Bogleheads® on Investing Podcast 048: Rob Berger on free and cheap online investing tools

00:00:00.000 | [MUSIC PLAYING]

00:00:10.380 | Welcome to Bogleheads on Investing, episode number 48.

00:00:14.560 | Today, our special guest is Rob Berger.

00:00:17.000 | Rob was a litigating attorney before changing careers

00:00:20.120 | and following his passion by providing

00:00:22.280 | free online investment tools and a broad range

00:00:25.400 | of financial education.

00:00:26.680 | [MUSIC PLAYING]

00:00:37.400 | Hi, everyone.

00:00:38.160 | My name is Rick Ferry, and I'm the host

00:00:39.820 | of Bogleheads on Investing.

00:00:41.520 | This episode, as with all episodes,

00:00:43.640 | is brought to you by the John C. Bogle Center

00:00:46.200 | for Financial Literacy, a 501(c)(3) nonprofit organization

00:00:50.840 | dedicated to helping people make better financial decisions.

00:00:54.080 | Visit our newly designed website at boglecenter.net

00:00:57.880 | to find valuable information and to make

00:01:00.520 | a tax-deductible contribution.

00:01:02.680 | And don't forget about our Bogleheads conference

00:01:05.560 | coming up this October 12 through the 14th,

00:01:08.800 | featuring many speakers that I've

00:01:10.320 | had on this podcast and more.

00:01:12.800 | There are a few seats remaining.

00:01:14.800 | You don't want to miss out.

00:01:15.960 | Visit boglecenter.net for more information.

00:01:19.520 | Today, our special guest is Rob Berger.

00:01:23.460 | Rob was a litigating attorney in a previous life.

00:01:26.960 | He received his JD from Boston University in 1992

00:01:31.280 | and worked as a litigator in the securities industry

00:01:33.800 | and the technology industry.

00:01:35.840 | In 2007, he started a website called

00:01:39.520 | doorroller.net, which received tens of millions of visitors.

00:01:44.480 | After selling that website in 2018,

00:01:47.600 | he became a Forbes deputy editor.

00:01:50.480 | And he published a book called Retire Before Mom and Dad.

00:01:54.500 | Rob is now the host of the Financial Freedom Show.

00:01:57.700 | He publishes in-depth, detailed reports

00:02:00.740 | on all of the free technology and low-cost technology that's

00:02:04.580 | out there to investors on his website, robberger.com.

00:02:08.380 | And he has also started a website

00:02:10.260 | for credit cards and banking called allcards.com.

00:02:14.860 | With no further ado, let me introduce Rob Berger.

00:02:18.620 | Welcome to Bogleheads Uninvesting Podcast, Rob.

00:02:22.040 | Rick, thanks so much for having me.

00:02:23.980 | It's really great to have you on the podcast.

00:02:26.140 | You and I have known each other for many years.

00:02:28.140 | And I know that you've interviewed me a few times.

00:02:31.140 | And now it's my chance to interview you.

00:02:33.660 | But I've just always been amazed at all of the information

00:02:40.340 | that you put out and have been putting it out

00:02:42.380 | for 15 years, a long time.

00:02:44.820 | Before we get started on where people

00:02:46.620 | can find that information and what you've done,

00:02:49.300 | could you give us a little background on who you are?

00:02:53.180 | How did you decide to get into this line of work?

00:02:57.720 | Because it's not what you always did.

00:03:00.140 | So I was a lawyer in Washington, DC.

00:03:03.140 | And at the time I started my first personal finance site,

00:03:06.940 | I was actually an enforcement attorney

00:03:09.820 | at the Public Company Accounting Oversight

00:03:11.580 | Board, which regulates the auditors of publicly

00:03:13.540 | traded companies.

00:03:15.180 | And I'd been investing for 20 years.

00:03:17.340 | And I was very interested in really all aspects

00:03:20.340 | of personal finance.

00:03:21.180 | And I said to my wife one day, I'm

00:03:22.980 | kind of bored with the practice of law.

00:03:24.620 | What should I do?

00:03:25.380 | She goes, well, get a hobby.

00:03:26.580 | Out of that came a personal finance blog

00:03:28.820 | that at the time was just sort of a hobby.

00:03:33.380 | I enjoyed thinking about these issues, writing about them.

00:03:37.180 | And over a number of years, it turned into a business.

00:03:39.860 | I ended up retiring from the practice of law.

00:03:42.780 | Then I did some work at Forbes.

00:03:44.820 | I published a book, "Retire Before Mom and Dad."

00:03:47.900 | And it ended up selling my original sites.

00:03:50.820 | And I've started new ones and a YouTube channel.

00:03:52.980 | And now I'm talking to you.

00:03:55.500 | So you were a lawyer.

00:03:56.820 | You were a litigator.

00:03:58.140 | You started the website.

00:03:59.140 | And the name of the website was Dough Roller.

00:04:02.220 | Did that for 11 years.

00:04:04.140 | And then you also became a Forbes deputy editor.

00:04:08.060 | Yeah, so it kind of happened how life sometimes opens doors

00:04:13.060 | that you're not expecting.

00:04:14.500 | So I had sold Dough Roller.

00:04:15.820 | I sold Dough Roller and the Dough Roller Money podcast

00:04:18.820 | and a couple of other sites in 2018.

00:04:21.260 | And literally just a few days after that,

00:04:22.860 | I went up to New York.

00:04:23.780 | I'd been a contributor at Forbes.

00:04:25.340 | Actually, by the way, thanks to you,

00:04:27.300 | you introduced me to Janet Novak.

00:04:29.180 | Oh, okay, thank you.

00:04:30.780 | Right, so really this is all your fault.

00:04:32.980 | Okay.

00:04:33.820 | So we were up on Forbes Fifth Avenue location in New York.

00:04:38.100 | And it was for contributors.

00:04:40.100 | And I just talked to Janet afterward.

00:04:41.740 | And I said, yeah, by the way, I sold Dough Roller

00:04:44.140 | and the next day she calls me and says,

00:04:46.220 | we wanna start something called Forbes Advisor.

00:04:48.500 | Will you be the managing editor?

00:04:50.100 | And at the time I thought I'm retired.

00:04:52.900 | I don't know what I'm gonna do,

00:04:53.820 | but I had no plans to keep working.

00:04:57.340 | And it just seemed like a fun thing to do.

00:04:59.100 | So I was the managing editor.

00:05:01.180 | My plan was to do it for a year,

00:05:02.700 | get it up and running and turn it over to someone else.

00:05:05.380 | I ended up doing it for two years

00:05:07.540 | and turning it over to some folks

00:05:09.460 | who I think are just fantastic.

00:05:11.580 | Well, that's great.

00:05:12.420 | That's a great story.

00:05:13.260 | I'm glad I could help out.

00:05:14.460 | I didn't realize that you became a deputy editor at Forbes.

00:05:17.580 | Now you have a website called robberger.com

00:05:21.100 | and you also have a financial freedom show on YouTube.

00:05:26.100 | And you have another website called allcards.com

00:05:30.980 | and that a website is about credit cards.

00:05:33.460 | And you must be working 80 hours a week.

00:05:36.220 | Well, it's not quite that bad.

00:05:38.260 | Sometimes it feels like it.

00:05:39.700 | So they're each sort of their own little thing.

00:05:41.580 | So my idea with All Cards,

00:05:42.820 | and I have a couple of people that helped me with that site,

00:05:45.500 | I wanna come up with sort of a database of credit cards

00:05:48.460 | and bank accounts primarily that folks can go to

00:05:52.100 | and they can kind of see everything that's available

00:05:54.580 | rather than just a select few

00:05:57.100 | that you get from most credit card or banking sites.

00:06:00.060 | You can basically just about everything.

00:06:02.460 | And that's taking some time,

00:06:04.020 | but fortunately I've got a lot of help.

00:06:05.620 | And in some ways it's just been kind of a thing that I do

00:06:08.220 | that's kind of fun 'cause it involves some programming,

00:06:10.700 | nothing sophisticated for sure,

00:06:13.180 | but the YouTube channel is probably

00:06:15.540 | where my heart is right now.

00:06:17.860 | And the truth is, I come up with a topic,

00:06:20.980 | I hit record, I record the video,

00:06:24.100 | if it's not a live show and I publish it.

00:06:26.380 | There's no editing, there's no...

00:06:29.140 | I can have a video done and published in an hour.

00:06:32.900 | I might do some research

00:06:33.940 | depending on what the topic is ahead of time.

00:06:36.500 | I've had some great folks on.

00:06:37.900 | I had Bill Behnken earlier this week,

00:06:39.420 | who's the father of the 4% rule.

00:06:40.940 | That was a fascinating conversation.

00:06:42.820 | I don't know if you know Harold Vinsky,

00:06:45.300 | but he's sort of the father of the bucket strategy,

00:06:48.500 | which Christine Benz talks a lot about at Morningstar.

00:06:51.140 | I had him on Wednesday.

00:06:52.380 | That was a fascinating conversation.

00:06:54.340 | - By the way, it was a really interesting video with Harold

00:06:58.260 | and I'll get to it in a minute,

00:06:59.700 | but you were also a competitive chess player.

00:07:02.740 | So I wanna hear about that.

00:07:04.620 | - Yeah, it turns out I'm not a very good competitive player.

00:07:07.220 | - Okay, okay.

00:07:08.060 | - Yeah, I've played chess since college

00:07:11.180 | and in my less lucid moments,

00:07:14.180 | I think I could become a master,

00:07:15.540 | which would be a rating of 2,200,

00:07:17.900 | but it's just over 2,000

00:07:19.340 | and then my rating has taken a nosedive,

00:07:21.780 | which by the way happens by and large

00:07:24.060 | when you get to our age, I think.

00:07:26.740 | In fact, I was in Philly over the 4th of July

00:07:28.860 | playing in the World Open,

00:07:29.860 | getting beat by eight and nine-year-olds.

00:07:32.020 | - (laughs) Okay.

00:07:33.180 | - Yeah.

00:07:34.020 | You can't see them behind me,

00:07:36.780 | but I've got chess books, chess software, databases.

00:07:40.700 | I'm like the golfer who has all these gadgets

00:07:42.940 | to try to improve their swing, but still shoots a 115.

00:07:46.260 | And that's me in chess pretty much.

00:07:48.460 | - Yeah, I'm curious about what you just said though,

00:07:50.500 | this cognitive decline after a certain age.

00:07:54.340 | Is there some chess data statistically

00:07:58.580 | where the average chess player as they age,

00:08:04.420 | this number declines, is that out there somewhere?

00:08:09.020 | - I couldn't point you to a study,

00:08:10.700 | although I suspect they're out there,

00:08:13.520 | but I can tell you certainly at the World Championship level

00:08:17.820 | it's a young person's game.

00:08:20.340 | At some point, Garry Kasparov got to an age

00:08:22.840 | where he couldn't keep up.

00:08:24.460 | I mean, obviously even today, he's like Michael Jordan.

00:08:27.500 | I'm gonna guess he's still

00:08:28.340 | a pretty good basketball player, right?

00:08:30.740 | But probably not gonna play in the NBA again.

00:08:34.180 | Garry, obviously a phenomenal chess player,

00:08:36.340 | but as you age, it's hard to keep up

00:08:38.900 | with the younger players.

00:08:40.460 | Magnus Carlsen is the world champion now,

00:08:42.660 | still the best in the world,

00:08:43.860 | but there are several players

00:08:44.940 | that are probably gonna catch him, when, who knows.

00:08:48.180 | In my case, obviously I don't play

00:08:52.380 | at anything like that, of course.

00:08:54.600 | I don't know that it's a cognitive decline,

00:08:56.580 | at least maybe I just try to convince myself.

00:08:58.180 | - Okay, well, that's my point.

00:08:59.580 | See, this is exactly what I'm getting at,

00:09:01.500 | because of just what you said, okay?

00:09:03.100 | It in fact is the cognitive decline,

00:09:05.700 | but we don't want to admit it.

00:09:07.680 | And I see it in myself.

00:09:09.780 | I've been trying to write a book for three years,

00:09:12.580 | same book, right?

00:09:13.660 | Now, I've written a lot of books, right?

00:09:15.540 | You know, I used to be able to bang out a book,

00:09:17.220 | it seems like, every six months, boom, boom, boom.

00:09:19.460 | But here I am in my 60s, and I'm trying to write this book,

00:09:21.900 | and it's not a very complicated book.

00:09:23.960 | But I'm really struggling, and I can't tell

00:09:25.920 | whether or not I'm just trying to do

00:09:27.060 | a really, really good job, or if I'm having

00:09:29.260 | some sort of a cognitive decline issue.

00:09:31.780 | Of course, I'd like to think that it's because

00:09:33.580 | I'm really trying to do a great job,

00:09:35.000 | and really trying to be very clear in everything I say,

00:09:37.080 | and maybe that is the case, you know?

00:09:38.740 | And I think this is an issue with people who are,

00:09:41.060 | let's say, in their 60s, which I am in my 60s now,

00:09:44.080 | my mid-60s, and we don't recognize

00:09:47.020 | cognitive decline for what it is.

00:09:49.860 | And it's just interesting that, you know,

00:09:52.280 | you were talking about chess and talking about this,

00:09:54.620 | because when it comes to your investment portfolio

00:09:56.460 | when investing, there's a lot of things

00:09:58.660 | that can help you with cognitive decline.

00:10:02.100 | And one of them is keeping a portfolio very simple.

00:10:05.860 | And this gets me to circle back

00:10:07.420 | to your Harold Advansky discussion.

00:10:10.500 | Because I'm sitting there watching that video,

00:10:12.300 | and you said to yourself, gee, you know,

00:10:14.580 | the bucket strategy, I used to have a three-bucket strategy,

00:10:17.340 | but realized that that was actually overly complicated,

00:10:20.140 | and now I'm going to more along the Harold Advansky view

00:10:23.380 | of just a two-bucket strategy.

00:10:24.960 | So you, you know, recall that conversation

00:10:27.260 | you had with Harold?

00:10:28.580 | - Oh, sure, absolutely.

00:10:30.580 | - You know, what I see there is simplicity.

00:10:33.060 | In other words, for older investors,

00:10:35.260 | the simpler you can make things,

00:10:37.220 | the simpler you can make portfolios, the better it is.

00:10:40.540 | - When I first retired, right before I went to Forbes,

00:10:43.140 | and I thought I'm going to be living off my investments,

00:10:45.820 | the three-bucket strategy really appealed to me.

00:10:48.660 | Maybe it's a little more complicated than two,

00:10:50.580 | but it's like, you know, how much more complicated

00:10:52.620 | can one extra bucket be, right?

00:10:54.640 | But when you actually start to sit down and figure out,

00:10:57.440 | okay, well, wait a minute, when am I going to move stocks

00:11:00.100 | from my, from bucket three to fixed income and bucket two?

00:11:04.240 | I think the three-bucket approach just doesn't,

00:11:07.380 | at least it doesn't work for me,

00:11:09.460 | because I want to allocate my investments

00:11:12.140 | based on percentages, not based on years of expenses,

00:11:16.400 | which is effectively what the bucket strategy does.

00:11:19.060 | In a two-bucket strategy scenario,

00:11:21.480 | like Harold described in the interview,

00:11:24.220 | yeah, the cash bucket is based on years of expenses,

00:11:27.340 | but it's a very small component.

00:11:29.020 | It may be just one year of cash, for example.

00:11:31.700 | And the rest is just, you know, your basic whatever,

00:11:34.500 | 70/30, 60/40, whatever works for you.

00:11:38.500 | So yeah, it is simpler, the two-bucket strategy,

00:11:41.460 | but I'm still not convinced that, frankly,

00:11:43.380 | a three-bucket strategy works for most people,

00:11:46.780 | because it changes the way you do your asset allocation,

00:11:49.420 | and I think that can lead to some problems,

00:11:52.040 | particularly depending on your withdrawal strategy.

00:11:54.980 | - Yeah, initially, the bucket approach

00:11:56.700 | was what was called the Tobin Separation Rule, right?

00:12:00.580 | Tobin was a Nobel Laureate,

00:12:02.440 | and he basically said you have your risky assets,

00:12:05.200 | you have your non-risky assets.

00:12:06.440 | I mean, the two buckets.

00:12:07.460 | I mean, they didn't call it the bucket strategy back then,

00:12:09.500 | but that's what it was.

00:12:10.740 | And so your risky assets generally were equity,

00:12:14.300 | but, you know, can be a balanced portfolio

00:12:16.700 | of stocks and bonds.

00:12:17.660 | And the difference between the three-bucket approach

00:12:20.080 | and the two-bucket approach, I think,

00:12:21.300 | is that allocation to stocks and bonds

00:12:23.800 | and the two-bucket approach is constant.

00:12:26.420 | It doesn't change.

00:12:28.340 | And the only thing that changes is moving money

00:12:30.500 | from that riskier, longer-term bucket

00:12:34.480 | over to the cash bucket that you would need to live off of.

00:12:38.900 | But it was funny that you said something.

00:12:40.700 | You said, "Gee, you know, I really am in line

00:12:43.500 | "with a lot of the things that you were telling me."

00:12:45.420 | This is what you said to Harold.

00:12:47.340 | He said, "I don't want people to think

00:12:48.680 | "that I'm stealing your ideas."

00:12:51.540 | But here was my comment about that,

00:12:53.500 | because again, you and I have been

00:12:54.780 | in this business a long time.

00:12:55.880 | Harold's been in the business a long time.

00:12:57.700 | Of course, Jack Bogle was in the business

00:12:59.340 | for how many years?

00:13:01.940 | A long, long, long, longer than us,

00:13:03.860 | probably twice as long as us.

00:13:06.080 | But as you get older or as you get more experienced,

00:13:11.080 | you become simpler in the way you think about things.

00:13:16.460 | And being simpler becomes much more helpful.

00:13:21.060 | So, it wasn't like you were copying Harold

00:13:25.380 | or that I was copying Harold

00:13:27.000 | or that any of us were copying Jack Bogle.

00:13:30.540 | I think that what happens is that

00:13:32.740 | as we get older and more experienced,

00:13:34.640 | and with or without cognitive decline, it doesn't matter,

00:13:38.140 | we just gravitate towards things that are simpler.

00:13:41.560 | - Well, it absolutely describes my investing story.

00:13:46.780 | When I first started truly understanding index funds

00:13:49.780 | and asset allocation, of course,

00:13:51.180 | your book, "All About Asset Allocation,"

00:13:52.620 | I think is one of the best out there.

00:13:54.380 | - I didn't pay you for that, by the way.

00:13:55.900 | I just want- - No, no.

00:13:56.740 | That was unsolicited.

00:13:57.940 | - But thank you for that, Shill.

00:13:58.940 | I appreciate it.

00:13:59.780 | - Yeah, unsolicited endorsement.

00:14:01.820 | Back in the day, I can remember just being so upset

00:14:06.340 | that Vanguard didn't offer

00:14:08.940 | all of the really cool index funds that DFA offered.

00:14:13.940 | And that to get dimensional funds,

00:14:16.460 | and by the way, one of the founders,

00:14:19.220 | Sinkfield, is a big supporter of chess.

00:14:21.260 | I don't know if you know that connection.

00:14:22.500 | In any event- - Oh, no, I did not.

00:14:24.020 | - Oh, yeah, he's funded the chess club in St. Louis

00:14:27.540 | in the Hall of Fame,

00:14:28.380 | and he has a Sinkfield Cup every year, big time.

00:14:31.980 | But I remember being so upset

00:14:33.380 | because I wasn't gonna pay an advisor

00:14:35.780 | to get access to these funds.

00:14:37.060 | Now, they have some ETFs today.

00:14:39.140 | And I'm trying to figure out how can I get

00:14:42.180 | these cool funds with different factors,

00:14:45.860 | international, small cap value, and all these things.

00:14:49.100 | And today, fast forward 25 years or whatever,

00:14:53.740 | it's the last thing I would do.

00:14:55.060 | And it's not because there's necessarily

00:14:57.100 | anything wrong with doing that.

00:14:59.700 | It's just that I don't need the aggravation.

00:15:02.460 | And there's no way to know

00:15:03.380 | if it's gonna improve your returns or your volatility.

00:15:06.820 | I mean, you can maybe make some educated guesses.

00:15:09.380 | We all can.

00:15:10.220 | But yeah, so I've absolutely moved

00:15:12.540 | from more complexity to less.

00:15:15.860 | And that's true even recently.

00:15:17.540 | I've been thinking, well, do I really need

00:15:19.140 | an emerging market fund?

00:15:20.180 | Do I really need a REIT fund?

00:15:21.380 | I mean, again, good arguments to keep them, to have them.

00:15:26.380 | Certainly wouldn't talk anyone out

00:15:27.500 | of having a separate REIT fund.

00:15:28.980 | But boy, it simplifies the portfolio

00:15:31.500 | when you don't have all of those things.

00:15:33.660 | And the other thing, Rick, that could be part of it,

00:15:37.020 | there's aging, right?

00:15:37.860 | And maybe you kind of wonder how that influences this.

00:15:41.540 | But the other thing is when you're starting out,

00:15:43.300 | maybe you've got a 401(k), maybe you've got an IRA.

00:15:47.040 | Well, today it feels like my wife and I

00:15:48.900 | have 47 different accounts, right?

00:15:51.900 | It's not that many, but we've each got a rollover.

00:15:54.100 | We've each got a Roth.

00:15:55.300 | I've got an inherited.

00:15:56.400 | We've got two HSAs.

00:15:57.740 | We've got two taxable accounts.

00:15:59.140 | That's a whole nother story.

00:16:00.820 | It's almost like playing three-dimensional chess.

00:16:03.460 | So when you're trying to balance all of that,

00:16:06.860 | having a simpler portfolio, I think, helps a lot.

00:16:10.340 | I really like that analogy with three-dimensional chess.

00:16:12.660 | Not only do you have a lot of individual investments

00:16:14.940 | in each of these individual accounts,

00:16:16.420 | because each of the accounts have to have investments,

00:16:19.340 | you've got all these different accounts.

00:16:21.760 | Because of taxes, you can't combine your Roth

00:16:25.260 | with your wife's Roth, and you can't combine

00:16:26.980 | an inherited IRA with a traditional IRA.

00:16:29.460 | So you've got all these different accounts.

00:16:31.260 | But usually, if you have HSAs and 401(k)s,

00:16:34.460 | they even have different custodians.

00:16:36.360 | So you're talking about three different levels, right?

00:16:37.820 | You have custodians, you have accounts,

00:16:40.660 | you have individual investments.

00:16:42.100 | I mean, it really is complex.

00:16:44.300 | It's complex enough where, gee, I want to make it

00:16:48.180 | as simple as I can wherever I can.

00:16:50.540 | Combine custodians and get rid of some that I don't need.

00:16:53.940 | Combine accounts, if I can roll a traditional IRA

00:16:57.260 | into a 401(k) that I might still be using,

00:17:00.700 | then that's what I can do.

00:17:02.380 | And within the investment side,

00:17:03.980 | try to have fewer and fewer investments.

00:17:06.740 | To me, I mean, I think that three-dimensional chess

00:17:08.900 | is a really good analogy for,

00:17:10.740 | let's make it as one-dimensional as we can.

00:17:13.480 | But it's impossible, I mean, you can't.

00:17:15.540 | And I think that some of the tax regulation

00:17:17.460 | causes you to not be able to do that.

00:17:19.500 | And we'll get to more of this in a minute

00:17:21.020 | in how to organize portfolios

00:17:23.740 | when we start talking about all the tools

00:17:25.420 | and all of the work you've done

00:17:26.860 | to look at all these different tools

00:17:28.300 | and calculators that are on the internet,

00:17:30.180 | some for free, some with a little bit of cost,

00:17:32.980 | and where you can find all this information

00:17:35.620 | on your website and other places.

00:17:37.340 | But before we do that, you wrote a book.

00:17:40.900 | And the book was called "Retire Before Mom and Dad,

00:17:43.720 | "The Simple Numbers Between a Lifetime

00:17:46.000 | "and Financial Freedom."

00:17:47.760 | Thank you for sending me a copy.

00:17:49.120 | I read it, I thought it was very good.

00:17:50.920 | Tell me about the book,

00:17:51.760 | what motivated you to write it, and what is it about?

00:17:55.100 | - So it started out, actually,

00:17:57.320 | my original plan was to focus entirely on compounding.

00:18:00.800 | I was gonna call it money math,

00:18:02.120 | and someone pointed out that most people don't like math.

00:18:04.440 | (both laughing)

00:18:06.040 | That's true.

00:18:07.400 | And then I thought, you know,

00:18:08.640 | I really want young people to read it

00:18:10.520 | before they wake up and find themselves

00:18:11.920 | in their 40s and 50s and having not set aside money.

00:18:15.720 | And so I called it "Retire Before Mom and Dad."

00:18:17.640 | And it kind of does take, I suppose,

00:18:19.340 | a young person's perspective,

00:18:20.720 | although it's not really about early retirement,

00:18:23.960 | although it certainly walks through the math.

00:18:26.000 | It's really about all the things you and I talk about,

00:18:28.880 | spending less than you make,

00:18:30.520 | investing the difference in a very simplified,

00:18:32.800 | low-cost, index fund portfolio,

00:18:35.480 | and then getting out of the way (laughs)

00:18:39.080 | and letting it do its thing.

00:18:41.160 | And, you know, I go through some practical examples.

00:18:43.480 | I challenge, you know, I talk about, you know,

00:18:46.360 | thinking about your spending, what brings you happiness,

00:18:50.240 | how to test through life experiments

00:18:53.480 | what you think brings you happiness,

00:18:55.740 | which I've had on different occasions an opportunity to do.

00:18:59.920 | And so that's basically the book in a nutshell.

00:19:02.760 | - And I thought the title, by the way,

00:19:04.480 | is what caught my eye.

00:19:05.640 | So you were right in changing the title

00:19:07.920 | Retire Before Mom and Dad.

00:19:10.240 | When I saw that, I said, that's a good title.

00:19:13.260 | It's catchy.

00:19:14.100 | It's better than investment math, money math.

00:19:17.120 | (laughs)

00:19:17.960 | So anyway, the name of the book is

00:19:19.440 | Retire Before Mom and Dad,

00:19:20.620 | The Simple Numbers Behind a Lifetime of Financial Freedom.

00:19:23.960 | Okay, let's get into the nuts and bolts

00:19:26.480 | of why I really wanted you on.

00:19:28.900 | First of all, thank you, by the way,

00:19:30.120 | for participating in the Bogleheads Conference,

00:19:33.540 | which is coming up this October.

00:19:35.000 | You're gonna be one of our presenters.

00:19:37.380 | You're going to be on a panel.

00:19:38.800 | And I appreciate you coming to the conference

00:19:41.040 | and telling everyone about all the great things

00:19:44.240 | that you've done and a lot of your knowledge

00:19:46.080 | and helping to spread your knowledge among the Bogleheads.

00:19:48.880 | The big draw is all of the financial tool reviews

00:19:53.880 | that you have on robberger.com.

00:19:58.720 | I mean, literally, it is a treasure chest of information,

00:20:03.640 | reviews on all of these different software programs,

00:20:08.640 | robo-advisors, on and on and on,

00:20:11.980 | all the different categories.

00:20:13.260 | I mean, you have spent an inordinate amount of time

00:20:16.340 | looking at all this.

00:20:17.900 | And also, I know that you've looked at the Bogleheads wiki

00:20:22.900 | and the tools and calculators on the Bogleheads wiki.

00:20:26.600 | So first of all, could you tell me about your obsession

00:20:29.640 | with tools and calculators?

00:20:31.460 | And then we'll talk about some.

00:20:33.980 | - Let me first say in terms of the Boglehead site

00:20:35.820 | and the wiki, I don't think there's anything better.

00:20:38.220 | I mean, in terms of just the information, it's phenomenal.

00:20:41.900 | The amount of work they've put into that

00:20:43.900 | is just extraordinary.

00:20:45.380 | And I find myself going back to it time and again.

00:20:48.740 | I was, in fact, just looking at it the other day

00:20:50.300 | in terms of withdrawal strategies.

00:20:52.460 | So in terms of tools, I'm kind of a tool junkie.

00:20:55.620 | I just find the technology fascinating.

00:20:57.900 | Before I was a lawyer in the securities field,

00:21:01.660 | I litigated technology-related cases

00:21:05.500 | for about 10 or 15 years.

00:21:07.580 | And I just, I find it fascinating.

00:21:09.700 | And there's plenty more that I want to put on my site.

00:21:11.660 | I mean, in many ways, I've got far more work ahead of me.

00:21:14.720 | And I kind of want to go beyond tools, too.

00:21:16.380 | I want to have a lot of detail on withdrawal strategies,

00:21:18.660 | frankly, a lot of detail on the different lazy portfolios.

00:21:22.980 | Because as much as I'd like to tell folks,

00:21:24.520 | well, just do the three fund and you're done,

00:21:27.420 | I know that some people just want some spice, I guess,

00:21:31.400 | in their portfolio.

00:21:32.500 | - Yeah, icing on the cake.

00:21:34.260 | - Yeah, yeah, yeah.

00:21:35.540 | In terms of the tools, in fact,

00:21:38.620 | I was just reworking a page on my site

00:21:40.480 | where I basically listed the tools that I tend to use

00:21:43.500 | on a regular basis.

00:21:46.460 | Happy to talk about them.

00:21:47.460 | I kind of, you mentioned robo-advisors.

00:21:50.020 | I certainly have some strong opinions

00:21:51.420 | about which ones I like.

00:21:53.380 | But I also cover things like retirement planning tools,

00:21:57.220 | calculators, just sort of investing tools.

00:22:00.980 | Like how do you know what your asset allocation is?

00:22:03.220 | How do you know not just what your investment fees are,

00:22:06.100 | but what effect they'll have on your portfolio over time?

00:22:09.540 | - Well, let's start with the first group.

00:22:12.740 | Let's start with the retirement planning calculators

00:22:16.180 | because then that folds into asset allocation.

00:22:19.660 | And then we could talk about robo-advisors.

00:22:21.460 | So let's start with retirement planning tools.

00:22:24.180 | What's available out there?

00:22:26.220 | What's free?

00:22:27.620 | What's a low cost?

00:22:29.740 | Start with those.

00:22:30.680 | - Okay, so in terms of retirement planning that's free,

00:22:34.760 | one would be personal capital,

00:22:36.400 | which we'll probably talk about

00:22:37.500 | in a couple of different contexts.

00:22:38.980 | So, and people have to understand what personal capital is.

00:22:42.100 | So personal capital is a registered investment advisor.

00:22:45.080 | So their business is getting,

00:22:46.820 | managing your assets for a percent of AUM.

00:22:51.280 | As a, frankly, as a marketing tool,

00:22:55.020 | they've built a pretty nice financial tool that's free.

00:23:00.020 | - Ah, do you have to be,

00:23:01.380 | you don't have to be a client to use it?

00:23:03.500 | - No, I've used it since they launched it

00:23:05.100 | and I'm not a client.

00:23:06.620 | Basically, you connect all of your accounts or you can,

00:23:10.060 | you know, not just investment accounts,

00:23:11.720 | but you can connect bank accounts, all your debt.

00:23:15.700 | If you have debt,

00:23:16.640 | you can actually connect the value of your home.

00:23:18.340 | They look up the price via Zillow for you.

00:23:20.820 | And it kind of does a little of everything.

00:23:23.100 | It shows you your net worth.

00:23:24.520 | You can use it as a budget, you know, spending tracker.

00:23:26.780 | It'll automatically categorize most of your spending.

00:23:29.860 | Some of it, it doesn't know the category for,

00:23:31.540 | but it does a pretty good job.

00:23:33.140 | They have, I think, a pretty decent retirement planner.

00:23:35.940 | You know, based on the accounts you've connected,

00:23:38.420 | you can make certain assumptions.

00:23:40.460 | Of course, when you're going to retire,

00:23:41.820 | assumptions about how long you're going to live,

00:23:44.040 | inflation assumptions.

00:23:45.220 | And if you're married, you can factor that in.

00:23:48.320 | You can factor in expenses and income in retirement.

00:23:52.480 | So maybe you're going to take a trip around the world.

00:23:54.360 | You can put that in with a date.

00:23:56.140 | In terms of a free retirement planning tool,

00:23:58.660 | particularly if you're still in the accumulation phase,

00:24:00.740 | you haven't actually retired,

00:24:02.780 | and you're just wanting to get sort of a bird's eye view

00:24:04.860 | of how you're doing, I think it's a pretty good tool.

00:24:07.780 | - Okay.

00:24:08.620 | - But there's another one I like a lot that's free,

00:24:11.220 | but it's got a very specific purpose.

00:24:12.820 | It's called FICALC, so F-I-C-A-L-C dot app.

00:24:16.300 | That's the website.

00:24:17.460 | - Okay.

00:24:18.380 | - And what it allows you to do is put in, you know,

00:24:21.420 | how long your retirement's going to be,

00:24:22.980 | how much you have, how much you're going to spend,

00:24:25.880 | what your asset allocation is.

00:24:27.240 | It's very simple, basically stocks, bonds, and cash.

00:24:30.600 | And then you can select from, oh, I don't know,

00:24:33.880 | maybe about a dozen withdrawal strategies.

00:24:36.520 | And then using historical data going back to 1926,

00:24:39.280 | which is effectively what Bill Bingen did in his '94 paper

00:24:43.040 | that gave us the 4% rule,

00:24:44.940 | it will crunch the numbers

00:24:46.800 | and tell you your chances of success.

00:24:50.080 | Success being not running out of money, right?

00:24:53.060 | But the thing that I really like about this tool

00:24:55.900 | is that it will show you for all of the year.

00:24:59.340 | So, you know, starting in 1926,

00:25:01.860 | would you run out of money or not?

00:25:05.340 | But it'll also show you those 30 year scenarios,

00:25:09.100 | if that's how long you've put in for your planned retirement

00:25:12.940 | where you didn't run out of money,

00:25:14.080 | but you almost ran out of money.

00:25:16.380 | Because I think that's as important

00:25:18.360 | as just quote unquote success.

00:25:21.960 | I'm not sure I'd call success, you know,

00:25:24.320 | on year 30, dying with $0,

00:25:27.200 | because that would have been a hard last year.

00:25:31.580 | And so it will show you those periods where,

00:25:33.960 | yeah, you didn't run out of money,

00:25:35.040 | but boy, you were close.

00:25:36.360 | And you can actually click on each year

00:25:39.420 | and it'll give you details

00:25:41.200 | about how that retirement would have looked

00:25:43.420 | had you, for example, with the assumptions you put in

00:25:46.560 | and the withdrawal strategy you've chosen,

00:25:48.980 | you know, and retired in whatever,

00:25:52.200 | 1968 or whatever year you want,

00:25:54.320 | how that would have worked out.

00:25:56.600 | And by the way, in the different withdrawal strategies,

00:25:59.400 | they include the Vanguard dynamic spending strategy.

00:26:02.560 | - Well, before we go on,

00:26:03.720 | could you explain what dynamic spending is?

00:26:07.800 | - Yeah, so if you think about the 4% rule,

00:26:09.920 | the way Bill Bingen tested it was

00:26:11.680 | you start with a certain percentage of your portfolio

00:26:14.700 | in year one, let's just assume 4%.

00:26:17.660 | And then every year thereafter, the 4% is irrelevant.

00:26:21.460 | You just adjust the previous year's distribution

00:26:24.180 | by the rate of inflation.

00:26:25.740 | So that would be considered a static spending rule,

00:26:29.300 | static on an after inflation basis,

00:26:31.500 | because you're effectively spending the same amount of money

00:26:34.300 | on an after inflation basis throughout retirement.

00:26:38.000 | Basically just about every other spending strategy

00:26:40.980 | is dynamic, right?

00:26:42.660 | Again, dynamic meaning the amounts changing

00:26:46.220 | on an after inflation basis.

00:26:47.780 | And on one extreme would be a fixed percentage.

00:26:52.340 | So you're just gonna take out 5% every year.

00:26:55.840 | And that's dynamic because, well, think of it this year,

00:26:59.420 | you know, the market's down 20%.

00:27:01.940 | Let's say it ends the year that way.

00:27:04.540 | If you take your 5% this year,

00:27:06.180 | it's gonna be a lot lower than the 5% you took last year.

00:27:10.820 | So that would be sort of an extreme case.

00:27:13.900 | And frankly, the static approach that Bill Bingen took,

00:27:17.760 | I personally view as an extreme approach

00:27:21.300 | to retirement spending as well.

00:27:22.840 | They're just sort of on opposite ends of the spectrum.

00:27:25.420 | - The 4% rule or any percentage,

00:27:27.900 | I've always had an issue with that

00:27:30.580 | because my expenses are going up with inflation

00:27:35.420 | and if my 4% is less than my expenses,

00:27:40.420 | that doesn't work.

00:27:41.280 | I still have to take the money out and pay my expenses.

00:27:43.460 | - Again, the 4% only applies to the first year, right?

00:27:47.460 | - Okay, that's what I wanted to get across.

00:27:49.000 | - Yeah, and then you adjust for inflation.

00:27:50.460 | By the way, he believes

00:27:52.020 | with a somewhat more complicated portfolio, by the way,

00:27:55.800 | small cap, mid cap, even micro cap, it's 4.7%.

00:28:00.800 | - Yeah, well, good luck with that.

00:28:03.980 | - Well, look, I'm just reporting what I've heard.

00:28:06.940 | - Fair enough.

00:28:07.780 | Okay, so we've got two now, two different programs.

00:28:12.100 | And is there a third one

00:28:14.580 | that you might like for retirement planning?

00:28:17.340 | - The most robust tool for consumers would be new retirement.

00:28:22.340 | - Okay.

00:28:23.460 | - From a planner perspective,

00:28:24.280 | they're gonna use MoneyGuide Pro or eMoney Advisor

00:28:27.020 | and I've worked with both of those tools.

00:28:29.360 | But those are generally not available to consumers

00:28:32.420 | unless they have a planner

00:28:33.540 | that they're working with.

00:28:34.940 | New retirement is, I think,

00:28:37.580 | comparable to both of those tools.

00:28:40.060 | And it's a very robust tool.

00:28:41.940 | It's not the kind of thing

00:28:42.780 | where you can just spend five minutes with it

00:28:44.780 | and have results.

00:28:46.300 | Because it walks through pretty much everything

00:28:50.280 | that would be relevant to spending during retirement.

00:28:54.500 | So it's gonna walk through long-term care insurance.

00:28:56.500 | It's gonna walk through social security questions.

00:28:59.180 | It's gonna walk through Medicare

00:29:00.880 | and estimate your Medicare premiums and medical costs.

00:29:03.940 | You're going to enter your accounts,

00:29:06.000 | your investment accounts,

00:29:06.900 | and you can link them

00:29:08.340 | and have that data pulled in automatically

00:29:10.000 | or you can manually put them in

00:29:11.520 | if you're more comfortable with that, which is what I do.

00:29:14.120 | But you're gonna set both pessimistic

00:29:16.660 | and optimistic return assumptions for every single account.

00:29:21.420 | Which is useful if, like me,

00:29:24.280 | you really take advantage of asset location, right?

00:29:26.800 | So 'cause my traditional retirement accounts,

00:29:29.360 | I don't expect the returns to be as high

00:29:31.760 | as my Roth and taxable accounts

00:29:33.520 | because of what I have invested in them.

00:29:35.080 | And so you can make those assumptions separate

00:29:37.640 | on an account level.

00:29:39.400 | You can walk through,

00:29:40.560 | if you expect to get an inheritance at some point,

00:29:42.760 | you can model that.

00:29:44.340 | Maybe you have passive income

00:29:45.680 | or some other sort of side income in retirement.

00:29:47.840 | So you can model all of these things.

00:29:50.100 | You can even model Roth conversions.

00:29:52.680 | And once you get done inputting all of this information,

00:29:56.780 | it gives you really a lot of both charts and tables

00:30:00.300 | showing you, here's your chances of success.

00:30:03.500 | Again, success defined as not running out of money.

00:30:06.560 | And they use Monte Carlo analysis.

00:30:08.640 | But it gives you a wealth of information.

00:30:11.320 | It'll show you your tax brackets

00:30:14.080 | all the way through life expectancy,

00:30:15.720 | including when your RMDs kick in.

00:30:17.700 | It'll show you your state income tax.

00:30:20.860 | You can model, maybe you move.

00:30:23.060 | Maybe you live in California when you're working

00:30:25.180 | and you're gonna move to Texas or Tennessee for the taxes.

00:30:28.960 | When you retire, you can model that,

00:30:30.800 | including you can set separate inflation rates

00:30:34.240 | for real estate and model that home

00:30:37.200 | you're gonna buy 15 years from now.

00:30:39.360 | And it'll change the tax implications

00:30:42.340 | depending on where you're gonna move from and to.

00:30:44.240 | So it really is, I mean, a feature rich tool.

00:30:49.240 | It is not free though.

00:30:51.200 | But I think the cost in my view is really reasonable.

00:30:54.520 | So they have three different tiers.

00:30:56.760 | The lowest, which gives you access to the tool is $120

00:31:00.200 | a year.

00:31:01.040 | - A year, $10 a month.

00:31:03.040 | - You can go up from there.

00:31:04.040 | They actually have started offering planning

00:31:06.440 | with a certified financial planner, if you want.

00:31:09.360 | - Is that extra obviously, or is that?

00:31:12.040 | - Yeah, so that starts at 1500 a year.

00:31:14.440 | But you can also do what they call Planner Plus Live.

00:31:16.840 | I feel like I'm a salesperson.

00:31:18.520 | You can also do Planner Plus Live, which is 360

00:31:21.760 | and you get one-on-one coaching.

00:31:23.440 | For me, I just use the tool.

00:31:25.240 | But for others, the coaching for a year might help.

00:31:27.720 | But for me, it's probably the most comprehensive

00:31:32.720 | retirement planning.

00:31:34.400 | It's really designed for when you're getting,

00:31:36.360 | I think, closer to retirement.

00:31:38.280 | It's not the only one out there.

00:31:41.080 | There are some other interesting ones.

00:31:42.640 | But new retirement's probably my favorite.

00:31:44.880 | - The technology for do-it-yourself investors

00:31:50.680 | on the retirement planning side has really come a long way.

00:31:55.360 | Like you were saying, most of the technology

00:31:57.720 | used to be MoneyGuide Pro or eMoney.

00:32:00.760 | And that's for people in the industry.

00:32:03.520 | But with these new companies coming along,

00:32:08.320 | the ability to do-it-yourself for do-it-yourself investors

00:32:11.400 | for a very nominal fee is really exciting, I think.

00:32:15.160 | - And I will say, it's a hard market.

00:32:18.640 | I mean, I think selling to advisors, planners,

00:32:21.240 | is a much easier, I mean, it's competitive, of course,

00:32:23.560 | but, you know, I mean, how many people

00:32:26.480 | really wanna dive into a tool like this?

00:32:28.240 | I mean, those that do are probably

00:32:30.080 | all listening to your podcast, Rick.

00:32:32.080 | - I'm not sure, but--

00:32:32.920 | - You know, you randomly ask a person on the street

00:32:35.760 | who's, say, within five years of retirement,

00:32:37.840 | hey, you wanna go to a coffee shop and spend three hours

00:32:40.040 | looking at retirement projections?

00:32:42.520 | Probably not gonna get a lot of yeses.

00:32:45.600 | - But you know what, maybe employers,

00:32:47.040 | maybe employers at some point would incorporate this

00:32:51.200 | in their HR departments.

00:32:53.280 | - That's already happening.

00:32:54.480 | I can tell you that's already happening.

00:32:55.880 | - Oh, that's great.

00:32:57.120 | Let's get into something that is an important part

00:33:00.640 | of retirement planning and financial planning,

00:33:03.640 | and that's in investment software,

00:33:06.160 | asset allocation software,

00:33:07.560 | portfolio management software.

00:33:09.160 | So this is kind of a part of it.

00:33:11.520 | You know, you've gotta get a certain rate of return

00:33:13.160 | or you're looking for a certain rate of return on your money.

00:33:15.760 | So let's talk about the tools that are available out there

00:33:18.080 | for doing investing.

00:33:19.680 | The free ones, the free ones,

00:33:21.120 | and then, you know, things that might cost a little bit.

00:33:24.120 | - I think most of these are free that come to mind.

00:33:26.720 | Well, I'll go back to Personal Capital

00:33:28.520 | because they have a very slick asset allocation feature

00:33:33.440 | that's got graphical elements to it

00:33:35.120 | where it shows you, particularly on the U.S. side,

00:33:37.240 | I'm not sure the international side is as robust

00:33:39.880 | as I recall, but, you know,

00:33:43.200 | it shows you your, basically,

00:33:44.440 | your different asset classes in boxes

00:33:46.200 | and then in table form,

00:33:47.120 | and you can click on a box and it drills in,

00:33:49.360 | and it'll show you, you know, for your large cap value,

00:33:52.320 | here are the funds and what percentage each fund,

00:33:55.360 | you know, contributes to that asset class,

00:33:59.160 | and you can draw all the way down.

00:34:00.840 | It'll show you sectors.

00:34:03.880 | And the other thing I like about it

00:34:05.240 | is they have a fee analyzer where, you know,

00:34:08.440 | of course, it pulls in the,

00:34:09.800 | it knows the fees of your funds,

00:34:11.760 | and that's pulled in automatically.

00:34:13.960 | If you have an advisor that's charging a AUM fee,

00:34:17.360 | you can model, you can include that.

00:34:19.040 | You can also make assumptions of if you're still working,

00:34:22.440 | what your contributions are,

00:34:23.840 | and what, if there's an employer match,

00:34:26.000 | you can actually model that.

00:34:28.840 | And the thing I like about it then is it shows you

00:34:32.080 | how these fees will affect, you know, your wealth

00:34:36.680 | up until you retire, and you put that date in the tool.

00:34:42.200 | That to me is probably, when I'm talking to folks

00:34:44.160 | that don't appreciate the impact of fees, you know,

00:34:47.600 | it's hard to say, well, 1%, what's that?

00:34:49.800 | You know, but when you show them,

00:34:51.440 | well, this is the impact over the next 25 years,

00:34:53.760 | boy, they wake up, that gets their attention.

00:34:56.200 | So that's, I really like that tool.

00:34:59.560 | So that would be one.

00:35:01.080 | - Anything else?

00:35:02.520 | - Morningstar is kind of interesting right now.

00:35:04.840 | So I think in terms of just quickly understanding a fund,

00:35:08.800 | to me, Morningstar is probably the best thing out there.

00:35:11.960 | It's really good.

00:35:13.040 | - Is there a cost to the level that you're talking at?

00:35:16.200 | - Right now, no.

00:35:17.040 | So if you just want to evaluate a fund,

00:35:19.800 | you can put the ticker in Morningstar.

00:35:21.600 | It'll give you, you know, it'll give you the style box,

00:35:24.680 | right, so it'll show you, is it small cap, large cap,

00:35:27.120 | value, growth, all of the, you know,

00:35:29.480 | give you all the valuation metrics,

00:35:30.920 | PE, price to book, price to sale.

00:35:34.000 | Of course, it'll give you its expense ratio.

00:35:35.600 | It'll show you, I think they show for free

00:35:38.160 | the top 30 holdings, right?

00:35:40.800 | They have always had a portfolio tracker.

00:35:42.880 | At one point it was free.

00:35:44.640 | You had access to like the X-ray analysis

00:35:47.320 | and other things with the paid version.

00:35:50.080 | They're moving over to a new system.

00:35:53.160 | It's actually investor.morningstar.com.

00:35:56.040 | And they sort of upped their game

00:35:57.600 | in terms of the user interface.

00:35:59.840 | 'Cause the old version was like, you know,

00:36:01.600 | 1990s called and it wanted its website back, right?

00:36:04.760 | I mean, it was really outdated.

00:36:07.720 | The new one is much better,

00:36:10.080 | but I still think it's a work in progress.

00:36:12.480 | They're still trying to work out the kinks

00:36:15.080 | and figure it all out.

00:36:16.360 | You know, you get a wealth of data,

00:36:17.680 | but at some point it looks like a lot of the features

00:36:20.160 | now are behind, you know, you have to pay.

00:36:22.680 | Yeah, but it's still, I mean, an overall good tool.

00:36:25.400 | Another one I like is Portfolio Visualizer.

00:36:29.720 | I don't know if you're familiar with that tool,

00:36:31.400 | but you can put in, it's not really

00:36:34.320 | to sort of track your investments,

00:36:36.080 | but you can put in a portfolio

00:36:37.640 | either based on asset classes or specific tickers.

00:36:40.640 | And it will show you the historical returns

00:36:44.320 | of that portfolio.

00:36:45.720 | You can compare multiple portfolios.

00:36:48.560 | It'll show you, you know, rolling averages,

00:36:51.200 | say five, 10-year rolling average returns.

00:36:53.520 | It'll show you standard deviation.

00:36:55.120 | Of course, the compound annual growth rate.

00:36:57.360 | And they have some pre-programmed portfolios.

00:37:01.440 | Like they have the Bogleheads 3 Fund Portfolio

00:37:04.080 | where you just click a button and it fills in

00:37:06.560 | Vanguard funds and percentages.

00:37:08.800 | And they also have one guy named Rick Ferry.

00:37:13.760 | I don't know if you've seen it, but your four fund,

00:37:15.200 | your core portfolio is in there.

00:37:17.400 | Well, I actually use it on that Core 4 website.

00:37:20.440 | Another part of the tool is

00:37:22.680 | they have a Monte Carlo simulator.

00:37:25.520 | You could kind of, it's kind of not like FI Calc,

00:37:28.200 | but you can put a specific portfolio in there

00:37:30.640 | and model the drawdown.

00:37:32.520 | So you could put in like a million dollar portfolio

00:37:34.720 | or whatever.

00:37:35.760 | Assume, let's say a $45,000 initial withdrawal.

00:37:39.760 | Adjust it for inflation every year.

00:37:41.920 | And, but put your specific portfolio in there

00:37:45.320 | and it will model how that has done.

00:37:48.160 | And you can actually change a number

00:37:50.600 | of the different statistical assumptions.

00:37:52.640 | But for example, it can use historical data.

00:37:55.520 | And so I find that tool to be extremely helpful.

00:37:58.760 | - Okay.

00:37:59.600 | Anything else out there for portfolio management

00:38:01.760 | and asset allocation?

00:38:04.000 | - I will mention one other tool in large part

00:38:06.280 | because I'm so frustrated

00:38:07.640 | that like all of the other brokers don't offer this.

00:38:12.640 | I've used M1 Finance a bit.

00:38:14.920 | I don't have an account there now,

00:38:17.520 | but you can create a portfolio, very simple,

00:38:20.520 | low cost index fund portfolio

00:38:23.320 | and invest your money through M1 Finance.

00:38:26.280 | And then when it comes time to rebalance,

00:38:29.600 | first of all, when you can make new contributions,

00:38:32.080 | they will automatically put it into the various funds

00:38:36.880 | to try to bring you back

00:38:37.920 | to whatever your planned allocation is.

00:38:41.400 | And you can also just click a button

00:38:43.240 | and they will automatically rebalance for you.

00:38:46.880 | Now I probably wouldn't do that in a taxable account

00:38:49.280 | or not without understanding the consequences,

00:38:51.920 | but within a retirement account, boy,

00:38:54.280 | that's pretty nifty.

00:38:55.640 | And I'm kind of waiting for, I don't know,

00:38:58.640 | Vanguard, Fidelity, Schwab.

00:39:00.680 | It doesn't seem like it would be that complicated

00:39:02.640 | and investment advisors have rebalancing tools.

00:39:05.200 | But as far as I know,

00:39:07.560 | M1 Finance is the only one

00:39:09.440 | that's actually made it available,

00:39:12.000 | well, other than robo-advisors that do it for you.

00:39:15.520 | - Let's talk about robo-advisors for a bit.

00:39:21.640 | And then the last thing I wanna talk about

00:39:23.280 | are all the tools on the Bogleheads Wiki,

00:39:27.200 | calculators and tools.

00:39:28.160 | So let's talk about all the work that you've done

00:39:30.760 | on evaluating robo-advisors.

00:39:33.360 | If someone decided they wanted to have another company

00:39:37.680 | manage their portfolio and do the rebalancing,

00:39:40.320 | could you go through your list of top three robos?

00:39:45.320 | - Yeah, and just for sort of perspective,

00:39:48.440 | I've used Wealthfront, I've used Betterment,

00:39:52.200 | and I've used Vanguard's digital advisory services.

00:39:56.440 | And then I've spent a lot of time studying Schwab's

00:39:59.000 | and SoFi's and others.

00:40:02.080 | My personal favorite today is Betterment and I use it.

00:40:06.640 | We invest our credit card reward.

00:40:08.640 | So we get cash back or whatever, I don't spend it.

00:40:11.800 | We invest it.

00:40:12.640 | Part of that is to show people how small amounts of money,

00:40:17.360 | invested over time, can grow significantly.

00:40:21.320 | And it also allows me, I move it from time to time

00:40:23.640 | just to test out different platforms.

00:40:25.680 | It wasn't in one finance at the moment, it's at Betterment.

00:40:28.960 | And I just really like Betterment.

00:40:30.640 | I mean, it's got great tax loss harvesting tools,

00:40:33.080 | which I don't view tax loss harvesting

00:40:36.360 | as some massive addition to a portfolio.

00:40:41.360 | I think in some cases it could be, but it's there.

00:40:45.480 | They have an asset location tool

00:40:47.520 | if you have your retirement accounts there.

00:40:49.960 | I think they've got some great core portfolios.

00:40:52.920 | They have some other things I don't care for,

00:40:55.360 | but their core portfolio I think is good.

00:40:58.040 | And you can actually create your own.

00:41:00.240 | You're limited in the ETFs you can use,

00:41:03.480 | but for a bogal head, they've got everything we could want.

00:41:06.280 | - Speak a little bit more about the asset location too.

00:41:09.240 | That interests me, how they do that.

00:41:11.560 | - They have an automated feature

00:41:13.760 | that when they're setting up your accounts,

00:41:15.760 | they'll do an asset location analysis

00:41:18.240 | and divide your investments based on an account type.

00:41:21.600 | I've read about it.

00:41:22.480 | Like I said, I haven't used it,

00:41:23.760 | so I can't speak from experience,

00:41:26.400 | but it seems like the kind of thing

00:41:29.000 | that technology should be able to do for us pretty easily.

00:41:33.160 | And I still kind of marvel

00:41:34.760 | that it's not more widely available,

00:41:38.320 | but maybe it's available with other advisors.

00:41:42.160 | Betterment's the only one at least that I know of.

00:41:44.680 | - Wealthfront was recently sold, correct?

00:41:47.720 | And you had money with them.

00:41:50.360 | I mean, how do you feel about Wealthfront

00:41:51.800 | and the fact that now they're owned by UBS?

00:41:54.840 | - Yeah, I liked Wealthfront.

00:41:57.840 | I mean, I think it's a solid robo-advisor.

00:42:00.280 | It would probably be my top three

00:42:02.080 | if I were gonna come up with three.

00:42:03.640 | One could wonder what the sale,

00:42:05.680 | how that will affect it going forward.

00:42:07.880 | And I guess there's no way to really know.

00:42:09.480 | Maybe it'll have no effect.

00:42:10.840 | Maybe they'll invest more money in it, I don't know.

00:42:12.840 | All of these robo-advisors,

00:42:14.880 | they're trying to survive, right?

00:42:17.360 | And so I do see them going in directions

00:42:19.800 | that I personally, maybe getting into crypto

00:42:22.800 | or getting into the smart beta kind of thing as examples

00:42:27.640 | or really pushing direct indexing as Fidelity and Schwab

00:42:30.840 | are both doing that now.

00:42:32.720 | And I'm just not convinced that these are things

00:42:37.720 | that for most people are worthwhile.

00:42:40.040 | And in direct indexing,

00:42:42.560 | which you typically wanna do in a taxable account,

00:42:45.840 | I've talked to folks who decide later

00:42:48.600 | they wanna leave whatever.

00:42:50.340 | Yeah.

00:42:51.180 | Wealthfront's had direct indexing for a while.

00:42:52.960 | They wanna leave it and manage their own investments

00:42:54.680 | and they got 120 positions.

00:42:56.640 | At least, at least.

00:42:58.080 | Yeah, so you gotta be careful.

00:43:00.400 | I know in theory, direct indexing, I think,

00:43:02.520 | has a lot of appeal in theory, but in the event,

00:43:05.560 | so you've gotta be careful as you evaluate what they offer.

00:43:10.320 | But overall, I like Wealthfront.

00:43:11.680 | I was not as impressed

00:43:13.840 | with Vanguard's digital advisory services.

00:43:16.320 | Now, this is the personal advisory service,

00:43:18.480 | but only basically the electronic

00:43:20.440 | portfolio management side?

00:43:21.800 | No advice, no speaking with somebody?

00:43:24.680 | Correct.

00:43:25.760 | Yeah, there were a lot of technical issues.

00:43:27.520 | I mean, to their credit, they were eventually resolved.

00:43:31.080 | But it took me two weeks just to get the account going

00:43:34.240 | because of technical issues.

00:43:36.280 | And then pieces of it didn't work.

00:43:38.360 | But again, to their credit, they got it fixed.

00:43:41.000 | It's not nearly as feature rich.

00:43:43.400 | I mean, in some ways, it's almost like a life strategy

00:43:47.120 | or a target date fund wrapped in a cool user interface.

00:43:51.000 | More tax efficient though, correct?

00:43:53.640 | More tax efficient than a balanced fund

00:43:55.760 | like a life strategy?

00:43:56.920 | Yeah.

00:43:58.280 | That's an interesting question.

00:43:59.600 | I mean, as you know, Vanguard had some issues

00:44:02.000 | with the taxes on their target date funds.

00:44:04.640 | And I don't know if you saw,

00:44:05.800 | they reached an agreement with Massachusetts on that.

00:44:08.760 | But it's a good question, Rick.

00:44:12.360 | I don't know if it's more tax efficient or not.

00:44:16.440 | Okay, fair enough.

00:44:17.640 | Any other robos that you might like that you've looked at?

00:44:20.760 | SoFi is interesting.

00:44:23.440 | It's quote unquote free,

00:44:24.880 | but they use some proprietary indexes

00:44:29.080 | for some of their funds rather than the S&P 500.

00:44:32.280 | And with Schwab, you've got,

00:44:34.520 | you're required to keep so much in cash.

00:44:37.400 | So it's quote unquote free, but not really.

00:44:39.360 | And you saw that settlement they had on that.

00:44:42.760 | Schwab settlement for holding a lot of money in cash.

00:44:45.560 | Yeah, yeah.

00:44:46.880 | So, I think the issue was that they were representing

00:44:49.960 | that it was free and that their recommendations

00:44:53.520 | were based sort of in the best interest of the users.

00:44:57.720 | But whatever, I mean, I applaud companies

00:45:01.080 | for trying to make these tools available

00:45:05.280 | for quote unquote free, but you gotta be transparent.

00:45:09.120 | And you and I both know that holding six or 10

00:45:11.600 | or 15% in cash in a portfolio is not free.

00:45:15.200 | Well, in addition, they also hold a lot of Schwab funds.

00:45:17.720 | Not that the funds that they hold are really expensive,

00:45:20.160 | but they do hold, in the Intelligent Portfolio,

00:45:23.640 | they do hold a lot of Schwab ETFs.

00:45:26.360 | Yeah, the thing I look to, and maybe you do too,

00:45:28.520 | is one, are they based on a proprietary index or not?

00:45:33.440 | 'Cause Fidelity Zero funds, for example, are based on,

00:45:36.200 | and it's not that they're necessarily bad funds,

00:45:38.040 | but they're based on a Fidelity proprietary index, right?

00:45:41.560 | Yeah, correct.

00:45:42.840 | I just feel more comfortable with the old S&P 500

00:45:47.560 | or whatever sort of well-recognized index.

00:45:50.800 | And then, yeah, you gotta look at fees.

00:45:52.400 | I think, for the most part, these ETFs

00:45:54.640 | are pretty inexpensive.

00:45:56.140 | Okay, let's get into the last thing I wanna talk about,

00:46:01.080 | 'cause I asked you to take a look at this,

00:46:03.280 | is all of the tools that are available

00:46:06.760 | on the Bogleheads Wiki,

00:46:11.840 | Tools and Calculators page.

00:46:15.120 | Just an incredible number of free tools, so have at it.

00:46:20.120 | Well, first of all, I would recommend

00:46:24.400 | that those folks listening are interested, go to it.

00:46:27.140 | I don't know if you can leave a link,

00:46:28.400 | but it's just Bogleheads Wiki, Tools and Calculators.

00:46:32.560 | And, I mean, you could spend a lifetime on the page, right?

00:46:36.360 | I mean, it's like, I don't even know where to begin.

00:46:37.800 | It's like drinking from a fire hose.

00:46:39.840 | You know, a lot of the tools,

00:46:41.160 | some of them we've already talked about.

00:46:42.600 | Like, for example, backtesting,

00:46:43.960 | they mentioned Portfolio Visualizer as a good example.

00:46:48.280 | But they include things like a backtesting spreadsheet

00:46:51.200 | that the community put together.

00:46:52.480 | I've not personally used it, but it's on my list to use it.

00:46:56.760 | And, you know, that kind of thing is very unique

00:46:59.640 | to the Bogleheads community,

00:47:01.580 | and I would highly recommend it.

00:47:03.160 | But, you know, they have bond calculators,

00:47:06.240 | if that's something that, you know,

00:47:08.480 | listeners are interested in.

00:47:10.360 | They link to tools, and Vanguard actually has a good one

00:47:13.480 | on, you know, college savings.

00:47:15.080 | You know, if you're at that stage of life

00:47:16.640 | where you're saving for, say, a child's education.

00:47:20.080 | They have, you know, things like on life expectancy

00:47:24.900 | and calculators there.

00:47:26.400 | I tend to avoid looking at those things.

00:47:29.760 | I'm not sure I want to know.

00:47:31.540 | You know, but they have everything.

00:47:34.640 | They have a ton of loan and mortgage calculators.

00:47:36.480 | And again, what these are,

00:47:38.800 | these are not necessarily things built by the Bogleheads.

00:47:43.400 | Some things like that spreadsheet I mentioned are,

00:47:45.200 | but these are just links to other calculators.

00:47:47.920 | One they have that's one of my favorites

00:47:49.480 | that I actually haven't been to in a while,

00:47:52.520 | but it's called Carl's Mortgage Calculator.

00:47:55.520 | It's a simple mortgage calculator,

00:47:56.980 | but it's really easy to use.

00:47:58.520 | And, you know, if you're looking to figure out

00:48:02.360 | how much a mortgage is going to cost to buy a home,

00:48:04.860 | that's excellent.

00:48:08.020 | So yeah, they actually have dozens and dozens and dozens

00:48:13.020 | of retirement savings calculators on here,

00:48:18.960 | free ones and ones that you can buy.

00:48:23.960 | They have a kind of a spreadsheet, you know,

00:48:28.160 | which ones do which and so forth.

00:48:31.800 | But again, like you said,

00:48:32.800 | you could spend a lifetime on here

00:48:34.080 | because they have put in so much time, all volunteers.

00:48:38.200 | I have put in so much time putting this wiki page together

00:48:42.860 | and all the different aspects of the free calculators

00:48:45.880 | and free tools page that it's just absolutely phenomenal.

00:48:48.880 | I mean, literally anything that you're looking for this,

00:48:52.800 | if you don't know where to go first,

00:48:54.800 | to go to Bogleheads wiki tools and calculators

00:48:58.200 | is probably a good bet to go there.

00:49:00.380 | You'll find something.

00:49:01.760 | Yeah, the thing I would say, I mean,

00:49:03.000 | if you're a calculator junkie, like maybe you and I are,

00:49:07.560 | it's a great place to go.

00:49:09.420 | If you're not, the thing I would say is,

00:49:12.100 | as you look through something like this great resource

00:49:15.700 | on the Bogleheads site,

00:49:16.600 | is just figure out what it is you need.

00:49:18.880 | We talked about a simple portfolio.

00:49:20.880 | I would keep the whole tools and calculator aspect

00:49:25.120 | as simple as possible too.

00:49:27.600 | And if free tools work for you, then why pay for it, right?

00:49:32.600 | And if you get some benefit out of maybe more advanced tools

00:49:36.160 | then that's great too.

00:49:38.220 | But I mean, 'cause at the end of the day,

00:49:39.640 | I probably only use a handful of two or three or four tools

00:49:44.640 | on a somewhat regular basis,

00:49:47.740 | just because it's all you need really.

00:49:50.500 | And so what's the next step for you, Rob?

00:49:53.160 | I mean, you're continuing to build out your website,

00:49:55.480 | you're continuing to do the YouTube videos,

00:49:59.160 | going down the credit card alley

00:50:02.320 | and working on that as well.

00:50:03.840 | I mean, where's it all going?

00:50:05.560 | What's the next step?

00:50:06.600 | I do have a couple of books that I wanna write.

00:50:09.880 | Oh, okay, great.

00:50:11.520 | One about how to invest once you're retired.

00:50:14.720 | Investing in retirement.

00:50:16.200 | Yeah, because, and this hit me hard, I wasn't expecting it,

00:50:18.760 | but when I sold my sites and thought I was retired,

00:50:21.920 | I was really scared to spend our money,

00:50:23.920 | even though by every known calculation,

00:50:27.840 | we had plenty of money to retire.

00:50:29.640 | It's nerve wracking to start spending your money.

00:50:33.280 | And at least I found it to be so.

00:50:36.040 | No, no, it's true.

00:50:36.880 | I mean, I work with a lot of clients.

00:50:37.960 | In fact, I had a call today,

00:50:39.360 | and this year where this client is transitioning

00:50:44.360 | from accumulation to distribution in retirement

00:50:50.120 | is the most nerve wracking time of your life,

00:50:55.240 | financially anyway,

00:50:56.280 | because you just don't know how it's gonna work.

00:50:58.880 | And you've got a lot of questions

00:51:00.040 | and you could have substantial amount of assets

00:51:03.920 | and still be, and your spending be very low,

00:51:06.360 | and you're still afraid to make that leap.

00:51:10.600 | Yeah, and unfortunately in the industry,

00:51:14.480 | there are a lot of players

00:51:17.360 | that will try to profit from that fear.

00:51:21.440 | Yeah, I agree.

00:51:22.520 | And yeah, you don't encounter that when you're 20 or 30

00:51:25.920 | and you're just saving.

00:51:27.480 | But when you start to retire,

00:51:28.760 | then folks will try to scare you into certain products.

00:51:33.600 | So yeah, it's much more challenging than I had anticipated.

00:51:39.680 | - Any parting words for us, words of wisdom?

00:51:43.880 | - Well, I do hope as many people as can

00:51:47.160 | come to the Boglehead Conference.

00:51:48.400 | I'm really looking forward to that.

00:51:50.640 | And I think where people can find me,

00:51:53.280 | the YouTube channel is kind of where my heart is

00:51:55.560 | in terms of trying to produce content that helps folks.

00:51:59.720 | It's not fancy.

00:52:00.760 | I don't have like a production person

00:52:04.240 | and I don't even edit the videos.

00:52:05.880 | So like if I mess up, well, you get to see it all.

00:52:08.680 | But I do live shows as well.

00:52:11.120 | People ask me questions and I do my best to answer them.

00:52:14.320 | I think it's fun.

00:52:15.840 | I'm not sure if everyone else does, I don't know.

00:52:18.160 | But people keep showing up, so.

00:52:20.160 | - Very good.

00:52:21.480 | Well, Rob, it's been a real pleasure

00:52:22.640 | having you on Boglehead's Uninvesting.

00:52:24.160 | I'm certainly looking forward to seeing you

00:52:26.240 | in person in October.

00:52:27.800 | And thanks for joining us today.

00:52:29.640 | - Thanks, Rick, really appreciate it.

00:52:32.040 | - This concludes this edition of Boglehead's Uninvesting.

00:52:34.920 | Join us each month as we interview a new guest.

00:52:37.840 | In the meantime, visit boglecenter.net, bogleheads.org,

00:52:42.120 | the Boglehead's Wiki, Boglehead's Twitter.

00:52:44.600 | Listen live each week to Boglehead's Live on Twitter Spaces,

00:52:48.040 | the Boglehead's YouTube channel, Boglehead's Facebook,

00:52:50.840 | Boglehead's Reddit.

00:52:52.480 | Join one of your local Boglehead's chapters

00:52:55.400 | and get others to join.

00:52:56.760 | Thanks for listening.

00:52:57.920 | (upbeat music)

00:53:00.540 | (upbeat music)

00:53:03.120 | (upbeat music)

00:53:05.700 | (upbeat music)

Bogleheads® on Investing Podcast 048: Rob Berger on free and cheap online investing tools

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