of the John C. Bogle Center for Financial Literacy. The Bogle Center is a 501(c)(3) nonprofit. organization created in 2012. by the founders of the Bogleheads organization with. the assistance of Jack Bogle. The center's mission. is to further financial education worldwide, promote. low fees and financial well-being and to foster.

a sense of community among our all volunteer. membership. Your tax deductible contributions. to this cause are greatly appreciated. Please visit boglecenter.net. Today is our inaugural Boglehead speaker. series live video event. The idea. for a live online event came about. after COVID-19 led to the cancellation of. the 2020 Bogleheads conference, which.

would have been held in October. As a matter of record, the board is. talking about resuming the conference in. 2022. In the meantime, we bring you this live speaker. series. I wish to thank all the board members. for the hard work they have put into making today's event possible.

and particularly Mike Nolan. who is Jack Bogle's former assistant. and a Bogle board member for all his hard. work and the work his committee has done to bring this event to. you. A special thanks goes out to Vanguard. for donating the time and resources to make today's. presentation possible.

Our first guest is Carl Richards. Carl. is a certified financial planner, creator of. the sketch guy column that has appeared in the New York Times. since 2010 and a dynamic. speaker. Today's interview is being conducted. by Christine Benz, Morningstar director of personal. finance, a long time Bogle head and a Bogle.

Center board member. We just we wish to thank. all of you who submitted questions on. the board to call. We hope you enjoy this presentation and tell others about it. Today's event is being recorded. The video. will be available on boglecenter.net and. a post will be made at bogles bogleheads.org.

When it is available for viewing, thanks again. and take it over Christine. Thank you so much for the introduction Rick and thanks to all. of you for taking time out of your weekends to join us for. our inaugural event for the Boglehead speaker series. I. could not be more excited to introduce Carl Richards.

He's. joining us from London where he lives. It's already Saturday night. there. Carl specializes in conveying. sophisticated financial concepts in an. easy to understand way, specifically using a Sharpie. He is a certified financial planner and he's creator. of the sketch guy column in the New York Times. He's also author.

of a couple of books, the one page financial plan. a simple way to be smart about your money in the behavior. gap. Simple ways to stop doing dumb things with money. He also did the wonderful sketches for a book that just came out. that I've made a contribution to called how I invest my.

money. Carl, welcome to the Boglehead speaker. series. We're excited to have you here and I'm even more excited. because I found out that you may be able to sketch a little bit. for us today. Christine, it's an honor to be here and Rick and the whole board. thank you for giving me the opportunity with just a pleasure.

I've always thought really highly of this group. of people, so excited to be here. Well, thanks for donating. your time. Wanted to start by asking about your particular. focus for people who might not be familiar. You're. a CFP, a certified financial planner, so you're certainly. very knowledgeable about matters of asset allocation and tax.

planning. But over the past decade or so, you've gotten more. interested in what we might call sort of financial. life planning. And let's talk about what. that is. What why you're so enthused? about this idea of helping people align their financial plans? with their bigger life goals. What kind of?

set you on this journey? Yeah, I so. I think it was just repeated so. 20 whatever 2223 years ago when I started. in this sort of financial industry speaking. broadly. I got into the. Industry quite by accident, sort. of. I applied to be a security guard thinking. that the ad said I didn't realize the ad said securities.

instead of security and I didn't know the difference at. the time. This is right during when I was at university and. it was in the late 90s, right? And there's a lot of exciting. things going on in the late 90s and so. after I got over the fact that I wasn't a security guard I.

was on the phone at a big call center. actually at Fidelity Investments, one of their big call centers at the. time it was their national call center in Salt Lake and. answering phones. And. I just remember being struck for that. I mean. it was years. I remember just being sort of like unmoored.

a bit about this. sense of it wasn't about spreadsheets. and calculators, right? I couldn't put words to it, but I was like. I didn't expect it to be so emotional. I didn't expect. I was like, wait, this is. spreadsheets and calculators, isn't it? And it turns out it's not.

And then I spent a. decade and a half sort of working with individual clients. and seeing this repeated pattern. of what we think our job. is as investors. and then even if you want to take it one step further. that we think what the industry thinks his job is.

to provide products. And I just saw this repeated. focus on maybe the best comparison is whether. I should take a plane arguing and researching about whether I should take. a plane, a train, or an automobile on a trip. Before we had decided where we were going to go. And this idea of deciding where you want to go right like.

that to me, we can build the best asset allocation. ever created by the mind of man smartest the. most research back the most evidence based the most. inexpensive. We can do all of those things, but. if it doesn't get us where we want to go, what's the point? And.

as this group knows really well, like one behavioral mistake will blow. the whole thing up anyway, so we can't get the behavior right. and we can't get the underlying sort of I'll. use the term goals very loosely, but if we can't get the underlying. goals right, we sort of wake up and we're seeing this all.

over the world. People are waking up and saying. What was it all for? You know what? Is this really what I wanted and? so I think. The idea of spending some time getting clear about why. we're doing it in the first place has become. to me, everything else feels like hacking at the branches.

that we can make marginal improvements. But until we. get that right, or at least until we start guessing. at that, we're never going to get it right, but until we start guessing. at that, the rest sort of. loses its importance. That's really how I started focusing. on that, so let's talk about this.

I think. you probably know this group of bogal heads. We've got a group of. people who are really good at the spreadsheet. and calculator piece and how about? how can we talk about how we get better at the? other piece of it at articulating our goals and our? vision for our lives?

What are the questions that we should be asking? ourselves? Yeah, that's a really good question. I mean, I think the first thing we need to do is sort of realize. like there's this sort of movement that I guess. people call life planning and I've never really never resonated. a lot with me simply because life.

planning to me feels and goal based planning feels. like oxygen based breathing. Right, like of course you should have goals for what. you're doing right? So I think the. first thing is just to say look, this isn't about crying on the couch. It's not about therapy. It's not about.

getting becoming one with yourself. It's just simply. about saying look the purpose. Of financial planning and I'm using that. term broadly is to align. your use of capital with what's important. to you. OK, and obviously as you mentioned this group. understands once like once. we need to deploy capital, we understand at least the.

process of figuring out how to do it in a sophisticated. way. So the question becomes how do we align that? What we're so good at. With what's important to us and it starts. by. I mean, I just didn't. I didn't realize I don't. know why I didn't realize how hard that is for us.

to get clear about what's important to us. We're not used to thinking about it. We're not used. to having an idea of like look. And part of the reason is mimetic were so. caught up in mimetic desire, right? Like looking we don't. know how we don't even know how to know what we want.

What we know is to look at what other. people do. Right, and take our clues from them, and this is only gotten harder with. sort of the Instagram lives. So many of us are trying. to keep up with. It's really hard to get clear, and so I. think the way to think through this is.

just to take the time like where do you? want to go? What's important to you? I love the idea of. the calendar and the checkbook never lie. Right, so I don't. I don't really care what. you say is important to you. Christine, show me your calendar. in your checkbook and I'll tell you what's important.

to you. So this idea if I were to draw. it and maybe we should have our first experiment. here. If I were. let me just connect this real quick. I'll. connect my iPad to the screen. There we go now. Let me share it if I were to. Here we go.

Tell me Christine, can you see that? I yes, I can. see it. OK, I assume our audience can as well perfect. Well, I'll just I'll look for it 'cause I can see you. So if you give me some clue that it's not working, I'll stop. So let's just think about.

let's just use a word like values. I think you could substitute a lot of words like what's. important to me values. I love purpose. I love the idea of purpose and. if we. But if we had a set of values and then we. looked at and we'll talk if it's OK, we can talk.

for a minute about how do we even get clear about this, but if we. then looked at how we. use our money and our time. And we'll just call those actions. Often there's a gap. here and that gap is called. being a human. Right, like and it's really it's really.

this gap here is. Is really painful, actually. Right when you wake up and say gosh, I spent all that time. At the office, I could have spent more time with the kids or I. we've got plenty of money, but we never. enjoyed it or you hear these things constantly.

like I can't remember the name of the book, but it was the. palliative care nurse, the nurse at the end of life nurse. that took care of so many people, and she wrote that book about what their. common regrets were, and it was always like. it was always the things they hadn't done.

There was very few. regrets about stuff they had. People didn't really remember the mistakes. they'd made. They remembered the things they hadn't done, and so there's this. often this gap between what we say is important to us and what. we're actually doing with our time and money and. so I just am hopeful that we can.

that we can somehow get that those. circles just can. we start. To see some of this overlap and wouldn't it be amazing. if that was a Venn diagram? Right where there was perfect overlap. I mean, I had that once Christmas. Eve. I remember right the kids. sitting on the couch.

The snow is falling. The dog was there doing. the thing and then the next morning. Of course we woke up. and all the presence and I was like who bought all these presents and what happened. with the budget like so we just serve. We just. end up circling back and forth between these ideas.

like OK, we get some overlap and then we end. up back here where there's a gap. So how do we? get clear? About the values piece, I'm going to stop this share for second. How do we get clear? about the values piece? Have I stopped my share? Yes, no, I'm still seeing it, but you're still.

saying OK, alright here. I think I just did this. There we go. And that's just. a function of taking time to ask ourselves. and to start noticing right? What? are the things that really? And there's so much research around. and hopefully this group is familiar with it around what?

really brings happiness as it relates to our use of money. Right? That experiences with people we love. And even there we know that the anticipation of the experience. is somewhere between 40 and 60% of the. enjoyment we get out of the experience. So there's so much we. can do.

What was her Elizabeth? It's not Elizabeth. Gilbert. Maybe it's not Elizabeth Gilbert. Elizabeth done Elizabeth Dunn's. book on it. She says if you don't think money. can buy happiness, it's 'cause you don't know how to spend it. Right, and so just getting a little more clear about the things that.

bring us. I assume the goal of money. Beyond freedom stability, I assume the goal of money is let's. call this thing happiness. Well, we know a little bit about how we. can use that and often how we. can use money to bring happiness and often it relates. to fulfilling our values and Simon cynics work on start.

with why so that's to me. That's a really long winded answer. to your question of how do we get clear? We start thinking about it. We start thinking about it, right? And I think right. now. Right, this is like 2008 and 2009. I remember. people having conversations that they I just had never.

heard before. I remember hearing him at the coffee shop. overhearing people talk about what's important to them. Who do they trust? Right now we've been given. permission in no way that I can ever remember. to really be questioning those things. I mean. assuming we have a little bit of stability to have.

those conversations and granted lots of us don't. right, but if we do a number of us have been giving permission. to ask those questions like who do we trust? What's? important to us? How do I really want to be spending our time in a way? that we've never had before?

So yeah, so hopefully that helps it. does. It does. I want to ask about the pandemic because you're. right. I think many of us are thinking big picture. thoughts about our lives and the trajectory of our lives and what we're. doing. I guess the question is, is this a good?

time to be making big life altering decisions? I mean, there are some things about what we're going through that are a little bit. traumatic. I just wonder, you always hear like. after the death of someone not to make any. big changes. How about right now? Is this a good time?

to decide to relocate or change jobs or whatever? it might be? Yeah, that might be slightly beyond my. pay grade, but my sense is. that now is a really good time to be noticing. Right, taking note recording. thinking, journaling, right? Like understanding now. and I also sense is that it made it obviously.

totally varies by your situation. Right, if you there are some of us that have been massively. impacted by this. Right, and there's others that financially. or whatever their situation allows them a little bit. If you've got the freedom. and flexibility to be making some of those decisions, right? but my sense is right now is a really good time to be noticing.

And asking questions and deciding like. what do I really want and then aligning? Your portfolio and your. use of capital with what you said. what you notice, right? Wanted to read you a question from one of our attendees he. wrote. He or she wrote in your book, the behavior.

gap. You said that financial decisions are about getting happy and. if there is a secret to getting happy, it's this be true to yourself. So that's great advice, but one must. first know oneself. How would you advise investors to go? about knowing themselves? Yeah, this is the huge problem I thought.

I didn't realize I was opening such a huge can of worms. for myself 15 years ago when I started thinking about this stuff. 'cause like it's really challenging like. when we say align your use of capital with what? is important to us. Getting clear about what's important to you is really.

really hard. I mean, we know a little bit about happiness and money. right? Like we talked about a minute ago. We know that spending money on experiences. with people you love is far more enduring. than buying stuff. Right, we know that above a certain income. level and not more income doesn't necessarily add.

exponentially, certainly not to our happiness. So we know a few of those things, but what we don't know is. do you enjoy spending time? at the museum and I enjoy spending time. on a river. Right, and so understanding and let me give you an example. We used to go to movies with friends.

It seemed like the thing you do. You would meet, maybe have a quick dinner. and then go to a movie and. the purpose of the evening. together was to spend time together. And then we'd go to a movie where we spent no time together. I mean. we were sitting next to each other, but we said and so one time we noticed.

we were like, well, wait, what if we? What if we invited a couple over to our? house and we're not cooks? We have no. I mean, we barely know how to cook anything, but what if we invited? a couple over? We made a simple meal together. Like we made it together, we spent two or three hours.

doing that. Rather than going to the movie, well. every time we did that, it brought I don't know what the. right multiple would be, but it's at least two. maybe 10 times more enjoyment than going to the movie. Let me give you one more example. I had a friend.

His name was Rob. And so here's the process we used to take people through so. we would just say, look, track your spending. And everybody loves this. Tracking their spending is everybody's favorite thing, but actually. this group might actually do it. Track your spending. but just add one thing.

So I would just go through every transaction and say. is this aligned with what I said was. important to me or not? And you get a gimme on all utilities, right? You don't. have to think through as the power bill aligned right. but all discretionary spending at the very.

least discretionary spending at least is it aligned or not if. it's aligned. We used to just make a note of what was the value that it. was aligned with, and so my friend Rob did this. and he noticed that he had a friend that he met every. month for lunch and he would pay for lunch.

And this let's just say it was $35. or something. Rob noticed OK, what's the value? The value is friendship. Well, this friend had been going through a couple of years of really. tough times, didn't have a lot of other people to talk to, and. so Rob was like that's aligned completely aligned.

But then the next step was is. there another way? Right, would there be another way to align that align? my use of time and money with that value of friendship? And Rob was like, well, geez, we both really like to walk. or hike and we both work at. a specific university that's right at the foothills.

of a bunch of really amazing mountains. So he said, look, what if we just met the next month? He suggested let's just meet and go for a walk. And Rob called me so excited 'cause he was like look. and what Rob did every month with that money he would use.

so he took that $35 and he automatically upped his auto. investment into the S&P 500 index fund and I'm. not making that story up just because of the audience, but it's actually. what he did. So every month. So now he was like, look, I've got $35. more going in towards a.

vehicle that's going to express some other value. And I'm spending more time with my friend. And so those are those like yes and yes. Decisions where we can get granular on just noticing. like turns out I don't enjoy that one last. one. A friend of mine who was just beating.

himself up, beating himself up for eating out so often. And the most ironic part about this is this friend of mine. wrote one of the most popular. in New York Times bestselling food books. of the last 10 years and I pointed out to him like wait. You love eating out.

It was like, well, yeah, but I shouldn't. I'm like who says you shouldn't. So the idea of looking for all the way. down to the budgetary level, like the spending level and. then we can talk if we want to about how aligning that use in our investments. but looking for ways to be cut ruthlessly.

on things that don't bring us value and. spend extravagantly on things that do and the only way. to sort through that. Unfortunately, there's no rule of thumb. There's. no app for it, right? And it's the only way to sort. through that is to make a small bet. Hey, let's try this.

I think I like going to the museum. Oh, I didn't enjoy that as much as I thought I would. Let's try. make small bets and notice where tailwind shows up and. keep track, right? So that's. Only way to do it. Unfortunately, there's no shortcut. You really live this experience that you urge people to go through the process.

of pushing themselves to try out new ideas. or take small bets as you put it and. try out experiences that they think might contribute to a fuller. and more fully realized life. Can you talk a little bit about? your personal experience? You're in London, as we said at the outset.

but it's not been a straight trajectory. You were in Utah. You were in Australia, I believe. So can you talk about? how you kind of pushed yourself in the direction that? in on the path that you're on now? Yeah, and I should tell you I'm not sure this is.

a good idea for anybody, right? And this is part of the problem is we all are looking. for models on how to do things. or templates, but. we were thrilled living. in Park City, Utah, which is sort of where I was. I lived there when I was younger until I was about 8, so it's sort of home.

to me. The Wasatch Mountains, right? Even the smell. of the Wasatch. I can feel it now, right? Like I love the place. Happily there and then we. but we had always talked about living overseas and. my wife particularly always wanted the experience and an. opportunity came up and by opportunity came up.

I just mean a window. opened. There was no like job opportunity there were like we. had to make this happen. And it's a very long story, but I'll cut it short to go to New Zealand. like somebody. See all that happened with somebody suggested. it to my wife at yoga and we make all of our major.

financial decisions based on my wife's experience at yoga, right? So somebody suggested and we had a little window. It was. because we needed to move from one house to another. That was the. window was like, hey, we're moving anyway, why not? move to New Zealand? So we went. to New Zealand for a year and stayed for three.

and a half because it was just it was amazing. Now I'm we've got we. have the flexibility because my work is location. independent. But we didn't do this. I just want to be. clear, right? Like 'cause I get this question all the time like wouldn't. it be nice we this was that we.

decided to value experiences. with our kids over security. And it was uncomfortable financially. like I are we really doing this? Are we really sure we should do? this? Because it wasn't the stable. thing to do, so we went to New Zealand and. it was worth every cent like I wouldn't.

I mean, it costs way more than we thought it was going to cost because things. come up. He says and all these things that you don't expect. But it was worth it. I would do it over again 100. I would do it over again. 100 out of 100 chances, right?

And then we're in New Zealand. And. Enjoying it and my wife had. always wanted to go to interior design school. And she had spent 24. years at that point, sort of delaying. all the things she wanted to do to be heavily involved. in the massive amount of work of running a household with 4.

kids. And so we were sort of like, hey, you should apply to this school and she. found this school in London and we sort of didn't think. it would happen immediately. She applied. in June, I believe. Got accepted and school started in September, so she. was like, well, I'll delay for a year.

And the family sort of looked at her and said, no, you've been delaying. for a long time for the rest of us. Like let's go. so that's we moved. We moved to London, got here. She came in September. We got here in January, just in time to really want to be.

back in New Zealand, but it's been. amazing. So yeah, that's what's happened here and we don't know. and this is interesting to me and I think might be. useful to all of you. I think one of the big lessons of the last 11. months, 10 months has been that.

Uncertainty is reality. Right, it always has been. We just have gotten sort of a stark reminder. Of it, and so these plans we make. our guesses and it's OK. right? Like, but life never goes if you. think life goes according to plan, just go. back and look at your goals that you wrote out in January of.

2020. And tell me if any of them went the way you thought. I mean, none of us saw this coming, and so. I think making plans is good. In fact, I know it is making plans is good because. it gives us a baseline. It's a little bit like a flight plan in a.

plane, right? Every good pilot. makes a detailed flight plan, but if you ask. every pilot I've ever asked, how often does the. plan go? How often does the flight go according to plan? They'll tell you. the honest truth, which is never right. It's always slightly. different, so I think we've gotten a real reminder of.

that and I think that's I. think that's it's really unsettling, but it's true. Right that life is uncertain markets. are uncertain. The biggest risk is the one. we've never thought about and can't. Think about right and so planning. in that environment forces us to accept this. reality that things are temperate.

Sorry things. are temporary. There is no permanence and then. once we accept that. Right, things get a little easier to navigate 'cause. we're not attached. To this idea of what we've stored up in the barn being. there exactly the place we put it when we go back, right? One concept that you've talked about, you talk about quite a bit.

and you've got a great sketch on this topic is the idea of enough. and Jack Bobo wrote a book called enough where he. explored that idea as well. Can you? take us through that exercise? How we can all figure out our? own personal sense of what's enough? Yeah. Yeah, again, excuse me again.

Such a good question. This, by the way, is why I said yes to this. opportunity is because I get to chat with you and you're always. so thoughtful. So thank you. I don't know I don't I don't. know how to figure this out. In fact, it's funny. I literally I do a lot of my work.

while walking and just thinking. about things and then calling a short list. of people way smarter than I mean, there's a lot of people way. smarter than me. I just happen to have the phone numbers are very short list and. last week I was having this conversation with Morgan Housel.

I called him. specifically and said, hey, how do you think about enough and another? friend of mine, Greg Davies, who's a real finance. guy here in London. I think to me and I've spent it. I'm not exaggerating when I say I spent a decade thinking about enough. And I love that old.

I believe. it was Kurt Vonnegut in that conversation that where. he said they're at a party that a hedge fund manager. through and somebody's Kurt said to somebody else. How does it feel to know that he makes more and camera? the details, but it's like how does it feel that he makes more in one day?

than you'll make in your whole life and whoever it was that. Kurt Vonnegut was talking to you said, well, I have something he'll never have, which. is enough. And. To me, after thinking about a decade, the only. answer I have is we just have to think about it right like we.

just I think. The real answers to all. of these questions, personal finance questions, budgeting questions. even investing questions. Really, we need to. get more in tune with awareness. Right, then we do a spreadsheet. And all those spreadsheet tools are really valuable. and there may be. There's probably some way to spend some time around.

the budget and you're spending to sort of sort out what enough might. be in, but I think. Those those represent the messy middle to me. right? Like looking at the spreadsheet calculating. seeing how much we spend seeing how much we need projecting it out at a 4% withdrawal. rate and using some Monte Carlo tool like that to me represents the messy.

middle really important looking at other people's examples. It's a little bit. like reading reviews of a pair of tennis shoes on Amazon. If you go read 50 reviews of the shoes you're thinking of buying. you don't leave with more clarity you leave. more confused, right? But maybe it's supposed to be.

that way that represents the messy middle considering the nuance. the edge cases. This is what I do with the sketches, right? I go into. a problem like enough and I have conversations for 10. years and at some point hopefully I'll pop. out the other side. Jack. So Bogle said.

sometimes to get to simplicity, you've got to cut through the SWAT. the huge. I think he used the word cut through huge swaths. of complexity. And I think it's the same thing with this idea of enough like just. pay attention. Notice that I thought. that car would be really valuable to me.

or I thought that vacation or I thought that house. or I thought once I had a $1,000,000 in my. beautifully elegantly designed passive portfolio I. would feel something. Well, it turns out I didn't. or I did and there's no right or wrong. answer to it. So to me it all comes down.

to just can we just start having this conversation? And not feeling like it's too California or. too new age or some fuzzy thing like can we just? start noticing and. I think this is where we've gone off track with money is nobody. taught us to talk about it in the first place and if they did.

teach us to talk about it, they taught us in that it was a math. problem. And then when we go to touch it. Every time we go to touch it, it reminds me of a electric. fence that you don't know is electric. I mean, if you've ever. had that experience, I actually have and I've got my wife was recording.

it. I was I was. We're in we're in France. and we're on a mountain bike ride and there was this wire and I'd never. seen it. I mean, I'm from the West. We have barbed. wire. We don't have and I brushed my leg. up against it was like cool.

Well, that was weird and I thought is that an electric fence? while recording? I reached out and grabbed it. But that's what it reminds me when we talk about or we touch these topics. around money. Is oh, I didn't expect that to be emotional. I thought this fit in a spreadsheet.

That's all I was ever taught and you're like wow turns. out this isn't about well, it is also about spreadsheets. but it turns out this is really about fear and. worry. It's the stuff that keeps us up at night. The stuff sometimes it. wakes us up in the morning and so the answer.

to the question around enough is can we just give ourselves? permission to have this conversation? Can we just? Pay attention a little bit. We just think about it like that's where this will all start. I want to talk about this behavior gap concept and. I suspect a lot of people watching will be familiar with the most.

common behavior gap that investors think about. which is that you've got this well laid investment. plan that you completely up in during times of market. turbulence. Do you think that that is? maybe over discussed at the expense of other behavioral? gaps that might go on in our lives? That's a such a good question.

Over discussed I. know that I for a maybe year. or two. I sort of got frustrated with the amount. of times people wanted to talk about that one and. really, it's investment return compared to investor. return and this audience will be totally familiar with. it and particularly the work even done at Morningstar.

where you've got for the same fund right? The investment and we could just use time weighted rates. of return versus dollar weighted rates of return for this audience, right? That was where the behavior app originally. was sort of named. And it's what people often. want to talk about because investments are what we talk about.

So I got a little sort of I don't know, tired of it. and then I realized it's actually just kind of. a righteous trick, right? It's just it's a Trojan horse. It's an opportunity to get into a conversation that's more. important. So yeah, I think it's over discussed, but.

I also think at least we're talking about it, right? At least we're starting to understand the importance of behavior. and at least we're having these conversations. 20 years on now, at least we're talking about it a lot. What are some of the other behavior gaps that you've observed? Yeah, so.

So you could go through all the behavioral finance. stuff and notice things like I think. I think clearly we've already talked about the other one that I'm most interested. in, which is just when we're not aligning. I have made a habit. of asking people when they find out what I do.

it gives me permission to ask questions. So like on a plane. or whatever, right? To ask people why is your money invested the way? it is? So I don't know how many times I've asked that. question, but I know it's hundreds, if not thousands of times now and. the most common question I get, I'm sorry, the most common.

answer I get. I mean, let me tell you, I've never gotten. What I consider to be the only right answer, which is. this port. I built this portfolio because it gives. me the greatest likelihood of meeting my goals. I've never had anybody actually. say that out loud and this audience that might just be like, come on seriously.

you've never right. What I often get is I read. about it in the newspaper and I saw it in the news. My buddy at my buddy at the club told me about like that's. how and the really smart people whisper carefully. they say I read about it in The Economist, right like.

the super smart ones. So that's a big. gap is not. thinking through. I did a bunch of institutional consulting and. even in the institutional consulting space like huge university. endowments where we'd have this conversation. and in a university endowment setting the right. answer to why is the money invested the way it is should.

be because this portfolio gives us the greatest likelihood of. meeting our spending policy. Right, it never was. It was always. like, well, we got a two inch thick book from XYZ. firm telling us what some super smart person. came in and bought a steak dinners and talk to us about this.

It's always. these crazy things, so I think that's another gap is not aligning. our portfolio with the. goals and like one last one last. story about this. A friend of mine named Jeff, a retired. investment banker, had a big pool of money when he retired. enough that he could get him to see the best financial.

quote unquote financial people in the world. He had met with five different firms, all of which you would recognize. This was this is actually the New Year's Eve party. He pulled me aside like I've got to talk to you. He tells me he's like I've met. with five different firms and not one of them yet.

Not one of them has aligned the portfolio they're suggesting. To my goals and I was like what are you talking? about? Like, what are they aligning to? And they're like, well, they're aligning it to their. tactical asset allocation model or their forecast. of what's going to come or their chief investment strategist.

and that's all great. Except that that's not the reason we invest the money. right? So that's another big gap. I'm not one more. well spending. We've already talked a little bit about one. of the big big mistakes I see and I. think I'm going to be if I can't.

I'll just be a little. direct because I think this group. Probably is prone to this mistake. Is over confidence and here's the reason. I think you're prone to it over confidence. is a problem of experts. Right over confidence is what you get when. experts behave exactly the way you would expect.

experts to behave. That's why it's so tricky. I don't have a solution other. than well. Here's a little exercise anytime. you're thinking and the reason I think and hopefully. the fact that you're prone to this comes across as a compliment. right? Like you're experts. And over confidence is what we get when experts.

behave exactly like experts are supposed to behave. So here's a little exercise before. the next the next. Before you go to make any change to the portfolio. because you're convinced something is going to change or whatever. that is, you read something on the interwebs and. you've decided that there's some change you need to make.

There's. a conversation that I like to go through with myself and. other people called the over confidence conversation and you. just simply ask what. If you're right and you make this change, how. would your life be different? So there's three questions. If you're right and. you make this change, how would your life be different?

Normally the answer. to that question is sort of marginally, right? Like it's. around the edges. I might take an extra vacation. Maybe I could retire a year earlier. like even if it's like a big bet, it's. not like I'm suddenly going to have an airplane normally 'cause. we're not talking massive bets.

So if you were right, how would your life? be different? Question number two, if you're wrong. You do this thing and you're wrong. How would you like to be different? Often the. answer to that question is like, oh geez, I mean, you know. what I mean? Like I might be in trouble at home.

I. also might have to work five more years. like it normally and part of that's playing into this. idea that we feel the pain of loss far. greater than we do the pleasure of gain. But so and. then the third question is and this is hard to ask people.

but have you ever been wrong before? Right, and so if you can just get yourself in the mindset. of like well. That's the only the only hint I have for dealing with overconfidence. is to just. Remind yourself of times when you were. so sure before. And you turned out to be wrong and we reason.

is so hard is we're so good at weaving. narratives. About. Our skill when maybe it. was luck or about our bad. luck when maybe it was a poor decision right? to suit our own story and if we again. it all comes back to awareness, we can just be honest and clear.

eyed about the decisions we've made. Would you say extended bull markets like the one we've had? tend to give rise to more overconfidence? Does it? relate it to what's happened in the market? Yeah, I think. I mean, that's another. If we can do. this real quick, I'll just. see how quick this goes.

I think if I just. hit share, it might still be there. So can you see that now? Just about, yep, yeah, so the. there's another challenge when we have extended markets either. direction and this recency bias problem is. a big deal, right? And so whenever this. is going on.

What we expect? So recency bias is just taking the recent past. and projecting it indefinitely into the future, right? So what we expect is this to happen. And even if it's not on the same trajectory, we're expecting. something like this to happen. And often what does happen is right like expectations.

versus reality and so. yes, I think what happens in extended. extended pull markets or we just get. we start to forget what. it means, what risk means. We stay say things like. Risk, what risk? And we I. can't tell you the and we do the same thing in a bear market.

right? Obviously, and the challenge we have these days is. our definition of the recent past has. shortened, it used to be. Maybe we. would talk in years. Now we're often talking. in days. I once made a chart of. All the apocalypse du jour's that we went. through. I think it was in 2016.

I can't remember which what it was. but it was just like every day and then it was. gone, right? Like in the news all day long for. like three days and then gone like not a mention of. it. And so when things are going. up, we tend to forget risk is.

so easy to forget, right? It's an arbitrary concept. until you experience it and all the lifeboat. drills like talking about getting punched in the face is different than. getting punched in the face. And so when we when we've forgotten. you know, bull market, bull market, bull market, we start to say things like.

yeah, I think I'd be comfortable with that 6040. portfolio moving into 8020. You know what I've heard of people that are 100% equity. What's wrong, right? We're not making those most. of us. Now this group may be different. I'm hoping this group is different, right? But most of us are not wired to make a decision.

to go deeper, increase our equity. allocation when things are scary. Right, and there's all those reasons like we are wired as herd animals. were looking around. Stay safe, everybody else is doing it. It feels safe staying in the herd, right? We equate leaving the herd to being killed, you.

know. So I think recency bias is a huge problem. and the only way I know to solve recency bias is again to. expand your definition of the recent past to. look back. The good news about investing is it leaves a breadcrumb. trail. Investing behavior, right? How did you behave?

in 2008 nine? You know if you can go back, what were you doing in 99 2000? 2001? Notice the behavior and like I've noticed for. myself, I'm terrible at it. Terrible, which is why I have a great financial planner that I. literally don't want to know anything about it.

I just want to throw the money. over the wall. Do not talk to me about it. I'm really. good at giving other people advice terrible. at taking my own. And so I think we need to understand that some. of us are hardwired that way, right? So yeah, the reason recent past is.

a challenge. Speaking of thinking back to how we thought. during bad market environments like 2008. we're all 12 years older, so I guess the question. is even if we might have been really placid. during that period, are we going to feel? the same now that we're 12 years closer.

to retirement? Yeah, yeah, no, I think so. There's a couple of things. that go on. Number one, every time. there's a scary market. Every time there's a scary market, it's. We have these words like I don't know who said. the famous quote. The last four words of any great investor.

this time it's different. Right, but the reality is it is different. It's always different, like the cause of. the scary market is always different enough to trick us. into believing that the outcome will be different. and I think that quote is pointing to the outcome, not the. cause, right?

The outcome as far. as far as the way the evidence of history shows. us is we get through these things when they're scary. But we don't know that when it's happening. And there is some truth to the fact that we you. don't know for sure. Right, that's why it's called risk.

Risk isn't just volatility risk is. the total of the. idea that like look are the equity markets going to always work the way. they always have worked. No, we don't know what's the. best bet we can make. The way the evidence of history right like it's. the only it's the only way I want to live anyway, but.

it's also only the only reasonable bet to make. But the event itself is different enough. our lives are different enough that those two. combined to help us make all sorts of crazy decisions. In scary markets and greedy markets. Right, and so I think it's just. really smart for us to say, wait, wait, wait, let's get out of.

these branches here. Like these way out on the branches, we all know what it feels like to be way out. in the branches. I mean, look at a branch next time in the windstorm, right? like those things move a lot. Then look at the trunk of the tree. It's not moving much the.

trunk of the tree. These products that we use the investment. performance. Those are the branches at the trunk. of the tree. Are you your life and your goals? If you haven't taken the time to clarify that. you got no touchstone to. grab when you're scared or greedy, one of the.

two, and so I think we can spend. all of our time. It's in fact, it's sometimes it's even a useful exercise. Some of us find it entertaining, right? Spend all the time. with the financial pornography network. Understand all that stuff. All that stuff out in the branches, but then we have to come back.

and go wait, wait, wait, wait. Why am I doing like for? me? That's time with my family, mainly outside. and serving in the community. Above that is a layer of goals like in order to meet that. why time with my family, mainly outside serving the community is a set of.

goals. If I come back to those that. I can say, are these goals all the same still? Well, maybe a few of them have changed. We don't need that much money. We'd like to move to the country, whatever, but. mostly those haven't changed. The value almost never changes. time with my family, mainly outside serving the community.

I've been saying that for 12. years at least the goals. If I say. to myself, the goals haven't changed, then I go. great. So the purpose. goals and then right above that I should be drawing. this right purpose goals and then right above that I would be. thinking process and that's investment process.

OK, and we all know the investment process predominantly here, right? We've got whatever the portfolio of passive. funds that make sense. That's low cost and diversified. whether it's the three portfolio fund or the four of the seven. portfolio fund or whatever it is all mixed together. in an allocation that matches the goals.

Then above the process sits product. Least important part, but it's the part we all spend all. of our time talking about product would be a set of mutual. funds or ETFs that populate. the product so we can go from. wait, that's right. This is crazy or. my is my purpose still the same or my goal is still the same.

Is the process still valid? OK, did I pick the right products? to validate to populate the process? The products are. just things to populate the plan. And if that all still yes, we can go OK, I. guess I don't have to do anything today. I want to take another audience question, Carl.

It's. a good one. What are three nudges you would recommend to improve? your finances? Uhm? So. Yeah, I think I would probably start with I mean. depending on where you are in this journey that. look, we all know that one of the most important parts of this process. is a great portfolio is amazing.

But if you don't have any money to put into it, it doesn't do any good. So I think the idea of getting. aligned with spending is always the place. to start and one easy way to do this. I just think of it as. finding. Finding free money. Right, so you track your spending.

And I wouldn't track my spending as a tool. to beat yourself up with. So I'm going to have a little. I'm the self declared king of permission granting. I have a little. staff and this is my staff. It's actually the Apple Pencil. but it's my staff and my staff.

I'm going to grant you. all permission to stop budgeting. To beat yourself up. Right, we're going to use budgeting as a tool. A tool to help us meet goals. It's fun. It's a game. I know I'm totally lying about the fun. part, but I'm just trying to convince you like stop.

It's not a. tool for inflicting pain. It's a tool for awareness. So I'm going to grant you permission to do that. So once you do that, you track. and then you just look. Are there places where? Everybody have taken this through taken through this. workshop around is. Can I decree these are non discretionary?

spending? That I don't really care about. Like, can I get a better deal on the cable? Not asking to cancel it. I'm just asking you to make a phone call or. two. Everybody that's gone through that is found a couple hundred. dollars, right? Like my utility bills double checking.

that I'm paying the right tax rate on property taxes just. take a month 45 days to look for free money. When you find it automatically increase. your contribution, well, assuming there's no credit. card debt around right automatically increase your contribution. into your S&P 500 fund. Then the next level of that would be find.

more line spending. Is there money that you're? spending that you don't really care about? There are 100 bucks a month going out the door to. Netflix that you never use or whatever, right? So. that's the first thing I would do is just go on a treasure. hunt. To find free money.

Redirect it towards a more useful. cause that cause might be paying down credit card debt. It might. be spent taking your spouse on a date that you've. been neglecting and it might be investing so. that's I think maybe just one giant nudge is. I would just understand I would look at spending more in the form.

of getting aligned with happiness. not in the form of beating ourselves up. I think so much of our budgeting. personal finance stuff is all around inflicting pain. Right, make it painful. It should hurt. You should be deprived. like no, I don't know that sounds fun. No reason it doesn't work for.

most people. But if instead we can be around getting aligned. And spending lavishly on the things that. we value, including investing. And cutting ruthlessly on stuff that we don't care about, it. could start to work. So I just want to mention the name of the. book that you mentioned Carl earlier on.

You talked. about the nurse who wrote the book about. interviewing people as they were close to death. Mike. Nolan tells us the book is called the top 5 regrets of. the dying. Ronnie, where I want to end on a question. about Jack Bogle Carl where I want. to ask you to just talk about how Jack.

affected impacted your career and. the way that you think about investing in financial planning. There's only. There's only one. I was trying to figure out who gave me. the other quote. Oh, Oliver Wendell Holmes. So here I'm going to draw this real quick. There's only one quote that's had more impact on me.

than Jack's quote around simplicity. And it's the Oliver Wendell. Holmes quote. So here's how I my entire. career has been built off. of the idea that sometimes we have to cut through great. swaths of complexity to get to the simplicity. on the other side, and also the idea that.

that take what was it? Your isn't it your? Yeah, take 100 minus your age and put that in equities. and then this and I don't really care about that part. What I care. about it was the next sentence, which was there. are plant there might be and I'm paraphrasing there might.

be plans. There might be investment strategies better than this. But the number that is worse is infinite. Like that changed my life. It changed the way I dealt with clients. I used to have clients where we. would have the simplest portfolios on the planet with millions. of dollars and all my colleagues would be like what?

And I used to always just say look if it's good. enough for Bogle, it's good enough for me, right? Like, let's just put our focus on behavior and so the way I think. but that simplicity quote that changed my life was really. this idea that we start we head into.

a problem around money and everything's going fine. until we're like, oh, geez, what account should we put that in and where and. what's growth in income and emerging markets? I. don't know an expense ratio 12 be one fee. like we and the whole industry has been trained. sort of to drop us right there.

Almost like a sales technique, right? Like dig a hole. throw a client into it and then look down. and go hey, I'm the only one with a rope and what. Bogle gave me permission to do was. to take them here. Right, like I can go through all this. Consider the edge cases, the nuance that all.

of that stuff, but what clients what clients and. readers and friends and real people in the world. really want is they just want to be. taken here. Now I know some of our stereotypical. engineers want to do that, right? And that's. fine. That's a good day at the office for me.

Somebody who cares. how smart I am, but most people. just want to know that and he gave. me permission to do that. 20 years ago and it changed completely. changed my entire career. I have been spending my. entire career since that time. Being warned. Warned about being too simple.

Like it happens almost daily. I get an email like. are you worried about being and so about 10 years ago. based on that quote. I mean, that's always been my bedrock. Is like wait, if it works here, I think. it's OK for me too, but I was like wait, it sounds.

like there's an exciting place called too simple with like scary. monsters that if you go there, you'll be eaten and your career will be. over and I was like I think I'm going to go see if I can find this. place. Like how simple can I get? And I never found the monsters, right?

All I found. was this great quote from Bogle. So thanks for asking. That was. that was fun. Well, thank you Carl. Thanks so much for being here. This was just. as much fun as I hoped it would be. I hope the audience enjoyed it. and now I'm going to turn it over to Rick for some closing.

remarks. Thank you, Christine. Thanks Rick. Thank you Carl and thank you Christine for the outstanding. interview. Thank you Carl. Thank you Christine for the outstanding interview. It's always interesting. to hear Carl's deep thinking views on money and life and. I always say simplicity is an alpha. that we talk about alpha all the time.

Simplicity is one of the biggest. alphas that you'll find. This presentation. has been recorded and will be available soon on bogal center. net. Our next bogal head speaker. series event will be on March 5th featuring Dan. Early, professor of psychology and behavioral. economics at Duke University and author of New York Times.

bestseller, Predictably Irrational. The discussion will be moderated by Alan Roth, a. financial planner, longtime bogal head and. a bogal center board member. Thanks. for joining us today. We hope that you and your family have a safe. and happy Thanksgiving and see you next time.