How many Mustacians follow JL Collins' advice???

[MrGville]

I recently read his book, and it made me wonder if there are many mustacians that truly follow his simple path to wealth.  How many of you out there are comfortable only investing in the two funds that Collins recommends?

I am just starting out on my investment journey, and the simplicity of his advice is very appealing to me.  However, investing always seemed complicated when I was growing up, so it also seems dangerous in a way to over-simplify it.  With that in mind, there is a part of me that is a little uncomfortable with the idea of putting all of my money into two index funds.  What are your thoughts?

[Psychstache]

Investing has 'seemed complicated' when you were growing up because making a simple subject complicated creates a money making opportunity for those that can sell you on the complexity. Don't buy the hype.

To answer your question, I am not comfortable with investing in the 2 funds mentioned by JLCollins, because I don't personally see a need for bonds in my portfolio at this time given my circumstances, so I have 1 fund: VTSAX (okay, you got me I have 2, the other is FSTMX, which is just Fidelity's version of VTSAX).

[MrGville]

Investing has 'seemed complicated' when you were growing up because making a simple subject complicated creates a money making opportunity for those that can sell you on the complexity. Don't buy the hype.

To answer your question, I am not comfortable with investing in the 2 funds mentioned by JLCollins, because I don't personally see a need for bonds in my portfolio at this time given my circumstances, so I have 1 fund: VTSAX (okay, you got me I have 2, the other is FSTMX, which is just Fidelity's version of VTSAX).

How long have you been investing in VTSAX and FSTMX?

[solon]

I am invested only in VTSAX - Vanguard's total stock market fund.

I believe pretty strongly in this strategy. I own the top companies in the US economy, so I share in the general upward trend of the market, without any additional risk (beyond the normal market risks that are baked-in to the economy).

I also have exposure to the international markets, to the extent that these top US companies are invested in other countries. I wouldn't want any additional exposure beyond this.

I won't have the crazy returns from investing in just one company that has a banner year, but I also won't suffer if that company has a crappy year. I believe that investors who swing for the fences will strike out more often than not, and their average returns over the long-term will be lower than the market as a whole.

And then there are the fund expenses. The VTSAX beats many other investments, just on fees alone.

If you want some other professional opinions on this strategy, I recommend A Random Walk Down Wall Street, by Burton Malkiel. http://a.co/gpSZiA0
Jim Collins didn't invent the strategy, he just put in a format that reaches a new set of investors.

[Paul der Krake]

I do.

It is simple enough that I will not stray when shit hits the fan (fingers crossed). I do not trust my impulses with anything more complicated than that.

[ysette9]

I don't follow his advice completely because I am comfortable with a different asset allocation. That said, I completely agree with the simplicity of few funds. Our taxable account has a combo of VTSAX and VTIAX (domestic and international total stock funds). My 401(k) has a mix of more funds in an attempt to replicate this with a touch of total bond funds to round out the mix. Once we are done working I expect to roll everything over to Vanguard in a mixture of VTSAX, VTIAX, a total US bond fund and a total international bond fun.

[prognastat]

I don't follow his exact strategy since most of my investments are in a work 401k that has limited funds, but I adhere to the core or investing as few possible funds that allow me to cover the whole market with low fee index funds.

[ketchup]

I only divergence from his specific strategy is due to 401k fund limitations (American Funds) that I've tailored the best I can.  I also own a (nearly paid off) rental property.

[MrGville]

I only divergence from his specific strategy is due to 401k fund limitations (American Funds) that I've tailored the best I can.  I also own a (nearly paid off) rental property.

My wife and I are in a similar situation.  She is eligible for a 403(b) through her work, but VTSAX is not available.  VINIX and VEXAX are available, however.  As far as I can tell, holding both of these funds is essentially the same as holding VTSAX, but I am not sure how much of each fund to hold to mimic VTSAX.  Any advice?

[nereo]

I am very comfortable with the advice Josh Jim gives, and I highly recommend his STock Series as an 'essential read' for anyone interested in becoming financially independent (regardless of age).

My entire investment portfolio is invested in two funds: VFIAX and VGTSX. 
Yes, I feel extremely comfortable about these investments - I'm not invested just two companies, I am invested across several thousand.  My time horizon is long, and besides annual rebalancing I don't sell any shares and have no plans to until we move into semi-retirement.

Investing does not need to be complicated.  See my tag line.

[MrGville]

I am very comfortable with the advice Josh gives, and I highly recommend his STock Series as an 'essential read' for anyone interested in becoming financially independent (regardless of age).

My entire investment portfolio is invested in two funds: VFIAX and VGTSX. 
Yes, I feel extremely comfortable about these investments - I'm not invested just two companies, I am invested across several thousand.  My time horizon is long, and besides annual rebalancing I don't sell any shares and have no plans to until we move into semi-retirement.

Investing does not need to be complicated.  See my tag line.

Great tag line, and great advice.  Thanks

[RWD]

I am very comfortable with the advice Josh gives [...]

His name is Jim, right...?

[nereo]

I am very comfortable with the advice Josh gives [...]

His name is Jim, right...?

Whoops.  Brain.  Fail.
(corrected)
full disclosure: I have never personally met Mr. JL Collins, and as an author he seems to use "JL" though I've seen him referred to as James (on 1500 days to freedom) as well as Jim elsewhere.

[Cwadda]

I wouldn't be surprised if 90% or more of posters (not lurkers) follow J Collins' advice. With the funds they have control over, not including 401(k) and such.

[rockstache]

I wouldn't be surprised if 90% or more of posters (not lurkers) follow J Collins' advice. With the funds they have control over, not including 401(k) and such.

That would be an interesting poll, with the caveats you included.

[CmFtns]

I am invested in Vangaurd total stock market index and also SP500 fund from fidelity only because that's the only low cost equities option in my 401k.

This is not because of JL Collins... it is because I find this advice everywhere in the ER community. It's simple and I believe it will work and has plenty of diversification especially for a young person. Reading JL Collins advice only further cemented my thoughts on the subject.

[Cwadda]

I wouldn't be surprised if 90% or more of posters (not lurkers) follow J Collins' advice. With the funds they have control over, not including 401(k) and such.

That would be an interesting poll, with the caveats you included.

OP, feel free to add it if you'd like.

[terran]

How long have you been investing in VTSAX and FSTMX?

Are these the two funds he recommends? If so, he's really just recommending one investment type, and two possible companies (vanguard and fidelity) since they're essentially the same investment. Just pick a company as your brokerage and invest in that company's fund.

[RWD]

How long have you been investing in VTSAX and FSTMX?

Are these the two funds he recommends? If so, he's really just recommending one investment type, and two possible companies (vanguard and fidelity) since they're essentially the same investment. Just pick a company as your brokerage and invest in that company's fund.

No, he recommends VTSAX and VBTLX.

[Psychstache]

How long have you been investing in VTSAX and FSTMX?

Are these the two funds he recommends? If so, he's really just recommending one investment type, and two possible companies (vanguard and fidelity) since they're essentially the same investment. Just pick a company as your brokerage and invest in that company's fund.

I believe this was a direct reply to my post, not a reference to the 2 funds he recommends.

[Frankies Girl]

I am definitely a follower of Jim Collins' advice. I think he even still quotes me on his website. :D

I am the poster child for "If I can do it, anyone can" as far as going from zero knowledge to 100% confident in managing my own and other relations' investments. I owe a huge thanks to Mr. Collins primarily for my financial education in general, but definitely have many posters on this forum I am very grateful to as well for all of their valuable help (and patience!). Been a follower (and cheerleader) for his book and stock series since discovering it in 2013.

I use the Fidelity equivalents of the Vanguard (I prefer the perks of using Fido and they offer index funds that match all of Vanguard's selections, but Vanguard is the gold standard for index investing). But same thing for all intents and purposes, and based off of Collins' suggestions. I hold 3 funds, all originally his suggestions - total stock market index/total bond market index/REIT index. He no longer recommends holding an REIT, but I still see the value in it and continue to hold these all as a 3 fund portfolio and have no plans to change, although I completely understand his reasoning for removing it and simplifying his own portfolio further.

And just in case anyone wants the Fido funds that match up: https://www.bogleheads.org/wiki/Fidelity

[aceyou]

I'm 100% VTSAX...except...

I just found MMM and JLCollins late 2014.  I still have crappy investments in a couple other places that I still need to transfer.  But this is not for diversification, it's just the remnants of my misinformed past. 

When I retire I plan to shift from 100% VTSAX to 80/20 with Bonds.  But I'm not doing it b/c of JLCollins, but because of the Trinity Study.  I feel like the professors at Trinity deserve the true credit. 

[Full Beard]

I'm 100% in VTSAX with my IRAs and taxable account.  I also have a TSP account where I invest in a 2050 lifecycle fund.  That fund includes some international and a small portion of government securities and fixed income. 

[MrGville]

I wouldn't be surprised if 90% or more of posters (not lurkers) follow J Collins' advice. With the funds they have control over, not including 401(k) and such.

That would be an interesting poll, with the caveats you included.

OP, feel free to add it if you'd like.

Poll created.  Thanks

[Dicey]

I took a different path to FIRE, so I don't, but I recommend it all the time to people who are earlier in their journeys. It's especially helpful for those who know how to save, but are afraid to invest. If his series had existed way back when, hell yes I would have used it! I surely would have started investing sooner, thus achieving FIRE at a younger age. Long live jlcollinsnh!

[MrGville]

For anyone out there that does not invest in a total market index fund, what is your reasoning?  What do you invest in instead?

[Cwadda]

I think the poll should be slightly more clarified to exclude real estate. We are talking about the stock market only, right?

[Eric]

I'm a big fan of Jim and his blog.  He lays out complex concepts very simply and does a great job with the mindset of investing.  But I can't really get behind the whole invest only in the US thing.  If you're an index investor, that means you believe in owning the whole market.  So how can you justify owning Ford but not Toyota, Apple but not Samsung, Johnson & Johnson but not Unilever, etc.  Not to mention that basically everyone else recommends investing in the whole world, a fact that Jim readily admits. 

I personally think that the argument of "US companies do business worldwide, so you don't need to own International stocks" doesn't work for the same reason that the opposite argument of "International companies do business in the US, so you don't need to own US stocks" doesn't work.

Set up a lazy portfolio, and you get better diversity with the same simplicity.

https://www.bogleheads.org/wiki/Lazy_portfolios

[dandarc]

+1 Eric - I personally do a 3 fund portfolio for this reason.  So answer was "No, use the 2 funds + alternative investments".  Of course, the alternative VTIAX, so not too far from Jim's approach.

[Clean Shaven]

For anyone out there that does not invest in a total market index fund, what is your reasoning?  What do you invest in instead?

My wife and I have all our taxable accounts (i.e. non-retirement accounts) in the total stock market or SP500 funds.

The retirement accounts have a mix of SP500 (because of limited fund choices in spouse's 401k) and Vanguard target retirement accounts.  We use the target date funds for their allocation of stocks to bonds, and to include international stocks & bonds.

We have been considering moving from the target funds to the life strategy funds.  We originally picked the target date funds because we didn't know any better (newbie investors) and they are well-diversified.  After educating ourselves more, we're satisfied with the target funds contents currently, but as they self-adjust to become more bond-heavy, we're thinking about shifting more to the life strategy fixed-allocation style. 

Something about the JL Collins' advice of "own all VTSAX, it's already internationally diversified" doesn't really sit right with me.  Can't put my finger on it though.

^^ Edit -- what Eric said, two posts above, pretty much covers it.

[slugline]

20% S&P 500
20% U.S. small cap
20% total U.S. stock market
20% total international
20% total U.S. bond market
By itself, I don't think a total U.S. stock market fund gives me as much exposure to small cap stocks as I'd like. So the above asset mix is what I've been going with.

[Radagast]

For anyone out there that does not invest in a total market index fund, what is your reasoning?  What do you invest in instead?

I am investing with a strong bias towards things that are riskier than the total market because I feel that in the early stages of investing, risk and reward are closer to being the same thing. Also I am probably a contrarian, so I seem to be avoiding companies in the S&P500.

Even if that were not the case, I doubt I would feel comfortable with less than a three fund portfolio as I approached FIRE. In fact for people who are not comfortable with at least three funds, I would recommend Vanguard Lifestrategy Growth.

[Villanelle]

We've got a few other index funds (S&P500, international, small cap, TIPSetc.), and some bonds, and husband's retirement account option is TSP.

I'd like to ditch the bonds entirely since DH will almost certainly receive an inflation adjusted pension, but he's not comfortable with that.  I think we are at ~10% bonds.

[MrGville]

At what age or point in your FIRE journey do people consider incorporating bond funds into their portfolio.  I"m 26, so I do not feel the need to include bonds at this point, but if my goal is to FIRE in about 10 years, should I shift 20% or so of my portfolio to bonds once my FIRE date approaches?

Once caveat is that i expect to work part time at a "fun" job (if that really exists...) once I FIRE. 

[Bourbon]

Also 100% VTSAX, except for 401k's where I build as close to it as I can from SP500 and Mid-cap/Small-cap indexes available using these ration -

https://www.bogleheads.org/wiki/Approximating_total_stock_market

After 401k and IRA, investing in local real estate and peerstreet.

Have been 100% VTSAX for several years now but incredibly tempted to market time and go 10-20% Bonds.

[Helvegen]

Nope. I don't have the stomach for 100% equities and I don't like strong home bias or buy into the argument that TSM is already fully internationally diversified. 50/25/25 domestic/international/bond is my allocation and what works for me personally.

I'm not sure I can possibly have as much blind and unwavering faith in the market always going up. Past performance is no indicator of future results. Every time someone brings up that the market 'always' does something based on past performance, I immediately get the warning posted on every prospectus flashing in my head that 'past performance is no indicator of future results'. Stock market doesn't have to drop to zero to really mess up my financial life. It didn't in 2008 drop to zero, but that was a fun time getting laid off constantly and struggling with major underemployment issues.

[BeanCounter]

Nope. I don't have the stomach for 100% equities and I don't like strong home bias or buy into the argument that TSM is already fully internationally diversified. 50/25/25 domestic/international/bond is my allocation and what works for me personally.

I'm pretty much in the same allocation. This past summer I was strongly considering changing our allocation to have more Treasuries and less bonds, and possibly backing down on international. Glad I didn't. 2016 was a good year.

[NoStacheOhio]

I only divergence from his specific strategy is due to 401k fund limitations (American Funds) that I've tailored the best I can.  I also own a (nearly paid off) rental property.

My wife and I are in a similar situation.  She is eligible for a 403(b) through her work, but VTSAX is not available.  VINIX and VEXAX are available, however.  As far as I can tell, holding both of these funds is essentially the same as holding VTSAX, but I am not sure how much of each fund to hold to mimic VTSAX.  Any advice?

80% VINIX to 20% VEXAX to mimic VTSAX. I do this myself, but honestly, holding 100% VINIX is going to yield very similar results.

[Cwadda]

Currently we're at about 68% of responses that invest in JCollins' recommended mutual funds. Huh, I thought that'd be higher.

[BrickByBrick]

Currently I'm having to re-allocate due to a rollover but the end result will be pretty close to 90% VTSAX and 10% VBTLX.

[nobody123]

I generally agree that a few low cost index funds that essentially let you bet on the economy as a whole is probably good enough for most folks.  I can't possibly know how any single company or sector of the economy will perform, so I would rather bet on them all.

I have to approximate VTSAX in my 401k and HSA using other Vanguard options.  I do also keep about 10% of those funds in the Vanguard international stock fund available to me.  I understand that most larger US companies have significant international exposure, but as Eric pointed out, I don't get the "Ford but not Toyota" angle.  Is 10% the right amount to put into that segment? Not sure, but I do think 0% is too low.

I have my wife's rollover 401k in a Vanguard target year retirement fund.  When she quit working it's what we agreed to do, and she feels good knowing that the money she earned and set aside is being "managed" by an investment company instead of me.  And since our traditional retirement age is so far away, most of it is in VTSAX anyway.

Our Roths are under $10K each at this point, and they are a combination of VFINX and VWHEX.  These double as the "last resort" portion of our emergency fund so I am a tad more conservative there.  Once there is $10K in VFINX I will exchange that for VTSAX, and once our overall net worth hits a certain goal, the VWHEX will go away.

[Aggie1999]

At what age or point in your FIRE journey do people consider incorporating bond funds into their portfolio.  I"m 26, so I do not feel the need to include bonds at this point, but if my goal is to FIRE in about 10 years, should I shift 20% or so of my portfolio to bonds once my FIRE date approaches?

Once caveat is that i expect to work part time at a "fun" job (if that really exists...) once I FIRE.

From what I have read for an early retiree with 30+ years of retirement or someone years away from retirement a 100% equities portfolio has always outperformed or at least matched any portfolio with bonds. To me it doesn't make sense to hold bonds in these scenarios. I saw one very detailed blog comparing different equity to bond ratio portfolios over the last 80 years or so. Can't find it though.

Now if someone is the average retiree at age 65 and plans to eat into his principle for retirement funds as opposed to just the earnings, minus inflation, then some allocation of bonds seem to make sense.

[Aggie1999]

I've noticed most in this thread that are doing international are doing less than 40% international. I chose a 60/40 split between US and international because that is what the Vanguard LifeStrategy Growth fund basically does. Figured they are smarter than me when it comes to the stuff. Of course after saying that I did delete the bond portion. I'm 100% equities between the US and International total funds. Thoughts?

[BTH7117]

We follow philosophically, not to the letter.

1.) We follow his advice to recreate VTSAX in my TSP account with C/S Fund mix;
2.) Our other investments are with Fidelity (we already had accounts there) but we use their Total Market Fund, FSTVX; and
3.) VTI is the commission-free total market option in my HSA, so that's what we go with there.

So while I'd like to say we Keep It Simple Stupid, we own: S Fund, C Fund, FSTVX, and VTI.

The TSP accounts keep us at a 0.04% average expense - so no complaints from me for slightly more complexity.

[damyst]

Avoiding international funds is the recommendation not just from Jim Collins but from Jack Bogle as well:
http://www.morningstar.com/cover/videocenter.aspx?id=718644
Which is not to say that we shouldn't question it, but for me the opinion of these two carries a lot of weight.

As a Canadian, I pay a bit extra in withholding taxes to hold U.S. equities, and rather more for international. The U.S. exposure is absolutely necessary, given the poor diversification of the Canadian equity market. But paying extra for international exposure doesn't make much sense to me. The U.S. economy is by now so thoroughly integrated with the world at large, it's hard to imagine it drifting apart from the "international" segment over the long term.
I remember reading that stock market performance in the major economies is increasingly correlated.

[MrThatsDifferent]

For anyone out there that does not invest in a total market index fund, what is your reasoning?  What do you invest in instead?

I am investing with a strong bias towards things that are riskier than the total market because I feel that in the early stages of investing, risk and reward are closer to being the same thing. Also I am probably a contrarian, so I seem to be avoiding companies in the S&P500.

Even if that were not the case, I doubt I would feel comfortable with less than a three fund portfolio as I approached FIRE. In fact for people who are not comfortable with at least three funds, I would recommend Vanguard Lifestrategy Growth.

This is what I've gone with, the High Growth Lifestrategy fund--one fund to rule them all, doesn't get simpler, while achieving the same outcomes as JL recommends as that.

[NoStacheOhio]

I've noticed most in this thread that are doing international are doing less than 40% international. I chose a 60/40 split between US and international because that is what the Vanguard LifeStrategy Growth fund basically does. Figured they are smarter than me when it comes to the stuff. Of course after saying that I did delete the bond portion. I'm 100% equities between the US and International total funds. Thoughts?

I'm 100% equity with an 80/20 split. I didn't want to skip international entirely, but I'm more comfortable at 20%. The higher ER also plays a little bit into my decision. Given the increasing correlation between US and International, it just didn't make sense to me to pay more.

[Retire-Canada]

I enjoyed JL's stock series and it was useful in my investing education, but I do not follow his investing advice rigidly.

My AA:

- US = 50%
- Canada = 30%
- Int'l = 20%
- bonds = 0%