If You Can by William Bernstein (NYT article)

[norabird]

I thought this was a pretty nice piece about the need to start saving young and the general savings problem. Obviously it's not MMM-level but then again, neither am I, which may be why it spoke to me!

http://www.nytimes.com/2014/05/04/your-money/a-path-to-retirement-for-those-far-from-it.html?src=me

[nawhite]

Looks like the pdf can be found at: https://dl.dropboxusercontent.com/u/29031758/If%20You%20Can.pdf

[mm31]

good read. Investing, like most simple things is hard

[clarkm04]

Very good and short primer.  I've passed it along to quite a number of friends and family members.

It's such a short and straightforward read and his 5 hurdles is applicable to any investor.

[lizzzi]

It's free on Kindle Lending Library.

[aclarridge]

Very good, it's great how he says to study history as one of the major important steps.

He mentions how corporate bonds are just in general a bad deal though, as if it's a fact... the justification being that the bondholders have no voting power. I don't agree with this - corporates have higher rates of interest in order to compensate for that fact and the increased credit risk over govt bonds.

[fallstoclimb]

Can we talk about this?  I just read it and am now confused on a few ideas -- please keep in mind that I am pretty new at investing/retirement accounts/I still don't understand how the stock market actually works.

He says to do 30% U.S. stocks, 30% international stocks, and 30% bonds.  That's not....generally accepted for young people, right?  30% bonds seems high for the young?  Does he mean more like roughly averaged over your lifespan?  I know he talks about rebalancing at the end of every year, but I don't understand that either. 

I was also surprised by the 3% real return.  I thought real returns were generally closer to 7%?  Is his real return low just because of the high bond allocation?

I know nothing.  I am looking forward (well, sort of), to doing all of his assigned "homework".

[dude]

Can we talk about this?  I just read it and am now confused on a few ideas -- please keep in mind that I am pretty new at investing/retirement accounts/I still don't understand how the stock market actually works.

He says to do 30% U.S. stocks, 30% international stocks, and 30% bonds.  That's not....generally accepted for young people, right?  30% bonds seems high for the young?  Does he mean more like roughly averaged over your lifespan?  I know he talks about rebalancing at the end of every year, but I don't understand that either. 

I was also surprised by the 3% real return.  I thought real returns were generally closer to 7%?  Is his real return low just because of the high bond allocation?

I know nothing.  I am looking forward (well, sort of), to doing all of his assigned "homework".

Bernstein has some great stuff, going back to 1996, here:

http://www.efficientfrontier.com/ef/index.shtml

As for his investment strategy, sometimes referred to as "Modern Portfolio Theory," you can see how such a strategy, more or less, would have fared over the past 19 years here:

http://www.retireearlyhomepage.com/reallife14.html

[norabird]

Found this on a separate NYT article on retirement savings in mid-life:

"Let’s assume you are 40 years old, earning $100,000, and you start squirreling away 10 percent annually. If you keep that up until you are 67, you could save nearly $582,000 on an inflation-adjusted basis or about $697,000 by age 70, according to calculations by Vanguard. (That assumes earnings grow by 1 percent annually, while savings return 4 percent each year, all after inflation.)"

So expecting 7% might be overly high?

[dude]

Ha!  norabird, I just three seconds ago posted that very article in this forum!

Nevermind the 7% number, it's retire-at-70 number I have a problem with!

[Basenji]

Really outstanding piece. I'm going to give it as a grad present to my niece. And a good list of books to read as homework for me, too.

ETA: Also the best explanation of why Vanguard should be your mutual fund provider. We started with them per MMM reccs, but I was wondering WHY. Now I know.

[clifp]

I purchased and read this book recently. 

I am not the target market, being retired, too old, too much experience to be close to the target market.

Bernstein and Micheal Lewis are my favorite financial authors, so I found it to be a terrific book.  I am tempted to push this book on several other forum which have a high concentration of young (e.g. a game forum) people.  But before I don't I'd be interest in what the young dreamers thought of the book, not just for yourself if you are on MMM, you are an outlier when it comes to money manager.

But more importantly is this something your friends who aren't Mustachian would actual read and understand, possible even listen too?

[arebelspy]

I purchased and read this book recently. 

I am not the target market, being retired, too old, too much experience to be close to the target market.

Bernstein and Micheal Lewis are my favorite financial authors, so I found it to be a terrific book.  I am tempted to push this book on several other forum which have a high concentration of young (e.g. a game forum) people.  But before I don't I'd be interest in what the young dreamers thought of the book, not just for yourself if you are on MMM, you are an outlier when it comes to money manager.

But more importantly is this something your friends who aren't Mustachian would actual read and understand, possible even listen too?

If you mean the PDF linked above, I enjoyed it, but I'm a financial/retirement/math nerd.

I think it's great for young people, but I think any young person that would read through it would be an outlier already.  Give it to the average youth and they'll flip through it for a second and go "meh too hard to understand" (even though it's written very plainly) or start to read and give up.  Lacking the background knowledge is a tough hurdle.

The biggest problem with "selling" it to someone is that it's not sexy.  That's a large part of the appeal of MMM for people I introduce to the idea - retire by 30?  Hot.

Low cost investments, retirement accounts, market history, investor psychology? Meh.

It's also so negative: here's hurdle one, two, three, ...,.  Makes one inclined to give up or think it's hopeless.  Not everyone thinks this, no, but we're talking the typical person.

Unfortunately I think that's the way of the world nowadays.  You need to "hook" them with something cool, and then get into the practicalities a bit later.  Being able to have a full income annually while not working is cool.  Round the world travel or other unique experiences is cool.  Get them with something they love, then bring in how to do it.