Jonathan Clements's Blog, page 73

Almost Magical

THE OTHER DAY, WHEN my son and I were out on our daily trash pickup walk, I found a $5 bill. No one was around, so I didn’t know who dropped it. It was just lying there.

I picked it up and put it in my wallet with all my other “pocket money.” This is money I use whenever credit cards aren’t allowed. The $5 bill slipped in next to the other $5 bills. I continued walking. The beauty of walking is it allows you to think. Since you aren’t driving, you don’t need to focus and instead your mind can just drift.

When I’m mowing my lawn, I’m also just walking, occasionally stopping to turn around. This becomes a great time to think about whatever. The blood is circulating but my brain is not being used for any great purpose. I come up with some of my best ideas during such walking sessions.

During this particular trash pickup walk, I started to think of using my newly found $5 for something special. My first thought was to buy a $3 scratch-off ticket that has the possibility of paying $5,000 a month for life. I’d cash the winning ticket under our local first-aid squad’s name, so the squad could get guaranteed funding.

Then I thought the New Jersey Lotto would need an individual’s name and Social Security number for tax purposes. In that case, I’d redeem the ticket in my name, and then donate the money every month to our first-aid squad since I found the $5 near its building.

Now that I had an investment strategy, off I went to our local ShopRite grocery store to buy my scratch-off. One problem: The scratch-off I purchased wasn’t the grand-prize-winning ticket. It was a winning ticket, however. It paid $10 on a $3 purchase. Good return.

As you’ll have noticed, I didn’t spend the entire $5 on the scratch-off. Maybe this was a bad move. Did I need to spend the entire amount to get the full effect of this magical $5? If I used the remaining $2 to buy a multi-million-dollar Powerball ticket, I could fulfill my charitable donation with the Powerball jackpot.

So, I bought the Powerball ticket with the remaining $2. Unfortunately, I didn’t win the jackpot, nor anything else for that matter. Still, I had my winning $3 scratch-off, which I took to ShopRite to collect. I asked for one $10 bill and put it in my pocket, where it is today. When they win a small lottery prize, many people feel compelled to let the money ride and buy another Lotto ticket or scratch-off to try and make a killing. I don’t.

It was fun to think that this particular $5 bill I found might be different from all the others. Maybe it was: It did give me one of my biggest payouts compared to all the other lotto tickets and scratch-offs I’ve bought over the years.

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What Friends Do

I SENT HUMBLEDOLLAR'S editor an email saying I was taking some time off from writing for the site. I really didn’t think I was going to write again. It wasn’t because I didn’t enjoy it. Rather, I thought I didn’t have anything to say that I hadn’t already said. But when I read Jonathan’s June 15 article, I was inspired to write about friendship.

Although I’ve never met Jonathan in person, he feels like a dear friend who I’ve known for many years. It’s because his writings aren’t just about money. They’re also about his life. He’s revealed so much about himself that you feel like you're a close friend.

We know he’s a Cambridge graduate who moved from England to New York, and now lives in Philadelphia with Elaine. They recently remodeled their house. They don’t own a car like most families do. He has a daughter, son and two grandsons. He used to be a long distance runner, but because of an injury he now rides a bike. He’s also not afraid to talk about the difficulties in his life: he was bullied in school, experienced two divorces and now is in a fight with cancer.

That personal touch is why I look forward to reading his Saturday articles. It isn’t easy finding a friend you can trust, which is what you feel when you read Jonathan’s writings.

When I was 19 years old, a bunch of us guys got together to play a pickup football game. We decided to play tackle instead of touch football. I wasn’t thrilled about it because I was the smallest guy on the field. I was short and skinny, just like I am today, at age 73.

We kicked off to the opposing team. My friend Mike caught the ball and avoided all the defenders except for me. I was the last guy to beat for a touchdown, and he could have done so easily, because I was too far away to catch him. But he decided to turn and run in my direction. At first, I didn’t know what he was doing—until I realized he wanted to run me over.

Mike was a strong kid. He was a lot taller than me and outweighed me by about 50 pounds. We collided, and his knee hit my chin as we both fell to the ground. As I slowly got up, I could see Mike looking down at me and smiling. I knew then that Mike wasn’t really a friend. A friend wouldn’t intentionally attempt to punish or hurt another friend.

I used to run track when I was in high school. One time, I was warming up for my race, while jogging past the pole vault area. Ron, Steve and Jerry were also competing for my school. Those guys always hung out together. While Jerry was attempting to vault over the bar, I could hear Ron and Steve chanting “miss it, miss it.” I couldn’t understand why they would not only root against their teammate, but also their friend.

Sometimes, it’s hard to figure out who’s a true friend. But as you get older, it’s important that you know, because it’s tough making it on your own, especially in retirement. You need family and friends who you can count on when you need help.

When I was taking care of my mother, I got her a medical alert system. It was a transmitter device that she wore around her neck that connected her to an emergency call center. If my mother was alone and needed help, the dispatcher would call an ambulance, the fire department or the police if it was necessary.

My mother rarely needed help, but one time she did. The dispatcher called Ann, who was a neighbor and close friend of my mother. They’d known each other a long time. Ann would often visit my mother and they’d have a glass of wine together. Ann agreed to be one of the individuals on the call list.

But Ann refused to come. She later told my mother she was in her pajamas and didn’t want to change clothes. We removed Ann from the list because she wasn’t someone who’d go out of her way to help a friend.

I’ve written a few times about losing my close friend Jeremy. It’s been difficult to get over his death. I thought at first it was because I missed our phone calls and lunches. But I now realize it’s more than that.

At my age, I know I’m eventually going to need some help. I always knew that Jeremy would be there for me, just as I’d be there for him. Now that he’s gone, I feel more vulnerable. I know I have my wife and other folks I can count on, but people like Jeremy are hard to find. No amount of money can replace the security that a friend like that can provide.

I wrote an article about paying our neighbor’s son $50 a week to water our plants, get our mail and keep an eye on the house while we were vacationing in the U.K. Since we were going to be gone for five weeks, I figured paying Michael was the right thing to do.

After we came back from our trip, Michael’s mother told me she didn’t want us to pay him. She said, “We want to teach him that he should help his neighbors and friends without expecting to be paid for it. That's what friends do.”

Dennis Friedman retired from Boeing Satellite Systems after a 30-year career in manufacturing. Born in Ohio, Dennis is a California transplant with a bachelor's degree in history and an MBA. A self-described "humble investor," he likes reading historical novels and about personal finance. Follow Dennis on X @DMFrie and check out his earlier articles.

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On the Move

MY WIFE AND I HAD intended to live in our single-family home for the rest of our lives. We remodeled several times so we could age in place, and we were confident we were all set for the future.

We knew life could change in an instant. We just didn’t think it would happen to us. My wife fell at home four years ago and suffered a traumatic brain injury. After six months in hospitals and rehab, followed by more than two years of occupational therapy, physical therapy and speech language pathology, she’s recovered pretty well.

Still, my wife lost her vision on her left side, so she can no longer see well enough to drive safely. Life isn’t the same, but it’s close enough.

Meanwhile, my health issues started 50 years ago with the first of four back surgeries. The last one, in 2019, was extensive. It left me pain-free but with weakness on one side and a foot drop. I’m lucky if I can walk a mile in 30 minutes.

My future includes a light travel scooter, which arrived a few days ago. It’ll allow me to venture out more and keep up with the crowd. It doesn’t do stairs, however.

Several years ago, Marriott Corp. sold its headquarters building and 33-acre campus in Bethesda, Maryland, to Erickson Senior Living. Erickson planned to build a continuing care retirement community with high-rise buildings on a small urban campus just 10 minutes from our house. We were uninterested.

That was a mistake. In my research into helping my wife, I kept seeing articles suggesting how important it is to remain active and socialize frequently. At the same time, I often heard my wife complain that we had nothing planned for the weekend. In the past, I’d left it to her to organize our social life. 

In addition, we often discussed what would happen when one or both of us needed more medical services for our physical or mental health. We’re in our late 70s and want to control our living situation without the help of our children, who have their own ideas about our future.

When my wife and I had our own eldercare responsibilities, we’d managed to keep our parents in their homes, with help from a premier local home-care company. For my wife and me, the goal is to always be together. In 2020, we were separated for six months during COVID-19, and didn’t want to experience that again.

One day, after a doctor’s visit, we saw they’d started demolishing the Marriott headquarters. We decided to check out the new senior living community, called The Grandview, a continuing care retirement community formed under Maryland state laws.

To our surprise, we were very, very late to the party. At our introductory meeting, we learned that there were over 400 names on the waiting list. We immediately added ourselves by making a $1,000 fully refundable deposit.

As we learned more about the project, we felt we’d made a terrible mistake by not acting sooner. We should have been more flexible with our aging-in-place plans. It caused us to ignore other options.

Erickson’s plan is for 1,100 apartments. The first two buildings are 14-story high rises with around 250 apartments each. All the amenities essential to me were located in the first building, which would be ready in the fall of 2025. I started to panic. I needed to be in the first building, but the math was against us.

In the first week of June, two months after they began accepting reservations, it was our turn to select an apartment. Five floorplans met our needs, and we wanted to be on one of the higher floors. One unit was almost perfect but the kitchen cabinets were not the right color. Yet the alternative was an extra $500,000 for one of the largest apartments available. Long story short, we reserved an apartment we’d ranked as our third choice and which was on the seventh floor. We expect to move in next year, when the building is finished.

My wife and I have learned we must be better planners. Staying in our single-family home was becoming isolating, even though it met our current needs for shelter and mobility. But we hadn’t thought enough about our future care needs.

Now, I advise friends to research what sort of community might work for them—and to place their names on a waiting list. It could be years before a spot opens up. If one does, take it. If not, keep your name on the list for the next opportunity.

Richard Hayman is a second-generation family business owner and inventor with three patents. He studied engineering at Cornell University and received a master's degree from George Washington University. After his family's business was purchased by a public company in 1999, Richard went on to enjoy several additional careers. He’s also been a STEM instructor for middle and high school students in after-school technology programs. Check out Richard's previous articles.

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June’s Hits

WHAT CAUGHT THE EYE of readers last month? Below are June's 10 most popular articles and blog posts:

Planning your retirement? As Dick Quinn notes, there's little agreement on the big financial questions—and most of the answers are too complicated for the typical American.
Faced with so many unknowns and some crazy market behavior, should investors worry? Adam Grossman's advice: Avoid market forecasts—and hedge your bets.
You might have heard that retirement savings socked away before age 30 are as valuable as all the money saved thereafter. Jeff Actor decided to put the notion into practice, with his twins as guinea pigs.
To trim his portfolio's tax bill, Bill Ehart uses his taxable account to buy stocks, while holding much of his emergency money in his retirement account. No, it isn't as risky as it sounds.
"For the remainder of his life, my father took taxis everywhere, even to the convenience store for milk," recounts Doug Texter. "This did not constitute a pleasant existence. Independence had disappeared."
Jeff Actor thought he'd simplified his finances as he got closer to retirement. But as he discovered when he needed major surgery, it didn't seem nearly so simple to others.
Can we commit to becoming super-agers through diet and exercise, or is it simply a matter of genetic luck? Sonja Haggert looks at the research.
To reduce the risk of unintended consequences from your financial decisions, keep in mind the notion behind G.K. Chesterton's fence, says Adam Grossman.
"It’s likely that my investments and taxes will not be as optimized as I’d want them today," says Bill Housley. "But I’m okay with that. It’s the price I need to pay to reduce the risk of bad future decisions."
Want to take a financial leap—but with a safety net? Consider a barbell approach, says Adam Grossman.

What about our twice-weekly newsletters? The most popular Wednesday newsletters were Howard Rohleder's Many Unhappy Returns and Dick Quinn's Not That Person, while the best-read Saturday newsletters were The C Word and Buying Freedom, both written by me. Don't get our free newsletter? You can sign up here.

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All in One Place

BEFORE 2022, OUR investments were held by multiple financial firms, more by chance than choice. Fidelity Investments was the 401(k) recordkeeper. My two individual stocks were held by separate transfer agents. My brokerage account was with Alight Financial. My two annuities and a small IRA were with RiverSource. It was a mess.

Each had different processes, websites with different functionality, and customer service that ranged from nonexistent to annoying. In one case, I couldn’t take a required minimum distribution online. I was required to speak with someone each time—a rep who’d then suggest where I put the cash.

My misplaced loyalty to my former employer—where I’d set up the 401(k) plan—for years kept me from rolling over my plan balance. When my old employer implemented a fee on inactive accounts, though, I’d had enough. It was especially annoying because, years before, I’d negotiated that all plan recordkeeping costs would be paid by the plan trust. The added fee would have meant that I paid twice for the same services.

Given that Fidelity was the plan’s recordkeeper, rolling over to a Fidelity IRA was easy. I initiated it online. Once I did that and saw Fidelity’s great website, I inquired about consolidating our other investments there.

My wife Connie and I went to the local Fidelity office. The consolidation process was explained. We discussed which mutual funds that I owned in the 401(k) could also be held in my IRA, and which Fidelity or other funds would come close to duplicating the others that I owned. Connie needed her own account because she had a small IRA.

Sign here, sign there. Everything was consolidated, though the annuity transfer took several months and several calls by Fidelity. It was a bit annoying—I was pressured not to move the annuities. Fidelity handled all the paperwork.

Everything is in one place now. Possibly the greatest benefit is at tax time. Waiting for those separate statements and ensuring I had everything I needed to file was a hassle. One year, I’d already filed when a late-arriving 1099 required me to amend our tax return.

Now, one consolidated statement does it all. TurboTax says it can download the information directly from our accounts, though I haven’t made that leap yet.

I regularly explore the Fidelity website. I like Fidelity, but no doubt other vendors are similarly robust. A click here and I see my net worth. I added the estimated value of our homes to the roster. Touch “activity” and every transaction, every reinvestment and every transfer appear.

I can see my overall gain or loss by investment, including for that day. The “research” function gives me more than I need to know about each investment. I’ve linked our bank accounts to Fidelity, so money flows back and forth in minutes—well, overnight at least.

While exploring the site yesterday, I found an option to add non-Fidelity accounts to the home screen display. Now, when I log on, I see not only our investments, but also the balances of each of our bank accounts. I love this technology stuff.

Years ago, I remember walking into our local bank with my passbook account to make a deposit and have it entered into my book. In the old days, I used to hold stock certificates. I recall sitting in a broker’s office watching the ticker roll by. What does a broker's office look like today? Heck, I remember the milkman delivering to our apartment with a horse and wagon filled with blocks of ice, but I guess that’s a story for another day.

One thing does give me pause. Where are all our investments? I mean where are they actually? What proof do we have that all these investments are ours? We’re nothing but account numbers on a bunch of computers. If the web implodes, does it all disappear? Is the monthly consolidated statement that I print out our security blanket? I hope never to find out.

In the future, with the growth of artificial intelligence, I’m hoping for even greater capabilities. When will I be able to say, “Fidelity, increase my net worth by 10% next month”?

Richard Quinn blogs at QuinnsCommentary.net. Before retiring, Dick was a compensation and benefits executive. Follow him on Twitter @QuinnsComments and check out his earlier articles.

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Found Wanting

WE ALL HAVE NEEDS and wants. It’s easy to know our needs because we’re constantly dealing with them: buying groceries, paying rent, getting gas for the car. Our wants, by contrast, are only limited by our imagination.

Our wants are easier to satisfy if they’re close to our current needs. You drive an older Honda Accord. Want a new Honda Accord? Not too difficult. Want a red Ferrari? That’s a different story. Your usual car budget won’t pay for a Ferrari.

How do you get the Ferrari? You have to be willing to do something that you’ve rarely or never done. You might sell all your possessions. You could sell your house, stocks and certificates of deposit, and cash in your life insurance. You’d need to raise a ton of cash so you can own that dream car.

Would it be worth it? If owning that Ferrari has been your lifelong dream, and you’ll only feel your life is worth living if you can drive down the street in that red Ferrari, perhaps you should go for it.

On the other hand, if you own a red Ferrari but nothing else, how good would your life be? It depends on what you value. If ownership of that car is the only thing that matters to you, you’ve arrived. But if you reach that peak and discover it’s not what you wanted, you need to rethink your wants and needs.

I’d venture to guess that we’ve all stretched to satisfy one or more of our wants. If it turned out to be what you truly desired, congratulations. Your focus and effort were worth it. If not, you need to move on.

In all of my early jobs, I sat outside the private offices in what’s sometimes called the bullpen. It was okay, but I wanted my own office. It just seemed like it would be so cool. I could close the door if I was trying to work on an important project or have a private telephone conversation. The “cool kids” had offices, and I wanted one.

It would have been great if I’d got an office due to a promotion. If the powers that be saw what an outstanding job I was doing, and how indispensable I was, and they felt it was only right that I got my own office, it would be very rewarding. I could say all my hard work paid off and I got my prize.

But that didn’t happen. Instead, when I got my own office, it was because I took a new job in Upstate New York, miles from where my family lived. It felt good when they showed me where I’d be working. My office. It has a nice ring to it, doesn’t it?

The problem: What I expected to feel sitting in that office and what it actually felt like were different. It was a nice office with a window overlooking the entrance to the building. But I didn’t feel any different. I still felt like me. Which was okay, but it was not better.

According to a popular quote—which, incidentally, didn’t originate with Thomas Jefferson—"If you want something you’ve never had, you must be willing to do something you’ve never done.” Whoever said this first would be disappointed by what I had to do to acquire this new symbol of power and status. I just needed to apply for a job, something I’d done many times before.

Goal setting has always been my way of planning for the future. Remember the song by Peggy Lee, Is That All There Is? That sums up how I feel about some of my earlier wants. I’m grateful I got to experience them, but I now know that my life wasn’t better with them, just different.

Viewing our wants with clear eyes helps us to see the flaws in our dreams. If the flaws don’t deter us from pursuing our goals, then we should go for it. We don’t want to be on our deathbed thinking, “If only I had.” Better to say, “At least I tried.”

David Gartland was born and raised on Long Island, New York, and has lived in central New Jersey since 1987. He earned a bachelor’s degree in math from the State University of New York at Cortland and holds various professional insurance designations. Dave’s property and casualty insurance career with different companies lasted 42 years. He’s been married 36 years, and has a son with special needs. Dave has identified three areas of interest that he focuses on to enjoy retirement: exploring, learning and accomplishing. Pursuing any one of these leads to contentment. Check out Dave's earlier articles.

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Balance Issues

THE YEAR'S MIDPOINT is here, with the stock market on track for its second consecutive year of above-average gains. This has many investors asking about rebalancing. Below are some commonly asked questions.

What is rebalancing? Let’s say that, to get the right mix of risk and return, you’ve settled on an asset allocation of 50% stocks and 50% bonds. Now, suppose the stock market rises 10%. This would lift stocks to some 52% of your total portfolio, instead of 50%. This is where rebalancing would come in. If you wanted to return your account to its initial 50%-50% split, you’d sell stocks and use the proceeds to buy bonds. That, in a nutshell, is how rebalancing works.

Why rebalance? When it comes to managing a portfolio, risk management should always come first, in my view. That’s the main reason you might want to rebalance. When you cut back on stocks, as in the example above, you reduce risk.

While risk management should be investors’ first priority, it isn’t the only one. Rebalancing tends to reduce a portfolio’s long-run growth, because it typically involves cutting back stocks. Still, it carries the potential to boost short-term returns. Suppose that, instead of rising, the stock market fell by 10%. The result in this case is that stocks would drop to about 47% of your portfolio. To get back to the original 50% target, you’d sell bonds and buy stocks. That means you’d be buying when stocks are at depressed prices and potentially set to rebound.

When to rebalance? There’s much debate on this topic. Some prefer to rebalance on a set schedule, such as quarterly or annually, while others rebalance only when the market has experienced a significant move. According to a survey of the research by author Mike Piper, the data on the topic is contradictory, which means that there isn’t one approach that’s guaranteed to be optimal. Personally, I prefer to rebalance only when it’s warranted by market movements.

If you’re in retirement and taking regular withdrawals from your portfolio, though, you could approach it differently. Retirees, whose portfolio has become too heavily weighted in stocks, could rebalance incrementally by taking each of their monthly withdrawals only from the stock side of their portfolio.

When it comes to the question of when to rebalance, the most important thing, in my view, is to avoid falling into the trap of recency bias—the mind’s tendency to extrapolate from recent trends. When investors see the market rising, it can be tempting to “let it ride” and avoid selling stocks. But it’s precisely at times like this that the discipline of rebalancing can be most helpful.

Where to rebalance? Suppose you hold stocks and bonds in more than one account. Where should you place your rebalancing trades? While every investor is different, there are some guidelines. For starters, there’s one account I’d never rebalance. If you have a Roth IRA, I’d keep it invested entirely in stocks at all times to maximize the tax-free growth.

On the other hand, if you have a tax-deferred retirement account, such as a traditional 401(k) or IRA, that would be the ideal spot to rebalance, because trades within these accounts don’t incur taxable gains.

The key is to view your portfolio holistically. If your target is to hold 50% in stocks, don’t feel the need to set every account to that same 50%.

How to rebalance? Once you’ve decided when and where to rebalance, the next question is how to do it. There’s a number of considerations.

First, it’s important to look at your portfolio through more than one lens. It’s good to have targets—such as 50% stocks—and to be diligent in rebalancing back to those targets. But it’s also important to look at your portfolio in dollar terms. Most important is to keep an eye on the dollars you hold in bonds because they’re your portfolio’s safety net.

Because bonds’ role is to meet withdrawals when stocks are down, you’ll want to regularly monitor your bond holdings relative to your needs in dollar terms. The reading on this gauge can help determine whether, and to what degree, there’s an urgent need to rebalance. Someone early in her career, who’s only adding to her portfolio, might not be as quick to trim risk when stocks rise. But a retiree who’s taking regular withdrawals might be much less tolerant of risk and thus quicker to reduce it.

A key question that many struggle with: Should you rebalance all at once or incrementally? There’s no surefire way to answer this question because, ultimately, we can’t know which way the market is headed—and thus we can never know in advance when the absolute optimal time is to rebalance. But taxes can provide a useful guide in making this timing decision.

If you’re rebalancing in a taxable account, and incurring capital gains as a result, you might use the capital gains tax brackets to help decide how much to sell each year. A 15% marginal bracket, for example, applies to capital gains when taxable income is below roughly $584,000 for a married couple or $519,000 for a single individual. While those numbers might sound high, keep in mind that they include all categories of income, including wages.

So, if you’re rebalancing, you might view the top of the 15% bracket as a cap and aim to defer any further gains into the following year. This way, you’d avoid ever paying the top capital gains rate, which is currently 20%.

Those with incomes below $100,000 can benefit from another tax threshold. For married couples with taxable income up to $94,000, or individuals with income up to $47,000, capital gains aren’t taxed at all. Folks in this 0% bracket might use the top of that bracket as their rebalancing cap each year.

And finally, married couples whose income is approaching $250,000, or single individuals with incomes nearing $200,000, should keep in mind the net investment income tax, which applies a 3.8% surtax on investment income above those thresholds.

When estimating your income for the year, don’t forget about dividends and interest, as well as capital gains distributions from mutual funds held in taxable accounts. Because these can be difficult to estimate, you might use the figures from your prior year’s tax return as a reasonable approximation.

What to rebalance? So far, we’ve discussed the question of rebalancing only at a high level, focusing on the split between stocks and bonds. But what if your portfolio contains more than one stock holding and more than one bond holding, which is the case for most people?

On the one hand, this makes rebalancing more complicated, but it also offers an opportunity, because it provides more levers with which to control capital gains. In trimming your stock exposure, you could sell a combination of some more highly and some less highly appreciated assets, or perhaps even assets with losses.

Another useful lens: Examine the breakdown of holdings within your stock holdings and within your bond holdings. When assessing a stock portfolio, you might look for concentrations that carry risk, such as a big holding in one stock, one industry or one geographic region. Meanwhile, within bonds, you might examine the breakdown along four dimensions: maturity, type, quality and geography. Don’t have the desired mix? That’ll make it easy to know what to sell.

Adam M. Grossman is the founder of Mayport, a fixed-fee wealth management firm. Sign up for Adam's Daily Ideas email, follow him on X @AdamMGrossman and check out his earlier articles.

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The Apprentice

WE MET IN THE GALLEY, the cafeteria in Vanguard Group’s nautical lexicon. Jack Bogle shook my hand. My pulse raced.

I’d learned about Vanguard’s founder while working at Morningstar. I’d read about him in Jonathan Clements’s Wall Street Journal columns. And I’d devoured his first book, Bogle on Mutual Funds.

“Where’d you go to college?” he asked. “Good board scores?”

We sat down, tucked into our meals—some sort of industrial casserole for me, a peanut butter and jelly sandwich for him. “I need someone to help me organize material for a new book. Would you be interested?”

Before I could say “yes,” Bogle proceeded to talk for 45 minutes, with pauses to ask for my thoughts on the investment management industry. I contributed maybe 10 words to the conversation. I think he just wanted to make sure that he could stand me.

I got the job. What did I learn? Lessons piled up in three domains: investing, humor and leadership.

Investing: Cost is almost everything. I reported for duty at 7 a.m., surprised to find a list of tasks on my desk. I checked with Bogle’s assistant. “He’s here,” she said. I poked my head inside his office.

“You need a coffee?” he said. “I could use a heater.”

We grabbed cups of Vanguard’s break room coffee, shaking nondairy cream crystals into the brew. We repaired to his office.

I expected the job to be easy. After all, I’d worked at Morningstar, a research powerhouse. I held the CFA charter, which was unusual at Vanguard in the late 1990s. And I was an indexing believer.

I knew that indexing’s power derived from future Nobel laureate Eugene Fama’s efficient market hypothesis, or EMH, the theory that stock prices reflected all available information, which made it difficult—if not impossible—for active managers to outperform the market by anything but chance.

Bogle peppered me with questions. What did I consider reasonable earnings-growth estimates for corporate America over the next decade? How would changes in stock-market valuations interact with my earnings-growth estimates to determine stock market returns? And which poet best captured the American experience—Whitman, Dickinson or Frost?

I faced a painful reality: I didn’t know anything about anything.

In Bogle’s office, I performed perhaps 200 analyses demonstrating that the lowest-cost funds outperform their higher-cost counterparts. We published many of these analyses in Common Sense on Mutual Funds. I discarded Fama’s EMH for Bogle’s CMH—the “costs matter hypothesis.” My takeaway: Whatever the investment opportunity, keep costs low.

Humor: Wit makes the world go round. As I worked with Bogle, politicians, celebrities and business leaders stopped by his office to discuss investment strategies.

The leader of a private bank arrived at Vanguard’s headquarters to prep Bogle for a speech on tax-efficient investing at a conference in Palm Beach, Florida. The buttoned-up banker, some 20 years Bogle’s junior, was intimidated. Bogle put him and me at ease. “Andy, take notes.” He directed me to a collapsing armchair with pilled upholstery.

Bogle asked the banker about his clients. “These are families,” he said, “with assets in the neighborhood of $100 million.”

Bogle nodded. “Well, that’s a pretty nice neighborhood to be in.”

I chortled. The buttoned-up banker’s mood lightened. Planning proceeded. My takeaway: A sense of humor is an underappreciated aide to collaboration and commerce.

Leadership: Push hard but recognize a person’s limits. Bogle pushed hard. Sometimes the pushing was trivial. For example, I felt like we drag-raced every morning down Lancaster Avenue in suburban Philadelphia to see who could get to the office five seconds before the other.

Sometimes, the pushing was consequential. I met him at his home late on a Sunday afternoon. He handed me extensive revisions to the 448-page galleys of Common Sense on Mutual Funds. I needed to return the manuscript to the publisher in 15 hours. I drove to the office, brewed a pot of coffee, and revised charts and text through the night.

And sometimes the pushing chafed. Bogle held an annual dinner for current and former assistants, people who’d assumed leadership roles at major asset managers or achieved entrepreneurial success. As I took my seat, the table’s average net worth collapsed.

Our waiter opened the first bottle of wine. Bogle held court. He told a story that concluded with “a cornucopia of possibilities.” He turned to me. “Don’t worry, Andy. I’ll tell you what ‘cornucopia’ means later.” Everyone laughed.

I was the new guy and, according to the dinner’s traditions, due for some ribbing. But my face fell. Bogle saw this. “No, Andy is actually pretty good with the language.” The laughter subsided. “And I want to give him this.” He presented me with a watch. The table raised a glass.

As Bogle recognized my thin-skinned distress, I saw him not only as an investment icon to be revered, but also as a human being to be admired. My takeaway: Great leaders push people to their limits, but also recognize each individual’s idiosyncrasies and what it takes to get the best from him or her.

I suspect HumbleDollar’s writers and readers can identify people who have shaped their approach to investing, work and life.

I can, too. And as I brace for the future, Jack Bogle is first among them.

Andy Clarke is a financial writer and editor in Pennsylvania. He worked for three decades in investment communications and research. Andy is a CFA® charterholder and CFP® certificant. He blogs sporadically at TheSecondPaycheck.com . Andy's previous article was French Connection.

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A Painful Confession

IT PAINS ME TO SAY this, but I hurt—everywhere. I'll start at the bottom and work my way up. My feet hurt, my knees hurt, my hips hurt, my back hurts and my shoulders hurt. One more thing: I can't remember. My memory is in decline.




Cataract surgery improved my eyesight. Hearing aids mean my grandkids don't have to be two rooms over when we watch TV together. Exercise seems to reduce my pain slightly and increase mobility. I see new knees and hips on the horizon. Maybe next up is an artificial intelligence chip for my brain.




Knowing my limits helps reduce my pain. On the treadmill, my knee tells me there's a big difference between 2.9 mph and 3.0 mph. When I try to push a little harder, my body quickly reminds me who's boss.




My cognitive decline is stealthier, revealing itself only when I try to talk. Words that were once common in my vocabulary aren’t there for easy recall. The aging fog of cognition is slow but sure. Thinking speed, memory recall and the ability to perform executive functions are all starting to suffer.




Once upon a time, I was a flight instructor. Living in Colorado, I enjoyed taking students into the mountains. Mountain flying offers pilots the opportunity to develop their skills while enjoying a new perspective of the Rocky Mountains. Few things compare to the thrill of flying around snow-capped mountains in the early morning. We would land at Leadville airport. At 9,934 feet above sea level, Leadville is the highest public-use runway in the U.S.




Safely navigating mountains is about risk management. Weather can change in an instant. From personal experience, I know that unseen waves of air can flip a plane sideways in a heartbeat. At these altitudes, one risk that must also be managed is cognitive impairment due to lack of oxygen.




Supplemental oxygen is a good idea above 10,000 feet. It's required above 12,500 feet if flying for longer than 30 minutes. Most mountain passes are above 10,000 feet. Rollins Pass, my favorite, is at 11,676 feet. To ensure you don’t need to dust the dirt off the underbelly of the airplane, it's wise to fly higher than ground level when crossing.




To demonstrate how altitude affects thinking, I’d always do this exercise before the flight: On the ground before taking off, I’d ask my students to count the sequence of A-1, B-2, C-3 and so on for as long as possible. I’d stop them when they started to stumble. This was usually around F-6 or G-7.




Deep into the Rockies and after flying above 10,000 feet for a while, I’d follow up with these questions.




Me: "How do you feel?"




Student: "Great."




Me: "How are your cognitive abilities?"




Student: "Not a problem. I'm fine."




Me: "Do you remember the counting exercise?"




Student: "Yes."




Me: "Okay, please count that alphanumeric sequence again."




Student: "A-1… B… 2… err C… err 3.” At that point, they caught on, “Oh my, I had no idea I couldn't think."




Every student says "great" when asked how he or she feels. Why? The wingman of reduced cognition is a false sense of euphoria.




Understanding and managing risk is life-saving. A couple of years ago, I made the personal choice to stop flying. Giving up one of the loves of my life was painfully difficult, but it was the right decision.




Cognitive decline from lack of oxygen—or from aging—is real. Our ability to function slips away quietly. Just as flying in the mountains requires increased awareness of risk, our need for financial risk awareness is greater as we age. The flight of aging doesn't stop mid-air. As we continue to our aging destination, our tanks continue to deplete until we finally land.




In the years before my father died, we asked, "Where’s your personal and financial information? How do we find your accounts and stocks?" His answer was, "Don't worry, I'll tell you everything when I'm ready." He went from being “not ready yet” to being unable to remember the details of his estate. Not having this information made things difficult for his executors. I don't want that for my children.




If I die at the same age as my parents, I have about 25 years left. That seems like a long time to get things in order. But I’d like to stop flying my finances and get things in order sooner, and well before I can’t. I want to simplify now, and switch my finances and investments to autopilot. It’s likely that my investments and taxes will not be as “optimized” as I’d want them today. But I’m okay with that. It’s the price I need to pay to reduce the risk of bad future financial decisions.

William Housley lives in Parker, Colorado, and has worked with Youth for Christ for more than 47 years. There, he serves as a trustee on the 403(b) committee. In their work with Youth for Christ, Bill and his wife Gretchen, a registered nurse, have ministered to youth in California, Germany, Vermont and Colorado. Today, Bill continues to contribute to the organization as “legacy staff.” He and his wife love spending time with their three grandsons. Bill's previous article was Gardeners Needed.

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Racking Up the Miles

AS AN ENGINEER and a believer in keeping things running, I haven’t owned many automobiles during my lifetime. Instead, my focus has been on extending each one’s longevity.

Among the maintenance and repairs I’ve undertaken: oil changes, spark plug and wire replacements, carburetor cleaning and adjustment, belt and hose replacements, distributor and timing settings, brake replacements (disk and drum), master and slave brake cylinder repairs, clutch adjustment, alternator repair, radiator repair, heater core repair, radiator fluid replacement, tire repair, motor mount replacement, engine and cabin air-filter replacements, wiper replacement, bulb and lens replacements, shock absorber replacement, wheel bearing renewal, tracing various electrical gremlins, and radio replacement.

Doing these myself has saved significant money. An example: One winter, when the brakes on our second Dodge Caravan started to make noise, I got a quote for the repair. A mechanic said the car wasn’t safe to drive and a repair would cost more than $800.

This was in the 1990s, and $800 was a huge expense for us. The van wasn’t unsafe. The brakes were just worn. This was a job I could do; I just didn’t want to. Over the following weekend—one that was cold and rainy—I put the van up on jack stands outside, because we had no garage. I replaced the front and rear brakes, rebuilt the brake slave cylinders, lubricated the rear wheel bearings, and flushed the brake fluid. The total cost for parts was less than $100.

Here are the cars I’ve owned over the past half-century, all of which were bought new or almost new.

1973 Mercury Capri. This was my first car, and I paid cash for it. I bought it used, but it was only nine months old. I loved that car and it served me well while in college, as a newlywed, and for many years after. I drove it until it died with 146,000 miles on the odometer. I think I could have gotten it running if I’d tried. But with two kids and tons of family obligations, there just wasn’t time.

1978 Datsun F10 Sportwagon. We bought it new for my wife. It was pretty much the cheapest automobile we could find. We financed it over three years. It was not a well-built car, and it required significant repairs. It experienced a cracked head after just two or three years. The transmission had to be rebuilt after five or six years. It had approximately 110,000 miles on the odometer when we sold it.

1985 Saab 900S. We were both making decent money and convinced ourselves we should have a nice car. We thought of it as the best car for safety and transporting future family members, but it was a bad decision. We paid it off in two years, but the car had transmission troubles late in life and all shop repairs were very expensive.

Saab of America shut down. Dealerships were closed or taken over by GM, and reliable service became iffy. This was a hard vehicle to work on because Saab design was idiosyncratic. We obtained good service for a time from a Volvo-Saab mechanic, but he dropped Saab repairs when parts and specialized training became too expensive. We continued to drive it for many years, with more and more things breaking. I finally had it towed away. It lasted at least 125,000 miles, but the odometer had quit years before, so there was no way to know the final count.

1988 Dodge Caravan. This was a good car for our family. It had a five-speed manual transmission and a somewhat underpowered four-cylinder engine. It seated seven passengers, or four passengers and a ton of stuff if I removed the rear bench seat. I suspect the dealership feared it would never sell because of the stick shift. We negotiated a good deal and paid cash. We borrowed half the purchase price through a home equity loan.

It was far more reliable than the Saab, but much more basic. At one point, the air-conditioning required an expensive repair. When the A/C failed again years later, I left it that way. That was a questionable decision, considering I live in North Carolina. I used this car for many Boy Scout campouts and related trips. Around 2003, with more than 200,000 miles on the odometer, the engine blew a head gasket. The cost of repair would have exceeded the value of the car by a factor of ten. I had it towed away.

2000 Dodge Caravan. This car was far less reliable than the previous Caravan. It was the first car I ever owned with an automatic transmission, and the first with more than a four-cylinder engine. This car had transmission failures, parking brake problems, and wiring harness issues. It was also great for carrying lots of people or lots of stuff if the rear bench seat was removed. My wife kept this car when we divorced, and over time it was passed to my youngest son. Neither my ex-wife nor my son paid attention to vehicle maintenance. The van developed an oil leak and the engine failed. It lasted the least number of miles of any car I ever owned.

2003 Saturn Vue. I thought we were purchasing this car to have a reliable vehicle to pair with the previously mentioned Caravan. It became my vehicle when we divorced. This was a return to a manual transmission, four-cylinder engine, and only a few bells and whistles. It was an extremely reliable vehicle. When I purchased this car, I really wanted a Subaru Forester, but the Vue was similar in layout and capability, and also a good bit cheaper.

The Saturn dealership offered five-year financing with zero interest. While driving this vehicle, I stopped doing a lot of maintenance other than oil changes and fluid checks. I let the dealership do repairs. At some point, even though it ran fine and had no real problems, I started thinking again about owning a Subaru. As I was contemplating a future purchase, my youngest son had an automobile crisis, so I gave this car to him. That brings me to my current vehicle.

2011 Subaru Forester. This continues the manual, four-cylinder tradition. Nothing fancy. Just a comfortable, reliable vehicle. I had to order the car because the local Subaru dealer apparently never stocked stick-shifts. I’m a member of Leave No Trace (LNT), a nonprofit that trains groups about responsible use of the outdoors. At the time, if you’d been a member long enough, Subaru offered a $3,000 discount off the manufacturer’s suggested retail price. Using this discount prevented any dickering on price.

Before I told the dealership about the LNT benefit, it was playing hardball on the price. So, I switched gears and told them I’d use the LNT benefit. The salesman, sales manager and finance manager all tried to convince me to finance the car. I told them I was paying cash, and they kept asking how I managed to borrow the money without having the title. Either they didn’t understand or preferred not to believe that someone would write a check for a car purchase.

Several weeks ago, we were in the Subaru, trying to turn against traffic during rush hour. The release bearing in the clutch assembly froze and I couldn’t put the transmission in gear. By this time, I was in the intersection and blocking traffic. To get out of the intersection, I managed to work some magic by shutting off the engine, slamming the car into gear and starting without benefit of the clutch. Between this repair and a 120,000-mile maintenance, I’ve recently spent more than $2,000 on car maintenance and repair. Perhaps it’s time to look for another Subaru.

What’s the lesson here? I’ve taken my chances with longevity. Through the years, I think I’ve saved a lot of money by driving my vehicles for a long time, and performing much of the maintenance and some of the repairs myself. My favored strategy: Buy a new car under warranty—and then drive it until it’s beyond repair.

Jeff Bond moved to Raleigh in 1971 to attend North Carolina State University and never left. He retired in 2020 after 43 years in various engineering roles. Jeff’s the proud father of two sons and, in 2013, expanded his family with a new wife and two stepdaughters. Today, he’s “Grandpa” three times over. In retirement, Jeff works on home projects, volunteers, reads, gardens, and rides his bike or goes to the gym almost every day. Check out his previous articles.

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