Boy, I've been pretty feisty recently! First picking a fight with Vanguard, then tackling the sticky healthcare debate, and now picking a fight with Jim Collins, the personal finance world's favorite uncle!
The reason for the fight with Vanguard—and now for the fight with jlcollinsnh—is that I've been spending quite a bit of time recently on asset allocation, and I'm starting to wonder whether the simplest approach truly is the best.
The Froogal Stoodent Takes On Healthcare
Is Medicare for all the best answer to healthcare in the United States? Believe it or not, that might actually be a more efficient approach, in terms of minimizing administrative costs! https://www.nytimes.com/2018/10/15/upshot/is-medicare-for-all-the-answer-to-sky-high-administrative-costs.html
But administrative costs aren't the only concern, of course.
Maybe this is a part of the reason why healthcare is so inefficient: https://www.axios.com/health-care-ceo-pay-compensation-stock-2018-0ed2a8aa-250e-48f1-a47a-849b8ca83e24.html
Mr. Money Mustache uses an alternative to the traditional medical model. Very interesting! But does it make sense for the rest of us? It's worth remembering that he's wealthy. I don't know about you, dear reader, but I'm not (yet): https://www.mrmoneymustache.com/2020/11/09/direct-primary-care/
Added 12/11/2020: Recently saw this horror story and thought it was highly relevant: https://www.nakedcapitalism.com/2020/12/medicare-blues.html
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It seems to me that there are a lot of insurance companies that would suffer greatly if we moved to a "Medicare for all" model.
It's tempting to say, "Yeah! Screw the big insurance companies! They just take all our money and make life miserable for doctors and hospitals!"
But that's partly because I don't work in the healthcare industry.
Imagine if we just snapped our fingers and did away with private health insurance companies like the various companies that comprise the Blue Cross Blue Shield Association. As of 2019, the U.S. Department of Labor counts 2.8 million people employed in the healthcare industry.
An untold number of additional people could be cut by hospitals and doctor's offices, because the billing would be streamlined from multiple different insurers to one (Medicare).
How would the economy absorb roughly 3 million suddenly-unemployed people? What kind of short-term waves would that create throughout the economy?
And what kind of impact would that have on the portfolios of people who are near retirement? Or are currently retired?
In the long run, over maybe 5-10 years, the situation would sort itself out. And, at least for younger folks such as myself, the efficiency gains over the long term may make it worth some short-term pain.
But tell that to the 3 million people who could lose their jobs.
Either way, there will be pain. There will be pain if we don't do anything, and there will be pain if we do overhaul the entire system.
Essentially, the cost-benefit analysis is far from clear, at least to me.
But what I do think is that our current situation is a lousy hybrid that marries some of the worst aspects of a free market with some of the worst aspects of government-run healthcare. In our current situation, nobody wins.
Except maybe the CEOs of healthcare companies.
The Froogal Stoodent Takes On Vanguard
In my constant search for better, easier, more profitable ways to invest, I've run into a fact that disturbs me more and more as I continue to think about it: most total stock market indices, such as Vanguard's VTSAX, are market-cap weighted.
What does that even mean?
Well, it means that a greater proportion of every investment dollar goes to the largest companies in the market.
At first glance, you'd think, "More of my money is going to the Apples and Googles and Microsofts of the investment world. Isn't that a good thing?"
Maybe.
But maybe not.
Living AFI is a blog that's been inactive since 2016, but it snarkily--and truthfully--touches on a lot of issues related to work and early retirement. This article deals with how to handle the topic of financial independence among your friends: https://livingafi.com/2014/09/20/friends-and-fi/
Want more from Living AFI? He's not posting, but A Purple Life is, and she's also great: https://apurplelife.com/why-im-comfortable-retiring-with-500000/
It's probably best to invest now, even if the price of stocks seems high. Here's why: https://www.fool.com/investing/2020/08/25/should-you-invest-in-the-sp-500-and-apple-at-all-t/
Are index funds really the best choice for investing? Fit DIY Dad posts a thought-provoking analysis: http://fitdiydad.com/index-funds-devils-advocate/
Active or passive investing? What's the difference, anyway? https://www.investopedia.com/news/active-vs-passive-investing/
Can a sovereign currency issuer (such as the United States) actually default on its debt? https://www.pragcap.com/can-a-sovereign-currency-issuer-default/
A good analysis on the topic of 'Modern Monetary Theory' described in the previous link: https://www.advisorperspectives.com/commentaries/2020/06/29/the-theory-of-mmt-falls-flat-when-faced-with-reality-part-i
And who suffers when the worst happens to the American economy? Everybody:
https://thefederalist.com/2018/10/25/u-s-goes-bankrupt-heres-gets-least-pain/
A great list of quotes! My favorite is "No one agrees with other people's opinions; they merely agree with their own opinion expressed by somebody else."
https://jlcollinsnh.com/2012/06/12/i-could-not-have-said-it-better-myself/
On the way home from
work yesterday, The Verve’s “Bittersweet Symphony” blasted out
over my car speakers. I forgot I had added it to my playlist.
In case you’re not familiar, the song has a very melancholy feel. It’s quite catchy, but the lyrics and vocal delivery are both melancholy…wistful…basically, it’s like it was written and sung by somebody who’s weary with the drudgery of everyday life.
The first line begins, “Cause it’s a bittersweet symphony, this life / Trying to make ends meet, you’re a slave to money then you die.”
Like I said, melancholy.
But relevant, given that this is a personal finance blog.
Link roundup September 2020
Are we still in a recession from COVID?
https://earlyretirementnow.com/2020/08/25/the-shortest-recession-ever-my-thoughts-on-the-state-of-the-economy/
A timely topic:
https://debtfreeguys.com/racism-and-personal-finance/
What's the difference between being 'rich' and being 'wealthy?'
https://www.personalfinanceforbeginners.com/rich-vs-wealthy/
Best current laptop deals, especially for students and bloggers:
ASUS Vivobook F512DA; $515 on Amazon (reg. $679 for this version)
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| ASUS Vivobook F512DA, a great laptop for students and bloggers |
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| Lenovo IdeaPad 3, a great laptop for students and bloggers |
Here's a very good question, with no easy or universal answer:
https://retirementresearcher.com/how-much-should-we-depend-on-the-stock-market/
I've planned to make a post on this myself. Drat! I've been scooped!
https://www.inspiretofire.com/hedonic-treadmill/
An outstanding explanation of why the historic CAPE ratio is not necessarily a good guide for the future:
https://thereformedbroker.com/2014/01/12/leaving-cape-town/
Jose and Tatiana from CrucialWealth were featured on MarketWatch:
https://www.marketwatch.com/story/this-couple-is-one-year-away-from-having-enough-money-to-retire-early-heres-what-they-did-2019-04-01
An outstanding series from LivingAFI:
Pt. 1 https://livingafi.com/2014/05/09/drawdown-part-1-the-basics/
Pt. 2 https://livingafi.com/2014/05/12/drawdown-part-2-simulation/
Pt. 3 https://livingafi.com/2014/05/18/drawdown-part-3-strategy/
Pt. 4 https://livingafi.com/2014/05/28/drawdown-part-4-examples/
Pt. 5 https://livingafi.com/2014/06/03/drawdown-part-5-validation/
Somebody who worked for Lehman Brothers was smart enough to start saving at 23, and saving by choice worked out well for him during economic downswings.
Did you get a later start than he did? He says, 'that's fine, just start now, and choose to live with an austere budget.' Good advice:
https://www.marketwatch.com/story/have-nothing-saved-for-retirement-follow-the-austerity-solution-2019-03-29?mod=article_inline
What should you be afraid of in retirement? Wade Pfau spells it out:
https://retirementresearcher.com/inflation-deflation-confiscation-devastation-the-four-horsemen-of-risk/
Worried about required minimum distributions (RMDs)?
https://www.marketwatch.com/story/these-rmds-are-driving-me-crazy-what-are-my-options-2019-03-27?mod=article_inline
*I'd note that the person who made this video missed one crucial element: risk tolerance. Sure, everything he says makes sense. But it doesn't make sense for just anyone to start a business. And he missed that crucial element.
*A little light on the storage space, but it's pretty powerful for the price, and there are a number of options for extra storage.
-The money quote: "But in this situation, it really helps to understand the big picture of what is actually going on. The world is not ending. The air outside your windows is not a swirling cloud of certain death. All that has changed is that we are in a self-imposed economic slowdown that has been created purely to save the lives of our most vulnerable people. Which is one of the most compassionate things our society has ever done." [emphasis in original]
