Welcome to the Bogleheads Chapter Series. This episode was hosted by the Bogleheads Starting Out and Mid-Career Life Stages and recorded June 15, 2022. It features a conversation with Q&A on personal investing with J.L. Collins, author of The Simple Path to Wealth. Bogleheads are investors who follow John Bogle's philosophy for attaining financial independence.

This recording is for informational purposes only and should not be construed as personalized investment advice. Hello everyone and welcome to another Bogleheads Chapter Series event. Today's session is jointly hosted by the Starting Out and Mid-Career Accumulators Life Stages Chapters and today's session is being recorded as already discussed. As most of you know, the Bogleheads are investors who follow John Bogle's philosophy for obtaining financial independence and a quick shout out, as Miriam mentioned, to Mel Lindauer, who's in the audience.

Mel is a founder of the Bogleheads and also a co-author of the Bogleheads Guide to Investing, so it's great to have you here, Mel. Our special guest tonight is J.L. Collins, author of The Simple Path to Wealth. J.L. is well known to many Bogleheads and has often praised the work of Jack Bogle.

J.L.'s career is long and varied, and his wisdom is timeless. His gifts include distilling sometimes complex topics into very digestible, user-friendly guidance. His books and blog, including the stock series on his blog, are known for doing exactly that. And more recently, apart from authoring A Simple Path to Wealth, J.L.

published another book called How I Lost Money in Real Estate Before It Was Fashionable. We'll touch on lessons learned there later. You can learn more about J.L. on his blog by googling J.L. Collins. And a friendly disclaimer before we start, today's session is for informational purposes only and should not be construed as personal investment advice.

So now back to our program. J.L., you should know we have a global audience, so if you ever want to highlight a similarity or difference of living or investing abroad, feel free. And on that note, we'd specifically like to wish a warm welcome to our Japan Bogleheads chapter. And I'll share a quote from a Japan chapter member about you, J.L.

So the quote is, "His book is very popular in Japan. The number of reviews at Amazon are over 1,000." We covered Zoom tips, so hopefully folks are good there. We'll now cover the format of what to expect tonight. J.L. and I will have a conversation covering a range of topics, including questions submitted by the Boglehead community via the RSVP survey questionnaire.

Feel free to submit questions via the chat during the meeting. And later in the evening, probably around a quarter to nine Eastern, we'll pause the primary conversation and we'll turn it over to Miriam and Lucas to take questions from the chat. So one more thing I'll mention about J.L., folks who are familiar with him and folks who aren't will learn tonight, his voice is incredible, it's mesmerizing.

So this next specific suggestion, it's timeless, but it's specifically relevant these days. And that is J.L. has a recording on YouTube called "A Guided Meditation for When the Stock Market is Dropping." It's just under 11 minutes, it's got over 70,000 views, and I, along with many others, highly recommend it.

Another note, J.L. has many interviews on YouTube, he's done many podcasts, they're easily available online, in addition to the content on his blog. So while we want to make sure tonight's session covers intro material for everyone, we also want to make sure we cover info that J.L. might want to speak about that he's spoken about less often, so that we cover a wider range of topics.

In doing so, we'll probably alternate between typical personal finance, and we may go from practical to philosophical at times. So with that, let's begin. Welcome, J.L. Thank you. What an introduction. I hope I live up to your very kind words. An honor to be here, I appreciate the invitation.

Yes, it's so great to have you. So J.L., you and I met in Ecuador in 2014 at a Chautauqua, which was a gathering about financial independence that you helped conceive and host and continue to bring to life. Interestingly, we had a question from the community about how you got involved with the financial independence movement.

So it would be great if you could elaborate on what Chautauqua means to you, and how it helps folks. And similarly, can you tell us a bit about your own FI journey, financial independence, and how you connected to the broader FI movement? Well, you covered a lot of ground there.

So let me start with how I connected, I guess, with the FI movement. In 2011, I had started writing a series of letters to my daughter, who was then in college, about financial things, about investing specifically. Because in my view, if you get that right, your life is infinitely better, and you have far more options.

If you get it wrong, it's a much more difficult path. So like all parents, I wanted the best for my daughter, and I wanted to impart this information to her. But I started way too early, and I pushed it way too hard, and I managed to turn her off to all things financial.

So I thought I'd better start getting this stuff down on paper, against the day where she might be ready and willing to hear it. So I started writing a series of letters to her, and I shared some of these with a business friend of mine. And he said, "You know, this is pretty interesting stuff.

You ought to put it on a blog." Now, at the time, I'd heard of blogs, but I'd never actually seen one. And I had no interest in starting a blog, but it struck me as a great way to archive the information. So I figured out how to build a blog, and I started putting this stuff up, and as my friends suggested, I sent it around to my family and friends, and as I figured, none of them really cared.

But then amazingly, and slowly over time, I started to build this audience that's now international in nature. And then around 2012, I started looking around, saying, "You know, I like this stuff, it'd be kind of fun to speak about it." And there were no venues in those days, at least none that I could find.

And so I decided to create one. And what I created was the Chautauqua. You attended the second year. The very first year was 2013, it took about a year to pull it together. And Chautauqua is our retreats where we, I like to say, we pick a really cool place.

We gather a small group of cool people, and we talk about cool stuff. And when I put the first one together in 2013, I had no idea if anybody would show up. But they did, and they all had an incredible time, and so we did again in 2014, and with a little hiatus because of COVID in the last couple of years.

We are now back this year, and we'll be in Columbia for two weeks, back to back. Each Chautauqua is a week long. So I think I covered your questions there. You did, and that's phenomenal. So since then, as your own experience in early, in retirement, you mentioned you're nomadic and you'll be in Florida for a period.

Can you tell us about your nomadic lifestyle, how it's been, what are some examples of how you spend your time, and maybe some great and not so great surprises from being nomadic? Well, so we've been nomadic for, I don't know, since about 2016, 2017. We have a little cottage on Lake Michigan in Wisconsin where we spend summers.

That's where I am at the moment. This past winter, before we came back to Cabonda, which is what we call our cottage before we came back to Cabonda, we were mostly wandering around out in the Western United States. And so we'll be back here for June, July, and August, and then September, we go down to Columbia for the month, and of course, in the middle of that month are the two Chautauquas.

And then we'll be back here for a month in October, and then we'll go south towards Florida, the Southeast for next winter. But at various times, in 2019, I think it was, we were in Europe for the better part of the year, and we had Chautauquas in the spring and in the fall, one in the UK and a couple in Portugal.

So that's what drew us there. And then of course, when COVID hit, that grounded us, as it did a lot of people. So we spent 18 consecutive months here at Cabonda, but that's kind of what that looks like. - Okay, and on the surprise side of things, any highlights, great things that happened that you didn't expect?

And maybe for folks who are looking forward to retirement or being nomadic, any lessons learned that you'd wanna share? - Yeah, well, a couple of things, I think on the plus side, we live in a, just traveling around in the U.S., which is what we've done the last couple of years, we live in an amazingly beautiful country, and with incredible people, you turn on the news, and I tend to see more news when we're at Cabonda than when we're on the road, and it's pretty horrific.

And if you just watched that, you would think that these were not the kind of people you'd wanna go out and meet, but the truth is, at least our experience, the people you meet traveling on the road are incredible, and wonderfully warm people, and it's a drop-dead gorgeous country.

The difficult part of it is, at least as I'm getting older, I don't think I had so much trouble with this when I was younger, but because we move a lot, every time you're in a new hotel room or a new Airbnb, you have to learn a whole new series of things, from anything from how to turn on the television, and how to work the stove, and the heating and air conditioning, to where the local grocery store is.

So that's kind of a pain over time, so it's nice to settle down for an extended amount of time, and I think when we go to Florida, as we were talking a little bit before the show started, we're gonna try to pick one or two places where we settle in and use that as a home base.

Okay. Sounds great. So you mentioned the news and how it can really drive you bananas. We had two related questions from the community, I'll read them both. How do I stop my addiction to financial news, and what do you think is a key for tuning out the noise of the market/news cycle, and what information sources are worth the time?

Well, so I think that breaking your addiction to the news cycle, I guess I haven't broken mine, because I do still tune it in, I think what I've chosen to do is just create a certain psychological distance from it, and to recognize how much of it is nonsense, particularly around financial predictions.

So there's no end of people predicting what the stock market's gonna do, and of course that's presented as if these people really are clairvoyant, or they really have some special knowledge base or insights that the rest of us don't have, and of course that's nonsense. Now, because there are so many people making so many predictions, almost anything that the market can possibly do is being predicted by somebody.

So somebody is correct. Not because they're clairvoyant, but just because somebody has to be correct. It's kind of like lottery winners, you know, when somebody wins the lottery, we don't all sit back and think, "Oh, Gorey won the lottery, he's figured out how to pick winning lottery numbers." No, we're smart enough to sit back and say, "Gorey won the lottery, he got exceptionally lucky, he beat enormous odds and happened to pick the right numbers." When you see somebody predicting what the market's gonna do and they turn out to be right, that's the frame of reference I think you ought to have.

Okay. Sounds good. Any particular trusted sources that you'd like to mention that might resonate with the Bogleheads community? You know, for news programs? Yeah. Yeah, not so much. I don't think, you know, I'm always a little struck by the fact that when I watch the news, and we like Shepard Smith, for instance, on CNBC because we like his style, we like his presentation.

But when I watch the news, most of it is about stuff that I don't know about. But I can't help but notice, and I'm not just picking on his show, but in general, that when they start reporting about things I do know about, how inaccurate they are. And it's striking to me, as I've mentioned this to friends, that they all say, "You know, I noticed the same thing when they start reporting on my area of expertise," you know, if they're a doctor or a lawyer or whatever they know about, how inaccurate the reporting tends to be.

And I think once you recognize that, then you, I think you learn to take everything with a grain of salt. Makes perfect sense. Thank you. So, as you know, we have a lot of retirees in the audience in the Boglehead community. Switching to specific practical insights, and you can approach this in both hypothetical and actual, so your own practices as well as a broader general application.

Can you share thoughts about rebalancing portfolios in retirement? Thoughts on withdrawal rates, and also thoughts on keeping an emergency fund? So again, that's kind of three things you might, I may need you to help me remember them as we go along. So I think the first was allocations, right?

Rebalancing. Right. Rebalancing your allocations. So in my world, when you're working and you have earned income, you should be living below your means, and that frees up a cash flow that you can channel towards your investments. And my fund of choice is VTSAX, which I'm, not every group I talk to is familiar with it, but I'm sure this group's very familiar with it.

And as I tell my daughter, just put in the, your set amount of money every month, don't pay any attention to what the market's doing. When you do that, when the market plunges like it has been of late, you're taking advantage of that drop. You're buying more shares for that given amount of money, and that of course is helping smooth the ride.

And I also tell her and people, young people or people accumulating wealth, that a market drop is a blessing. It's a gift, as long as you don't panic and sell and continue to invest. Now at some point when you want to live on the portfolio, it seems to me that you want something else to smooth the volatility of stocks in the way that earned income cash flow did.

And that's bonds. And of course, whatever allocation you choose is up to your tolerance for volatility, with the understanding that the more bonds you add, the less volatile your portfolio is likely to be, but also the lowest, lower performance you'll have on time. So that's the trade off that only you as an individual can decide what the right balance is, is for your own tolerance for volatility.

With the important caveat that if you let your stock portion drop below 50%, you are endangering the long-term survivability of your portfolio as you begin to draw from it. And so rebalancing is just a function of keeping whatever percentage you have decided in sync. So if you're 75% stocks and 25% bonds, as I happen to be, when stocks drop, as they have recently, you might shift some of those bonds over into stocks to bring that balance back into place.

In fact, I just did that myself two days ago. In terms of withdrawal, there's a lot of discussion, unnecessary for the most part in my view, around what's come to be known as the 4% rule, and I think it's that word rule that gets people all concerned. If you change it from rule to guideline, I think you have a brilliant guideline to inform your thinking about how much money you need in retirement, or conversely, how much you can withdraw from your given portfolio and expect it to last.

But this idea that 4%, or any other percent, is something you want to choose and lock in and have it adjusted every year for inflation and never pay any attention to it is a little bit insane, in my view. You're obviously going to want to pay attention to what the markets are doing while you're withdrawing this money, for two reasons.

One is that, according to the Trinity study, in the 30 years they looked at, while 4% is an extraordinarily conservative and successful number, in 4% of the time, it fails, it doesn't last for the 30-year period that they measured. So you certainly want to pay attention so you don't run out of money, which is everybody's fear.

But that's actually the smaller of the two reasons, it seems to me, to pay attention, because it's the one that is least likely. The one that is most likely, and happens most times when you look at the Trinity study, is that if you withdraw 4% from a given portfolio over the course of 30 years, at the end of 30 years, you will have a phenomenally larger amount of money than you started with, because of the power of the stock market.

So you certainly don't presumably want to just wind up with a whole bunch of money at the end of that 30 years, you want to enjoy it along the way. So for those two reasons, I say use 4% as a great guideline, and then monitor it as you go along.

In the unlikely event you hit a really bad sequence of return here when you first start out, and you need to adjust, and for the much more likely event that you start accumulating a lot of money that you could enjoy rather than just let it accumulate. Great sound advice.

And then the third part of that question was, can you talk about your thoughts on keeping an emergency fund? Oh, right. Thank you for reminding me. I think emergency funds depend largely on your situation. I don't keep one myself, because, you know, I only have a small cottage, I have a relatively new car, I don't have a lot of things in my life that could suddenly cause me a big expense that I couldn't handle out of the normal course of money flowing through my checking account.

On the other hand, you know, if your savings rate is low, and I doubt that applies to too many people in this group, but if you're living pretty much paycheck to paycheck, maybe you have an older house that needs chronic repairs, maybe you drive an older car that might need unexpected repairs, then I think that's the time when you want to really think about an emergency fund.

But for a lot of people, and particularly I think people in the FI community, I think emergency funds are probably less important than they might be for somebody who is not as fiscally responsible as I'm guessing the people listening to this are. Yeah. Okay. Great advice. I would also, I think you're spot on in terms of this immediate crowd, but I think within the Bogleheads community, everyone's got friends, relatives, colleagues who come to them for advice on saving more efficiently, investing better.

So the broad spectrum of guidance is definitely welcome here. So you mentioned home repairs as, you know, something a lot of people face, that's a great segue into real estate. We mentioned the book you authored on real estate with the funny title. Can you elaborate on, you know, your thoughts on when you think real estate's appropriate, when it's not, and your own phrase of wings versus roots.

And how has your philosophy evolved over time, even if it's not in a single direction? So I kind of cringe at the concept that your personal residence is an investment. In my view, you are probably, if your goal is to maximize your journey or to accelerate your journey to financial independence, you are probably better off renting just the space you need and diverting that money into something like VTSAX.

I think people convince themselves that their house is a great investment because they want to own a house. In my world, the way I think about it, and I've owned houses, to be clear, most of my adult life, but I've never seen them as an investment. I've made money on some of them, but I've always seen them as an expensive indulgence, something that I only bought when I could easily afford it.

And because I felt for whatever reason at that point in my life, it enhanced my lifestyle and I was willing to spend the money to do it, like on any other indulgence. Investment real estate, of course, is a different kind of animal. You mentioned the second book, which is How I Lost Money in Real Estate Before It Was Fashionable.

That's the story of the very first piece of real estate I bought. It's finally, I can see the humor in it. So it's written to be a humorous story, almost a little bit of a miniature novel. And you can learn from my mistakes. The subtitle on that is a cautionary tale, because if you made a list of all the mistakes you could possibly make in buying real estate, well, I would have checked off all of those things in this particular purchase.

And for the sake of the story, it has the advantage of having in the process of owning it, because I couldn't get rid of it, morphing from a personal residence into a rental. And if you want to invest in rental real estate, that's great, but probably backing into it because you can't sell your personal residence is not the way to go.

Sounds good. So you mentioned learning the hard way. We had a question from the community. So let's say real estate lesson aside, what are other financial lessons you had to learn the hard way? Well, I think the hardest lesson and the one that I wish I had corrected soonest is I was very slow to embrace index investing.

I started investing in 1975, which of course is a little bit ironically the year that Jack Bogle brought out the first index fund. Now, I can't regret not buying that fund, because I didn't know about it at the time. In fact, it was 10 years before I heard of indexing, and it was introduced to me by an old college buddy of mine, and that would have been 1985.

And that's when I should have embraced it, and if I were smarter and less stubborn and what have you, I probably would have, but I was a stock picker, and I was reasonably good at it, and I was making money at it. In fact, I achieved financial independence doing that in 1989.

So I was kind of stubborn and a little bit arrogant, I suppose, and so I was very slow to embrace it. And there is something, I think, counterintuitive about the power of index investing, because you think if I only avoid the bad companies, I could certainly outperform the index, or I just focus on the clearly the best companies, and they'll outperform.

Well, of course, we know that research teaches us that those best companies are sometimes tomorrow's Enrons, and those dogs are sometimes tomorrow's exciting turnaround stories. So actually outperforming the index, especially over any period of time, is extraordinarily difficult. But at least for me, that felt very counterintuitive, so it took me a long time to embrace it.

And again, I think part of the problem is it's not like picking individual stocks doesn't work. Of course, sometimes it doesn't, but it does work. So you're not comparing something that doesn't work to something that does. You're comparing two things that work, one of which just works better, and with a whole lot less effort.

And of course, that's index investing. So I wish that I had first heard of Mr. Bogle's creation in 1975 and been smart enough to embrace it. But failing that, I wish that I'd embraced it in 1985 when I first heard about it. My investment road would have been easier and more profitable.

Understood. Yeah, and that definitely resonates with this crowd. So we had a question about overcoming cognitive biases from the community. So can we explore a bit more what you just spoke about? So apart from the kind of intellectual information, like higher probability of index investing, like you said, can you talk about overcoming cognitive biases in a way that when people-- most people, almost by definition, people don't know when they're wrong, right?

They wouldn't consciously, intentionally have a wrong view. Can you talk about how folks make this journey, or in your own experience, from having bad information or being misinformed, transitioning to a better understanding or seeking or embracing disconfirming information? Yeah, I'm not a psychologist, so I'm not sure that I'm qualified to talk about that.

My personal observations in listening to people-- I remember in my business career, I had the occasion to go to Las Vegas on a regular basis for shows and conventions and what have you. And of course, when people go to Las Vegas, they gamble. And it was remarkable to me that almost everybody-- and these are my customers and my colleagues-- would report that they made money in the casinos, that they won on a consistent basis.

And I'd look up at these billion-dollar casinos and think, wow, there are a whole lot of people who are smarter than I am, because I didn't win in the casino. Now, to be clear, occasionally I did, because the casinos are set up so that people do win on a regular basis.

But nobody, I think, wins consistently. But they fool themselves, because the sensation of winning is so intoxicating that you tend to block out the times when you lost. I think that's true of picking stocks. In fact, for me at least, it was even more true than-- casinos have never particularly appealed to me, because it's so biased in favor of the house.

But there is nothing in my experience, or very few things in my experience, that are more intoxicating than researching a company, deciding that, yeah, this is worth buying the stock, and being proven right, and letting it ratch up. So I think I'll take some pride in the fact that I was always clear-eyed enough to recognize my mistakes, and to realize that even though I picked some winners-- and maybe I can even go so far to say the winners did better than the losers, because as I say, I did make money doing it-- but I was always aware of the drag the losers represented on my portfolio.

And sometimes when I talk to people, whether it's about their gambling in Vegas or their stock portfolio, I wonder about their memory. Makes sense. So on a related note, within financial independence-- and you spoke about saving, and investing, and doing well with stocks ultimately-- Jack Bogle famously wrote a book called Enough.

Can you share with us your concept of enough? We have a lot of people who work indefinitely, they save and invest indefinitely, they may have trouble spending and not working. Can you elaborate on your idea of enough? Yeah. So I might, at least to some extent, fall into that category.

And I'm not sure that-- I don't say that in that it's a good thing, necessarily. But personally, I've just never been enamored with owning things. I guess I've never been particularly materialistic. So in my business career, when I wasn't driving as fancy a car as my peers in the business world were driving, sometimes for the sake of my career, I thought that was a mistake on my part.

But that's just not something I wanted. We lived in a very nice house, but it wasn't necessarily the fanciest house that we could live in, or the house that my peers in my business career were living in at the time. So I was a little bit always out of step with that.

I always liked work. And to this day-- and I think that's one of the reasons I'm very grateful that I found this FI World, and that I just by happenstance started this blog, and then the Chautauqua's, and then wrote the book. I find work extraordinarily satisfying. I am, frankly, better at work than I am at play.

And that caused a little psychological stress at times, because there is a drumbeat that you should prefer play and relaxation. So you combine those things, and you do wind up accumulating money. My solution is to give it away, which is satisfying in and of itself. But I think that-- I'm not recommending this path.

I think the better path would be to have more balance than perhaps I've had in my own life. And recognizing that there is a certain point where, depending on your own particular situation and needs, and how you feel about things, where you have enough money, and accumulating more money doesn't add anything to your life.

And as the old saying goes, you can't take it with you. So I am absolutely a believer in the concept of enough. And I think it's a healthy way to look at things. Excellent. All right. So we've spoken about retirees a bit. The crowd here also has some newcomers to the space.

So they're just beginning their journey. Thinking about the title of your book, "The Simple Path to Wealth," can you elaborate on this idea that the simplicity of it has its own appeal, but it's not just the simplicity of it that's the appeal, the powerful result of being simple? That may not be intuitive to folks new to the space.

Right. So as I mentioned, I think, earlier in the conversation, I basically wrote the book for my daughter. And she came home from college one day, and of course, I was still trying to engage her in conversations about these things, even though I managed to turn her off to it, pushing too hard previously.

And at one point, she said to me, she said, "You know, Dad, I get it. I understand this is important stuff, but I don't want to have to think about it all the time." And that was an epiphany for me, because I realized that I love thinking about this stuff all the time.

But she, like a lot of people, had more important things to do with her life than think about investing in money. And the wonderful thing about investing is the truth is that if you do the simplest things, you will get the more powerful results. And if you identify those few simple things, and you put yourself on that path and set it on autopilot, and then otherwise forget about it, that's a superpower.

My daughter, for instance, probably doesn't even know the market's down 20% because she just doesn't care. But she's on the path. She puts money into BTSAX every month. And that's her superpower. Her lack of paying attention to it is going to keep her from panicking and selling. It's going to save her from the temptation to constantly tinker.

And if the research is indicative of anything, it's that the more you tinker with your investments, the less well you will do. It's kind of remarkable when you think about it, because I don't believe there is anything else in our life where if we put in less effort, we get a better result.

If you want to be a woodworker, the more effort you put into it, the better woodworker you will be. That's true of almost anything we can think of. But with investing, the more you tinker with it, the worse your results are likely to be. I liken it to, imagine if you had a banquet table that was just filled with all kinds of exotic dishes on it, and in one tiny corner of that table were the core nutritious foods that you really need that are good for you, that your body needs.

What's analogous to all of the investment products that Wall Street offers, a lot of them are extraordinarily exotic and difficult to make, and of course, that's by design. So you're driven into their arms for high fees to sort through all that stuff. Well, the truth is, just like with the food on the table, you can put your arm down in front of those handful of very simple foods.

And sweep everything else onto the floor because you don't need it. And you can do that, the same thing in the world of investing, and sweep everything onto the floor except for broad-based, low-cost index funds. Which is the great gift that Jack Bogle gave us, and it's the reason that I call him a fiscal saint.

Jack Bogle has done more, and I know I'm preaching to the choir with this group, but Jack Bogle has done more for the average investor than anybody before or since because he created the only thing that we really need to get outstanding results, and ironically, with the least possible effort.

It is amazing and ironic. So I want to be sensitive of your time and the audience's time so that we wrap up this portion of the session with one more question from the community, and then I'll turn it over to Lucas and Miriam, who have consolidated some of the common theme questions from the chat from the live audience.

So that last question, you mentioned the market went down. So the question is, what are three of the biggest financial challenges you see facing retirees today? Well, I think that the biggest one, at least for anybody who is going to follow my approach, the simple path to wealth, is staying the course.

When I started writing in 2011, the market really has done nothing but march straight upwards. You know, it dropped a little bit in COVID, but it recovered almost instantly. This drop that seemed to have everybody in a panic is, you know, it's 20%. It's a very mild bear market, at least so far.

And I think that most or a lot of investors out there really haven't experienced a sharp decline. And they don't perhaps fully appreciate the fact that nobody can predict them with any accuracy and that they are a very normal part of the process. If you are going to reap the benefits of investing in stocks, then you have to accept the fact that periodically the stock market is going to plunge.

It's a volatile, it's not a smooth ride, it's very volatile. And you have to stay the course. I tell people, when the market drops, and it will, if you panic and sell, you do not want to be following my advice, it will leave you bleeding by the side of the road.

You have to stay the course. And so I think that's probably the biggest obstacle as to whether people can just hear somebody like me say that and take it to heart and endure the volatility, which, of course, is very unpleasant. It's very scary. Or whether they actually have to live through panicking, selling, watching the market turn around and leave them behind and having to get in later.

But I tell people, it's like living in Florida and being surprised when hurricanes come. Hurricanes are unpleasant, they're potentially very dangerous and destructive, but you shouldn't be surprised that if you're going to live in Florida, that you're going to have to deal with them. It's the same thing investing in the stock market with bear markets.

So that makes sense. Before I turn it over to Miriam and Lucas, let's explore that a little more. Because I think intellectually, people can hear this, that table stakes, the price of entry is the roller coaster. But if all folks have experienced overall is the upward trending market, like you described, it's natural that they might think their actual risk tolerance is higher than it really is.

How do you suggest people learn their true risk tolerance to the extent they can in advance of a market correction? Yeah. So I don't know that I have the answer to that question. That's kind of what I was saying or trying to say is, I don't know how many people can read about it and take it to heart.

And I think you're correct that a lot of people, especially when all you've experienced, and there are a lot of adults that have come of age and only experienced this last 10 years, I think it's one thing to intellectually say, "Well, of course I can handle when it drops." But it's one thing to know it in your head, it's another thing to know it in your gut.

And I think what it requires, I mean, the advice I would give to people is to really sit back and think about it, and I think a lot of people don't, they kind of dismiss and say, "Okay, I can handle it." For instance, if you go back to '07, '08, '09, that debacle, I remember, of course we know historically that the market hit bottom in, I think, March of '09, if I'm not mistaken, and it was at 666, which is a memorable number, of course, and it had lost, I don't know, 50% of its value at that point.

So it's easy for people to look at that and say, "Oh, okay, well, I think I could handle losing 50% of my value, the value of my portfolio." Wouldn't be happy about it, but I think you can tolerate that. But now understand this, that in March of '09, all of the smart people I was talking to thought the market was going to go much lower.

I mean, they were talking about it dropping another two-thirds. Nobody that I heard was saying, "Oh, now we're at the bottom." So think about it this way. Let's suppose that you had started with a portfolio of a million two, and in March of '09, the market's been cut in half and your portfolio is now 600,000.

What you're hearing is not, "It's the bottom, it's going to turn around and get better." What you're hearing is the market's going to continue to go down another two-thirds, which means your million two is potentially going to be $200,000. Walk that scenario through your head and say, "Would I stay the course?" And I think maybe that's the only sobering way I can think about looking at this, short of going through it yourself.

Okay. Thanks for that. A great exercise. So, as mentioned, I'll turn it over now to Miriam and Lucas, who will share questions from the chat. Jim, we'll reconnect and close the meeting later, but before turning it over, I want to thank you again for sharing your incredible insights and timeless wisdom.

I appreciate it. As I said at the beginning, I appreciate the invitation. You asked some really interesting questions that I haven't gotten before, so I thank you for that. Sure. And they're largely sourced from the Bogleheads community, so thanks for the feedback. So Miriam or Lucas, I'll turn it over to you.

Sure. So I'll ask the first question. JL, Collins, thanks for coming on, by the way, big fan. So the first question we had was from Garrett, and these are in the chat, by the way, and this is a question for mid-career folks. And the question is, "When do you stop living like in your 20s, which is spending very little with lots of delayed gratification, and start 'living' like you want to?" I'm always torn between being frustrated for delaying gratification for 10-plus years now, but also worrying if I start spending that something will go wrong, example, a recession leading to a job loss.

So any thoughts on that? Yeah. So I think that, again, is going to be a very personal decision for each individual. So probably the best way I can talk about it is how I did it. And remember, when I started on my journey there, I had no concept of financial independence.

I was wandering in the wilderness, if you will. But for whatever reason, I decided that financial, I wanted to have, I'd come across the concept of having a few money, which was not enough money to never work again, but enough money that I could make bolder decisions, that I could always leave the job if I wanted to go do something else, or if I just didn't want to work for that company or that particular boss.

So that was the goal that I had, such as it was. So I decided out of college, when I got my first professional job, I was going to live on half of my income, and that's what I did. My first professional job paid me $10,000 a year, and I lived on $5,000 a year, and I invested the other $5,000.

But then as my career progressed, of course, I started making more money, but I kept that ratio the same. So my lifestyle did inflate. So in a few years, when I was making $20,000 a year, well, now I'm investing $10,000, but I'm living on twice what I was living on before.

And that worked out well for me, and right up the march where I was making $30,000, $40,000, $50,000 into six figures, I was still doing the half and half thing, and my material life expanded with it. But again, this is coming from somebody who never has had a very high regard for material things other than travel is, I guess, where I spend money the most.

But I also kind of cringe at this idea that you're not living your life if you're not spending money. I never felt deprived when I was going through this. I think most people would say, "Well, if I'm not spending, there's half of my money, my income that I'm not spending.

That feels like deprivation." It never felt like deprivation because, again, when I came out of college, $5,000 a year was a lot of money, and then it kept growing on the spending side. So I think if there's somebody listening who thinks that there's no satisfaction to be had in life unless they're spending as much money as they possibly can, I would urge them to think about that a little more deeply.

Great. Great. Thanks. Would you like to read the second one, Ma'am? Yes. We have a question about bonds, and the question is, "Why bonds as a ballast when the return is so poor, not much better than cash? Is there some alternative you would recommend instead of bonds to use instead?" And then I have an additional question to that because I understand that you recommend mostly stocks for young people.

When would you add bonds to the portfolio? What thinking would you have in relation to this question, bonds as ballast versus bonds as return? Right. So bonds as ballast has not been working out real well in recent history, as I think we all know. I mentioned earlier in this conversation that a couple of days ago I just shifted some money out of bonds and into stocks, and I don't remember the exact numbers, but the bond portfolio was down 10%, 11%, but the stock portfolio was down 22%.

So would I have preferred that the bond portfolio was up a little bit, which would be the ideal situation with ballast or even flat, obviously. But we're in kind of a unique economic environment, and right now bonds are getting hammered at the same time that stocks are, but not quite as hard, and so I still think of them as being ballast, although it's not performing as well as I would like, because in terms of what else to use, I honestly don't know the answer to that question, considering that I believe in playing the long game.

So in the long game, if you owned bonds in BBTLX, the total bond market fund that Vanguard offers, it's, of course, gotten hurt pretty badly, but what you need to understand is that's a portfolio with thousands of bonds in it of all different maturities, and at any given time, some of those bonds are coming due, and that money will be reinvested in new bonds at higher interest rates.

So slowly but surely, that bond fund, along with all bond funds, will be paying more and more interest, and it'll recover in that fashion. So I kind of see it as a rockier road than I would have hoped for with bonds. If you told me that we were going to have the kind of inflation we're having a few years ago, I would have said, "Yeah, that's the road that bonds have ahead of us," but I don't have a crystal ball.

In terms of when to add bonds, again, this depends a little bit on someone's risk tolerance. So personally, when I stepped away from the workforce in 2011, that's when I added bonds. Now the risk to that, of course, is the stock market could have immediately tanked. My timing could have been very bad, and then I would have had to use depressed stock prices, sell stocks at depressed levels, to buy those bonds.

But the truth is, the market doesn't tank aggressively all that often, so I was willing to roll those dice. If someone is less willing to roll those dice, then what I would say is, "We'll start edging into whatever bond position you run over the course of five years before you're going to be needing to live on in the portfolio." Great.

Thank you. Okay, so the next question that we had is in regards to mutual funds versus ETFs. So earlier, you were speaking about the bonds mutual fund, the total bonds mutual fund, and then also VTSAX versus VTI. Advantages, disadvantages, what are your thoughts there? So I'm an old guy, and when I started investing in these things, there were no ETFs, and so I think in terms of VTSAX, I think in terms of the mutual fund.

I was a little resistant to ETFs when they first came out because there were some trading costs associated with them. And my understanding is they were created specifically to make trading these assets more easier and more effective, and I'm not a trader. I mean, when I buy VTSAX, my holding period is literally forever.

I mean, the only time I would ever sell it is to sell off a couple of shares, perhaps to make ends meet if I'm living on the portfolio. So I see absolutely no value in trading, and I have no need for it. So the ETFs, there was never any reason for me to switch to them.

Now having said all that, the trading costs have come way down, as I understand it. You can, of course, if you're new to the game and you have relatively little money to invest, I think the minimum on VTSAX is $3,000 these days. You can get into VTI with the cost of a share.

I have no idea what a share of VTI costs these days, but considerably less than $3,000. So perhaps it's a little easier entry point. I guess the bottom line is it doesn't really make any difference, as long as you're going to hold either one for the long term. Whether you own VTI or VTSAX, you have exactly the same portfolio, and bottom line is that's what matters.

Great. Great. Thanks. Miriam, did you want to ask another? We have another question from the chat. It is, "Should we be doing anything different in anticipation that the U.S. may experience an extended period of high inflation, for example, 10 years of 8% to 10% inflation?" And may I add that I'm an old lady, and when we first bought our first house, my husband and I, our mortgage was about 16%.

And my first IRA, I opened in 1981, and I put it in a regular money market fund, and it was paying about 16%, 17%, 19%. Right. Well, I lived through those days as well, and I remember those money market fund rates and those interest rates, as I had both of those myself.

You know, I think not. I think that, you know, if you're in this for the long term, and in my view, that's the only way you should be investing in stocks, and as I've said a couple of times now, I own VTSAX forever, you know, once stocks get through the shock of the Fed raising interest rates and the potential that that will trigger a recession, which it probably will, and that will slow down the economy and slow down the sales and profits of companies.

Once companies get past that, just like once the bonds get past the shock of the fast rising interest rates and begin to buy the new bonds with the higher rates and provide those higher interest rates on the fund, you're going to find that stocks are actually a pretty good inflation hedge, because you're not just buying pieces of paper or bits on a computer that are just there to be traded.

You are, in a very real sense, owning pieces of real, genuine, active businesses that have assets, that have products, that have services, that have pricing power, that can serve you well in keeping pace with inflation. So I look back in the 1970s, which is when I came of age and first began investing, and that was a very difficult time for the market.

It was a time of very high inflation, as Miriam was just pointing out, but it was also a wonderful time to be adding to something like VTSA, which VTSAX didn't exist in those days, but adding to the S&P 500 fund that Mr. Vogel had first created would have been a wonderful time to be accumulating shares.

As the old saying goes, you want to be buying when there's blood in the streets, and there was certainly blood in the streets in those days. You had, I think it was business week in 1978, had a famous cover called The Death of Equities. And if you ever see a magazine cover like that, I think you could be pretty sure you're near the bottom of whatever terrible thing is going on.

So no, I'm very comfortable continuing on the same path that I've laid out and that I've been on for decades. And in fact, if anything, over time, I think it'll be even more powerful because this is a wonderful time to be accumulating shares in VTSAX. Thank you. And along those lines, that segues into a question from one of our friends over in France.

So what, in your opinion, is the best way to attract younger people in their 20s and 30s to more of a saving mentality? And this is asking for a friend. Yeah, so I don't, again, I think that's a question that's kind of above my pay grade. I don't know.

I don't quite know how to do that. I think that it is remarkable to me watching what has happened in the FI world since 2011 when I first launched my blog, and then with Bogleheads, the sources of information that are available are just extraordinary. And, you know, I think about when I started my journey and I was kind of wandering in the wilderness, and frankly, it all felt wrong.

It felt like I was doing things wrong because everybody else was living paycheck to paycheck and spending all their money. But now, if you have any inclination to consider a different way of living, a different path, the amount of role models you have out there, the amount of information that you have out there is really unlimited.

So I suppose if I were trying to persuade somebody, and I'm notorious for saying I've never tried to persuade anybody but one person, my daughter, of anything along these lines. And by the way, I've succeeded, so I feel good about that. But if I were trying to persuade somebody, I suppose I would, and I'm going to be self-serving here, is steer them to my blog, to the stock series, and/or to the book.

But at that point, it's going to be up to them. But yeah, I'm certainly not an expert in trying to persuade people. I think the people who I've influenced are people who have come to my work and for whom it's resonated, and they've continued on on their own. Great.

Well, you've influenced me, I'll tell you that much. Well, there you go. Any others? Miriam, did you want to ask any others from the chat? Yes, we can. We can also open it up to questions for the raised hand. Let me see on the chat, we have a question about IBONs and whether you own IBONs.

Would you add those to your portfolio? So it's interesting, I fielded that question on, it must be on my Facebook today, and maybe a week ago, I fielded it on my Twitter account. IBONs pay an extraordinarily high interest rate, they're government issued bonds, just so everybody knows what we're talking about.

But you can only buy $10,000 worth of them. So my answer to the question is, it depends on how important or how big a portion of your portfolio $10,000 is. If it's a meaningful portion of your portfolio, then by all means, it's you're not going to get a guaranteed 9% or whatever it is elsewhere.

But if you're further along in your journey, then $10,000 is probably a rounding error. So for that, I think you need other tools for your heavy lifting. Then of course, no matter where you're on your journey, I suppose, if you want to make the effort, even for $10,000, why not?

Great. There was another question that we received in the chat. You mentioned giving your money away. What do you choose to donate to, to give away? Well, I don't know how deep we want to go into that, and I kind of consider it a little bit private, but interestingly, I did another interview earlier today and was asked the same question.

Maybe Jim, I'll insert just to clarify, and I respect that you're keeping the details private, but if you can talk about how you make philanthropic decisions, because I think the crowd here as retirees, that's a growing interest for them. Well, I'm happy to talk about this one particular charity because I did in this other interview earlier today.

There's a charity based in Salt Lake City called Adopt a Native Elder, and most of their work is done on the Navajo reservation. Poverty levels on reservations are by and large extraordinarily high. It's one of the most impoverished groups in the country. The elderly on the Navajo reservation tend to be deeply in poverty.

They tend to be living far out in rural areas with very little access. They tend not to have running water or electricity or things like that. This organization reaches out to those people with things like food and firewood and water, and also materials. They can be wonderful craftspeople, and so yarn for weaving rugs that then the organization will help the market and create a little bit of cash flow that way.

It's a charity that I'm very fond of, and I put a fair amount of support behind. Interestingly enough, I started supporting them a number of years ago, and they were not rated on any of the charity rating organizations. It was a little bit of a gamble, I guess, for me, because I'm the kind of person who likes to analyze everything to death, and so I was a little uncomfortable that I couldn't find them on any of those organizations, but I chalked that up to the fact that they were pretty small and probably didn't have the resources to go through the paperwork.

I just liked the way they talked about the work that they did. Well, now they are rated on Charity Navigator and have been for a few years, and I was delighted when I first saw that because they have absolutely top-notch ratings when it comes to efficiency and what have you, so if anybody is looking...