#boglehead

Since graduating from college last May and working full-time, I’ve slowly started to learn how to “adult.” (Ok, I hate this term but it’s relevant here.) My main goal was to become financially literate. I don’t want to bore anyone or to make this a super long post, but to keep it short(er), here’s what I’ve learned. And keep in mind, I am by NO MEANS an expert in this.

I’ve been educating myself a looooooot about financial independence, investing, mutual funds, finance tips, etc etc. And I’m proud of myself for doing so. At first I thought the whole idea was really scary and wanted to put it off, but then I realized I needed to educate myself on it. Then, I started checking out crazy amounts of books from the library, reading online about finance, and more and slowly but surely, I started to gain understanding and familiarity. Then it didn’t feel so scary anymore!

I’ve read/skimmed a ton of financial literacy books, including the Investing for Dummies, Common Sense on Mutual Funds, The Little Book of Common Sense Investing,  A Random Walk Down Wall Street, The Richest Man in Babylon,  and more.  I would tentatively classify myself as a Boglehead. Here’s an excerpt taking from the College Investor about what a Boglehead is and what investing lessons you can learn:

What Do Bogleheads Follow?

Bogleheads follow several simple investing philosophies:

1. Live Below Your Means

This is a simple strategy - spend less than you earn. Live below what you need. Save the rest. Frugality is important, but so is earning more.

2. Invest Early And Often

This is one of the main reasons why I started this site. I wanted to encourage young adults and college students to start investing. The earlier you start, the better you'll be financially.

3. Never Take On Too Much Risk, Or Accept Too Little

Investing is a game of risk - but you don't want to go crazy. You can lose money investing. In fact, many people have gone broke investing. But that's rare, and it's near impossible to lose all your money investing if you follow simple advice.

4. Diversify

It's important to never keep all your eggs in one basket. Look at the people who had all their investments with their company stock, and then their company goes bankrupt. Investing in low cost index funds gives you diversity in your portfolio, especially as you mix up stocks, bonds, and other asset classes.

5. Don't Time The Market

Time in the market is better than timing the market. You never will know when the top or bottom is, all you can do is invest for the long term.

6. Use Index Funds

Index funds are fantastic tools to diversify across the stocks. Heck, you can buy the total stock market in one index fund! When it comes to diversification at low cost, there's no better way to do it.

7. Keep Costs Low

Fees are going to be the number one detriment to long term investing success. Keep cost low. Invest in low-cost mutual funds, and be wary of advisor fees. Read this scary story if you dare.

8. Minimize Taxes

Taxes are the enemy - we all hate taxes. Make sure you're taking advantage of tax-deferred investment tools like a 401k or IRA to the max. If you're self employed, you have the solo 401k at your disposal that can really allow you to save.

9. Keep It Simple

Simplicity is important. The more complex you make things, the harder it is to manage. Investing can be simple. Pick a few funds, keep your accounts together, and watch your money grow.

10. Stay The Course

The stock market goes up and down. In fact, as of writing this, it's near all time highs. It might crash. But you need to stay the course and keep investing for the long run. Buy low, sell high - don't fall for the panic and do it backwards.

How to be a Boglehead

Bogleheads invest and keep it simple by buying mutual funds or ETFs that try to mimic the entire market.  Or, to build a proper asset allocation for their own individual needs, they may buy a stock mutual fund and bond mutual fund to be diversified in both asset classes.  When buying these funds, they pay special attention to fees, and only invest in funds with low fees and expenses.

Taxes are also a huge consideration.  To maximize tax efficiency, investment vehicles like 401ks and IRAs are the preferred mediums.

Finally, they stay the course - the stock market goes down, they keep investing.  The stock market goes up, they keep investing.

I think it’s very important to start investing early. Compounding is amazing! Anyway, I don’t want to drone on and on, and not to toot my own horn again, but I’m really proud of myself for taking active steps in being financially literate, making a game plan and actually doing it (not just all talk, but I’m walking the walk), and for getting started in this while I’m young. It seems like most of my peers don’t even start investing until their 30s! Granted, I’m in a very fortunate situation because I’m nearly debt free (only debt is my car which will be paid off this year easily). But because of my fortunate situation, I know I need to take advantage of this status.