Christine Benz, of Morningstar) but concision and clarity are laudable goals in this endeavor.
The coordinator’s perfect counter-example (there’s always one trouble-maker!) is an IPS that was just a list of asset classes until last year when I decided to articulate objectives to give my portfolio some purpose beyond increasing our net worth. It has become a mini-novel but my captive audience on Saturday exercised great civility in allowing me to read aloud several excerpts from it. It’s too lengthy to quote here but if anyone, having already read Ulysses and War and Peace, is desperate for summer reading material, I will mail you a copy. Its concluding paragraph is reproduced below.
We finished our discussion of The Bogleheads Philosophy as outlined in the Wiki, focusing on the last five (6 Use index funds; 7 Keep costs low; 8 Minimize taxes; 9 Invest with simplicity; and 10 Stay the course).
Members on vacation: It is now safe to return home.
An Investment Policy Statement (IPS) Coda
Investing | goals
Avoid the siren call for ‘ever more’… more money, more asset classes, more ideas
meant to hurry along the relatively slow process of wealth accretion. I started investing
at 46––the laws of compound interest and mortality tables suggest I will be dead long before I become fabulously wealthy. But what’s bad about that!? I’m likely to be very comfortable and the consolation is my awareness that there is very little I can do now (except save and invest steadily, and live modestly) to secure, much less spend, the levels of capital that are requisite to those in the top decile of the 1%. I’m free to live my life without the soul-crushing commitment to consumerism, envy and dissatisfaction that are experienced by some, as well as fanciful dreams and the illusions of youth, experienced by nearly everyone.
In practice, I think this means that investing in exotic instruments will not give me
satisfaction. Even should they work to increase my portfolio’s value many times over,
I don’t believe I will be happier. I do get some oxytocin or endorphin when I am able to
husband a thing along and by doing so, improve it—this, I know. And it gives me an
emotional basis for doing what comes almost naturally to a Boglehead kind of investor ….
to continue learning about investing (until it’s no longer fun), to conserve the nest egg— a legacy of sorts—and work assiduously to add to it over time.
I have elected to take a pass on any investment plan or program that relies upon for its success regular outperformance of a specific investment vehicle or one whose construction, policies, business practices and costs are not fully transparent and aligned with my own goals.
I will guard against the urge to do something different when my investments are earning small change, or none. When times are good, I shall revisit this plan and revise as needed.
Realizing that I am my most important asset, I will seek to maintain a life in balance, to impart something of myself to help others and inspire their happiness before my journey ends.