Author: David H

Get Rich Slowly By Following Vanguard’s Bogleheads

Bogle,?NOT Boggle

You probably have good reasons for not investing in the stock market. For example, lack of knowledge, fear of losing money, a general mistrust of brokers and advisors and not having enough money to invest. On top of that, most of you probably didn’t have parents who taught their kids the importance of investing at an early age.

I was lucky.? Both of my parents are in financial services and?taught me the importance of working and saving money. However, anyone can learn good financial habits and it’s never too late to get started.

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One of the best things my mom has done for me is introduce me to the Bogleheads and their book,?The Bogleheads Guide to Investing by Taylor Larimore, Mel Lindauer, and Michael LeBoeuf.? Last year my mom and I attended their annual financial conference.?As a sixteen year old, I was the youngest person attending.

What’s a Boglehead? The Bogleheads are a group of people just like you and me who have an interest in investing and like to follow the principles of Vanguard founder, John C. Bogle.??The Bogleheads have an online forum at where investors share ideas. Each year they hold a conference where the Bogleheads meet and talk to well-known financial figures.

Benefits of passive investing

The first lesson I learned is that you don?t have to be Warren Buffett to be a great investor. The Bogleheads emphasized that you do not have to spend hours and hours trying to identify the stocks that will consistently beat the market.? They encourage a strategy of passive investing rather than active investing.

…even Warren Buffet has instructed that after his death, his wife?s estate should be put into passive investments like index funds.

In fact, day trading (aka actively buying and selling stocks) leads to losing money 80% of the time according to one study.? The Bogleheads caution against being an emotional investor because this leads to making too many changes and poor investment returns in the long run.?Mr. Bogle recommends investing in a diverse portfolio and investing in low-cost index funds. For example, the Vanguard Total Stock Market Index Fund (VTI). [Editor’s note: we are not paid by Vanguard. They’re just a great, not-for-profit company and the pioneers of low cost passive index investing].? There are plenty of other index funds by different companies that one can invest in as well.

Related: Forget Retirement – Here’s Why You Need To Start Investing Now

If you doubt that you can beat the vast majority of active investors, while only spending a few hours a year doing it, The Little Book of Common Sense Investing, by Jack Bogle, explains the strategy and statistical evidence to back up his advice. Jack Bogle mentioned that even Warren Buffet has instructed that after his death, his wife?s estate should be put into passive investments like index funds.

A fun way to teach kids about investing

One of the topics Bogleheads discussed was how to get the younger generation–my generation–interested in personal finance and investing.??The Bogleheads panel of experts expressed their concern that the younger generation doesn?t seem to care about finance.??Jonathan Clements, a member of the panel who is the creator of the HumbleDollar blog, talked about how some of his kids? friends are finishing college and taking a year to travel the world, then returning to be Starbucks baristas, with little hope of paying off their college debt quickly.

Parents can do a lot to get their children interested in investing.? For example, parents can take their young kids into a store like Starbucks and show them a cup of coffee. Then explain that when someone buys a cup of coffee from Starbucks, the people who have invested in Starbucks will make money. Consider buying a share of a company like Apple, Starbucks, or any company that produces products that your child uses.
This can also be an opportunity to show your kids that they can vote with their wallet?by supporting companies whose values align with their own.? For example, instead of buying a bottle of shampoo that is produced by a company that is bad for the environment, kids can buy bottles of shampoo that are produced by eco-friendly companies.??I think that it would be great if parents taught their children about basic investing principles like these so that their children have an incentive to make money through investing.

Being a conscious consumer builds good money habits

The conference isn?t only about investing. There was a lot of discussion about personal finance and how to be a smart consumer.?The Bogleheads encourage being careful with expenses and not wasting money. They even recycle the plastic name badges they use at the conference each year.??They emphasize allocating a meaningful amount of your monthly income each month toward saving.???It’s never too late (or too soon) to start building your financial well-being.

The conference as a whole was incredibly entertaining, educational, and a valuable experience. While I highly recommend attending the conference if you can, I recognize this may not be possible for everyone. Check out and read the books that I mentioned. These are amazing resources and you will gain so much valuable information. Happy investing!

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Do Teenagers Have a Spending Problem?

When Lunch Breaks The Bank

I don?t consider myself to be a ?cheap? consumer but I do consider myself to be a ?smart? consumer. Unlike a lot of kids my age–16–I am careful about how I spend.

Many Juniors and Seniors at my public high school in Boulder, Colorado go out to expensive lunches during the week.

There is a nearby shopping mall close to my high school that has quite a variety of dining options. The mall is about a fifteen minute walk away but most students tend to drive over. Whether students realize this or not, they are slowly using a lot of gas which adds up.

However, this isn’t even the main problem. In the shopping mall, there are two well-known and well-liked restaurants. There is Restaurant A, a traditional sit-down American restaurant where there is a wide variety of options. The prices vary. There are some expensive items on the menu but there are some low priced items as well. Most students choose to go to Restaurant A. I will admit, Restaurant A has really good food and I go to Restaurant A once every couple weeks.

When I go to Restaurant A, however, I make different choices. I usually order a chicken sandwich, which is $8 before tip and tax. Sometimes I’ll splurge and get a drink or some french fries. That comes to $11 after tip and tax. My peers on the other hand order 12 Chicken Wings, which are $15 pre-tip and tax. On top of that, they will order large french fries, which is $4, and a soda for a couple more dollars. This means most of my peers are spending around $20 per meal.

I prefer Restaurant B. Restaurant B is a bagel restaurant. You can get a filling bagel meat sandwich for $5. If you bring some snacks from your house for outside the restaurant, you have a perfectly filling and tasty lunch for $5! However, most students don?t go to Restaurant B for lunch.

This is just the beginning. A lot of students will drive out to farther places. There are more popular shopping malls with numerous good restaurants that are a 10-15 minute drive away. Teenagers will go out and get meals that are at least $20. What most teenagers don?t realize is that they are getting themselves into bad habits that could last for the rest of their lives. If they go out to lunch every day, and spend at least $20, that’s a minimum of $140 for lunch every single week!

Setting Bad Habits

Teenagers don?t only have a problem with spending lots of money on lunch, they have a spending problem in other areas. Teenagers spend a lot of money on clothes, for example.

I have heard of students specifically ordering a $25 baseball cap and paying for overnight shipping because they need a certain color hat for an event. That is just crazy!

Also, students pay a ridiculous amount of money for clothes by shopping at expensive stores. I think most of my peers believe that it is unacceptable or not cool to shop at places that offer discounted priced clothes.

A lot of students are using their parents? money to pay for these sorts of things. They may think of this as ?free money?, but they are unlikely to change their high-spending habits when they have to earn and spend their own money. Some of the students, like myself, have part-time jobs. Having a job is a good reality check. If I know it?ll take me an hour?s work to earn $10, I won?t go around wasting money when I can avoid it. Whether the students realize it or not, they are setting themselves up for future financial troubles.

Teenagers seem to be spending more and more money and I believe one of the main reasons is they feel like they have an endless supply of money from the Bank of Mom and Dad. Once they head off to college and are saddled with massive student debt, they will have to learn how to control their spending.

Impact Down The Road

I am genuinely concerned for most of my peers because they could wind up in a terrible financial situation say ten years down the road. They will have to come to the realization that there is not an endless supply of money for them to spend. Otherwise, they will be in debt for possibly the rest of their lives.

Think about it. If they are already spending $140 per week on lunch as a teenager, I can only imagine what their other expenses will be. I believe that most of my peers will choose to take out huge loans to buy an expensive house that is way out of their price range instead of settling for a more modest house where they are taking out less money or not borrowing any money at all.

Based on my observations, my generation seems to be developing some potentially dangerous spending habits. If kids continue to spend like they are now, a whole lot of them are going to be in serious financial trouble for the rest of their lives.

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