This article is composed by Bogleheads® forum member digarei
On a beautiful day in November ELEVEN (11) people attended the 20th meeting of the Sacramento Area Bogleheads at its midtown headquarters. This event took place on the 12th of the month, Second Saturday, in 2016 at 10:30 AM. Though members were invited to speak about the U.S. election, which had taken place just days before the meeting, it was evidently not a subject the group found more compelling than the topics that were presented; little mention was made of the national election or its candidates.
Meeting Agenda Timetable
- Introductions (17 mins)
- “The Journey is the Reward”: Managing a financial plan.
Presentation by Chris G. (17 mins)
- Question & Answer 20 mins
- It’s a Risky Business: Measuring & Mitigating Investment Risk (79 mins)
The Journey is the Reward
Chris revisited his budget and personal financial plan that he had shared with the group one year before. A relatively new investor, he marked a number of areas of progress from his earlier appraisal and was especially happy to note that his significant other was more aligned with their goals than in the past, independently increasing her amount of savings.
Most experienced investors can look back over their lives and identify a period of transition or a point in time when their awareness was rapidly expanded or a discovery made that proved to be foundational to their subsequent investing success. So, a number of accolades and positive comments were directed to the speaker from individuals in the room. Many of us felt we were listening to financial memoir.
Is there any feeling more trenchant, more powerful than recognizing yourself in the the words or experiences of another human being?
“Yes, I remember ….”
Greg introduced the discussion on the topic of ‘Risk’, and distributed a couple of short handouts:
- Risk and Return: Application: a four page supplement to the main article on the Bogleheads Wiki website that presents an overview of risk. Inexplicably, its strongest and most meaningful assertion about risk (that it is integral to investing and is inseparable from the earnings investors seek) is set in extremely small typeface on the first page. (Source: Risk andreturn: application)
- Sequence of Returns Risk: [original document misplaced, source: Michael Kitces]
The takeaway quote from the first paper is the following:
The Bogleheads Wiki wrote:
Risk and return are inseparable. Higher returns can only be achieved by taking more risk. There is no free lunch.
What followed was the longest continuous discussion we’ve ever had on a single topic during a Sacramento Bogleheads meeting. It lasted about an hour and and twenty minutes and the smaller group size (there were eleven of us) ensured that everyone was able to have their say. We ran well over our normal meeting time but no one seemed to notice.
During talk about Sequence of Returns risk it was asserted that for each year one delayed taking Social Security, from age 62 to 70, there was an 8% gain in the benefit amount. This is incorrect. (See Notes)
Following adjournment, at 12:44 PM, seven (7) of us traveled to Centro Cocina Mexicana , on 27th & J streets in midtown to assemble at a back table for a leisurely and delectable lunch. I believe Kathy gave this restaurant a thumbs-up in her blog.
6/17/2017 – Date posted. Link to the audio recording sent to meeting attendees.
The additional effective net increase in your monthly benefit amount when you delay taking Social Security (SS) varies from 5% to 8%. The latter figure, often quoted from articles promoting the notion that it’s a ‘no brainer’ to delay SS until age 70, applies to the period that follows attainment of Full Retirement Age (FRA), not from age 62.
Because individual circumstances vary greatly, SABH has taken no position on whether a retiree should claim SS earlier, at the time of, or later than FRA. There are advantages to each of these claim dates.