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Target date funds are everywhere for
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American retirees, advertised as an easy
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one-stop shop. And in some cases, that
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might be true. But recent research shows
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that the average target date fund is
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much worse than you might think. So,
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we'll break down all the details today
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and share with you how to judge whether
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your own target date fund is good, bad,
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or outright ugly. Welcome to personal
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finance for long-term investors, where
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we believe Benjamin Franklin's advice
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that an investment in knowledge pays the
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best interest both in finances and in
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your life. Every episode teaches you
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personal finance and long-term investing
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in simple terms. Now, here's your host,
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Jesse Kramer. Welcome to Personal
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Finance for Long-Term Investors, episode
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137. My name is Jesse Kramer. By day, I
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work at a fiduciary wealth management
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firm helping clients nationwide. You can
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learn more at bestinterest.blog.
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blog/work. The link is in the show
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notes. By night, I write the best
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interest blog and I host this podcast. I
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also put out a weekly email newsletter.
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And all of those projects help busy
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professionals and retirees avoid
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mistakes and grow their wealth by
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simplifying their investing, taxes, and
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retirement planning. And yes, today will
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be a deep dive. You could even call it
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an expose on target date funds. So,
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first though, let me do a quick review
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of the week. This one is from 0302
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Explorer who left a five-star review on
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Apple Podcasts and said, "Honest broker,
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Jesse puts out some great retirement and
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personal finance content that covers
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some issues that other producers lack. I
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particularly appreciated how he tackled
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projecting inflation and HSA, that's
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health savings account issues. He's
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relatable, factual, and responds to
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emails. Thank you for the kind words,
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Explorer. And yes, I do love responding
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to your emails. If you've ever gotten a
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uh you know a 300word email response
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from me. I apologize for the length. I
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think sometimes writing a long easier is
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probably easier than writing a short
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one. It's like Pascal said, I would have
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written a shorter letter, but I didn't
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have the time. But anyway, explorer,
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thank you for the kind words. Drop me an
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email to jessebinest.blog
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and I'll send you a super soft t-shirt.
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And I know I'm a little behind on
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t-shirts. I have to get a couple months
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worth of t-shirts shipped out. So, if
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you're waiting on a t-shirt from me,
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don't worry. It's on the to-do list.
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It'll happen soon. But let's get to the
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main show today. Let's focus on target
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date funds. I want to give a a special
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shout out to a couple other retirement
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nerds who set me down this path for this
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episode. So, Frank Vasquez, uh,
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especially his episode 333, 333 of his
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podcast, Risk Parody Radio. Then, Ben
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Felix and Cameron Pasmore, specifically
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their episode 374 of uh, Rational
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Reminder podcast. They produce the
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Rational Reminder podcast. And then,
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Professor David C. Brown who conducted a
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lot of the research that I'll be citing
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today. We'll link to all the relevant
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research and podcast episodes here in
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today's show notes. The simple fact and
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I'm I'm kind of excited about this topic
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today. I'm excited to be talking about
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it because up until I don't know a month
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ago, a couple months ago, I had this one
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particular set of thoughts about target
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date funds. Very positive thoughts. And
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those thoughts were based on all the
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learning that I'd done over the past 12
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years. you know, everything that I've
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ever consumed and and whatever of those
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topics were based about target date
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funds left a very positive set of
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thoughts in my head about target date
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funds. And if you look at other experts
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out there, Rammit Seti or Christine Benz
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or John Bogle himself are all on the
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record saying some pretty good things
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about target date funds. And when they
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said those things in the past, you know,
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especially if they were referring to
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what I'll call the right type of target
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date funds, I think those experts had a
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totally valid point. Somewhere in the
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filing cabinet of my mind, that helped
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me shape my positive opinion about
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target date funds. But with new
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information and new research, I had to
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shake off my prior opinions about target
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date funds and and revisit them. And so
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that's what created today's episode. So,
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in today's episode, I'll explain to you
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what target date funds are and how they
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work, just how dominant they are in the
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American retirement landscape, which is
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one of the reasons why I think it's so
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important to talk about them. We'll talk
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about the glide path concept, which is
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fundamental to target date funds, and
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I'll explain these five key factors of
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target date fund performance, and why
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those five key factors often lead to
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underperformance, which is one of the
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main reasons why we're here today. I'll
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talk about this thing called the curse
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of average and what you might want to
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think about instead of a target date
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fund and kind of what the spectrum of
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investing looks like. On that topic, I
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will talk a little bit about bread. Yes,
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the food. But I promise you, bread has
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something in common with target date
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funds. And last, I'll share with you a
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couple examples of target date funds
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that I think are the best of the bunch.
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And I'll share with you the exact
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criteria that I use to evaluate them.
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So, let's get going. A target date fund
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is a type of investment fund designed
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ideally to simplify your retirement
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investing. Instead of building and
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managing a portfolio yourself of many
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different funds, you choose a single
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fund labeled with a year that's close to
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your expected retirement date, such as a
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2045 fund or a 2060 fund. And the fund
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itself then automatically manages your
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investment mix over time. And the core
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feature of a target date fund is its
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glide path. You know, think of a plane
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coming into land, a glide path. And that
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glide path determines how the
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portfolio's risk level changes as the
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investor ages. Early in an investor's
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career, the target date fund typically
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holds mostly stocks because younger
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investors have many years before
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retirement and they can tolerate more
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market volatility. But as the target
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date itself approaches, the fund
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gradually shifts toward bonds in an
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effort to reduce the impact of large
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market downturns near retirement. Most
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target date funds are structured as a
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fund of funds. And what I'm about to say
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here is an incredibly important set of
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details. Okay, very very important. So
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instead of the fund holding individual
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securities directly, target date funds
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usually invest in a collection of
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underlying mutual funds or index funds.
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So that the target date fund manager
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decides how much to allocate to each
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asset class such as US stocks or
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international stocks or bonds and then
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periodically rebalances the target date
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fund portfolio to maintain the intended
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allocation. So it's a very important set
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of detail that it's a fund of funds and
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we'll dive into those details much
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further today. Now if we combine the
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glide path idea with the fund of funds
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idea, I want to give you a quick example
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of how a particular target date fund
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works. So I'm going to share the the
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Vanguard family of target date funds as
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they've published a very informative web
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page explaining their glide path in
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great detail. We'll link that glide path
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link here in the show notes. So Vanguard
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for all their target date funds, they
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define five age-based markers in a
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person's life or career. So at age 20,
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they assume that someone is is starting
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the early career phase of their life.
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And then at 40, the second phase starts.
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They call it midcareer. At age 60, they
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define that as the beginning of the
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transition to retirement. Age 65 is when
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retirement actually occurs. And then at
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age 72 is what they call the beginning
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of retirement withdrawals. And that's
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based on research that they've done.
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They said the average retiree begins
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withdrawing from their portfolio at age
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72. Going back starting at age 20,
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Vanguard has its investors in a 90%
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stock 10% bond asset mix. The stocks
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themselves are a 60/40 mix of US to
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international and the bond portion is
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70% US to 30% international. And that
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9010 overall allocation remains until
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age 40. And that's when for Vanguard,
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the glide path begins. So over the
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following 20 years between ages 40 and
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age 60, the allocation shifts from 90%
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stocks down to 60% stocks and from 10%
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bonds up to 40% bonds. That glide path
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continues onto age 65, by which time the
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overall allocation is 50/50. But in the
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five years between 60 and 65, the
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Vanguard funds, they add in uh
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short-term TIPS. TIPS being, you know,
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treasury inflation protected securities.
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It's a type of bond that's protected
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against inflation or has a hedge against
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inflation. And about 10% of the
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portfolio ends up in TIPS by age 65. So
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40% being other types of bonds, 10%
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TIPS, and 50% in stocks by age 65. And
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then the glide path continues another 7
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years to age 72 which as I said before
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that's when Vanguard's research states
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is the average age when portfolio
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withdrawals actually begin. And at that
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point the Vanguard target date fund it
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reaches its final allocation 30% stocks
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and 70% bonds. 16 of that 70% is in the
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tips bonds and that allocation is
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maintained going forward for ostensibly
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the rest of the investor's life. So that
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right there is how a glide path works.
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Now, let me pivot really quickly, talk a
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little bit about history. Back in the
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early 2000s, we have to understand that
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the default investment in many American
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retirement plans was cash or very, very
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short-term treasuries. After all, cash
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and treasuries are both very quote
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unquote safe, low-risk investments. So
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rather than automatically investing
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someone's money into something slightly
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more aggressive or something that had
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more long-term growth, the 401k plans
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back in the early 2000s and before would
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play it safe with an ultra low-risk
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asset. So you would have people who who
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were saving in their 401ks for years, if
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not decades, and maybe they assumed
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their money was being invested in some
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way, but unless they went in and
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actually maybe opted into a true
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investment, that money might just be
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sitting there in cash again for years or
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decades. And that's not a very good
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outcome. In fact, it's an outright bad
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outcome. But Congress changed things. In
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2006, they passed a law called the
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Pension Protection Act. Took me about
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five takes to get through that word,
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which basically mandated that every
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single retirement plan out there had
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these things called qualified default
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investment alternatives. QDIA, qualified
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default investment alternative. And as
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the name might imply, the point was that
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you can't just put all the people in the
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401k plan in cash as a default. You have
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to have some sort of actual investment
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alternative that can act as a default.
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And target date funds were one of the
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very limited options that qualified as
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one of these QDIA qualified default
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investment alternatives. And you know,
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their appeal was their ease. Investors
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could hold one diversified fund possibly
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for decades and decades of time while
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the asset allocation automatically
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adjusted as retirement approached. And
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this idea, at least on its face, makes
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sense. It aims to provide a hands-off, a
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diversified, a long-term investment
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strategy. All good things and all
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related to an investor's expected
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retirement timeline. Now, Morning Star,
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wellrespected institution, estimates
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that almost $5 trillion today sits
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inside of target date funds. If you had
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a h 100red million people, right? Think
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about that. If you had a 100 million
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people who each had $50,000 inside of a
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target date fund, that would get you to
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$5 trillion. I only put it in those
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terms because 100 million people is
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about twothirds of the American
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workforce or about 40% of the entire
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population of American adults and
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$50,000 while not enough to retire on is
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a pretty good chunk of change. And I
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would wager that any of you listening,
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for example, that you would care and you
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would certainly keep track of a $50,000
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line item on your balance sheet. So the
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magnitude of what we're talking about
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here today is as if half the adults you
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know have $50,000 on the line. It's kind
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of a big deal. And then approximately
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twothirds of all new dollars going into
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workplace retirement plans are going
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into target date funds. So again, it's
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as if more than half of all the working
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people, you know, are putting their
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retirement dollars into these types of
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funds. It's a big deal. And I can say
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for myself that currently my 401k is
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through Empower, which is a really big
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kind of 401k institution. Now, I'm not
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using a target date fund in my current
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401k. I built a simple three index fund
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portfolio in that account. But at my
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previous 401k, I was using a target date
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fund. It happened to be a black rockck
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fund. And we'll come back to Black
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Rockck later today. And I know for a
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fact that the reason I got interested in
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personal finance and investing in the
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very first place is because my first
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ever postcol job, I was using a 2050
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target date funds through Fidelity and I
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was watching it grow. So target date
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funds are everywhere. But not all target
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date funds are equal. In fact, many of
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them are not only less than optimal,
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many of them are outright bad. And
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that's one of the big reasons why I'm
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here talking to you today. So, why do I
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say this? Now, what's this the simple
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summary takeaway for today's episode?
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It's that the average target date fund
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in today's American retirement plan
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underperforms by an average of 1% per
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year. Underperforms by an average of 1%
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per year. Don't worry, I'll explain
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this, but the takeaway is that 1% per
00:12:19
year underperformance. If someone starts
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using a target date fund at 22 and holds
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it until 82, after all, it is supposed
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to be a one-stop shop for life, that
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could be 60 years of underperformance.
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If you punch that into a calculator, if
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you punch in 1% underperformance for 60
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years, it would eliminate 44% of that
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investor's would be wealth. Instead of
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having $1 million, that investor only
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has $560,000.
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Now, that is obviously a tremendous
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claim. It needs to be explained. It
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needs to be backed up. But the the first
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and most obvious place to start, I
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think, is uh 1% underperformance. Well,
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compared to what, you know, what
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benchmark are we using to say that
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target date funds underperform
00:12:59
something? And this result comes
00:13:00
directly from professor David C. Brown's
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research. What professor Brown did was
00:13:04
he he looked across the target date fund
00:13:07
landscape at any one particular vintage.
00:13:09
So, a vintage almost like wine. Think of
00:13:11
the year. So, 2040 target date funds.
00:13:14
2040 being a particular vintage. He's
00:13:16
looking across every single 2040 target
00:13:18
date fund. He looks at Vanguard's 2040.
00:13:21
He looks at Fidelity's 2040 funds
00:13:23
because Fidelity actually has two
00:13:24
different 2040 funds. One is totally
00:13:26
passive with index funds, but one is
00:13:28
active. One uses active funds at
00:13:30
Fidelity. And he looks at Black Rockck's
00:13:33
2040 and State Streets 2040 and Troll
00:13:35
prices 2040, etc., etc., etc., every
00:13:37
single 2040 fund out there. And he takes
00:13:39
the average allocation of all of them.
00:13:41
How much in US stock? How much in
00:13:43
international stocks? how much in US
00:13:45
bonds, international bonds and other
00:13:46
stuff. That average allocation to stocks
00:13:49
and bonds and other stuffs that that's
00:13:51
the study's benchmark. But more
00:13:53
specifically, the study benchmark
00:13:55
portfolio uses only index funds. So
00:13:57
again, the 2040 benchmark against which
00:13:59
all of the individual 2040 target date
00:14:02
funds would be compared was simply the
00:14:04
average allocation of all those funds in
00:14:06
terms of stocks and bonds and anything
00:14:08
else but recreated as a totally passive
00:14:11
indexonly fund. Then Professor Brown
00:14:15
went through and compared each
00:14:16
individual 2040 fund against that
00:14:19
benchmark. And on average, the
00:14:21
individual 2040 funds underperformed
00:14:24
this benchmark by 1% per year. Now,
00:14:28
where does that underperformance come
00:14:30
from? Well, the first place is fees. On
00:14:33
average, 0.55% or 55 basis points,
00:14:37
right? Just over half a percent. 55
00:14:40
basis points of the underperformance is
00:14:42
due to fees alone because remember the
00:14:44
benchmark portfolio it's only index
00:14:46
funds so it's very very low cost
00:14:48
professor Brown used Vanguard index
00:14:50
funds specifically so his benchmark
00:14:53
portfolio had fees lower than 0.05%
00:14:57
120th of a percent five basis points and
00:14:59
what this is telling you in short is
00:15:01
that many target date funds have fees
00:15:03
that are half a percent 6.7% or even
00:15:06
higher some fund providers charge upward
00:15:08
of 1.2 2% upward of 1.5% per year.
00:15:12
That's just for the investments and
00:15:14
that's just not a good price in today's
00:15:16
investment landscape. And I'm not saying
00:15:18
that target date funds should be free.
00:15:20
I'm not saying that it should have the
00:15:21
same cost as an index fund. But these
00:15:24
products can be done so simply that the
00:15:26
fees ought to be very very low.
00:15:28
Vanguard's 2040 fund, for example, has
00:15:30
an all-in cost of 0.08%.
00:15:33
Eight basis points, 8 hundredths of a
00:15:36
percent. Fidelity's index 20 240 fund
00:15:39
is.12% or 12 basis points. Now that to
00:15:42
me is the cost I would expect to pay for
00:15:44
a target date fund. So fees are that the
00:15:47
biggest component of the
00:15:48
underperformance. But where else does
00:15:50
the underperformance come from? The next
00:15:52
biggest culprit is actively managed
00:15:54
funds inside of the target date funds.
00:15:57
So even before we look at fees, the
00:15:59
active funds that are inside of some
00:16:01
target date funds underperform their
00:16:04
comparable indexes by about 0.45% or 45
00:16:07
basis points per year. So let's go back
00:16:10
to the Vanguard 2040 fund to explain
00:16:12
this one. Vanguard's 2040 fund has four
00:16:15
sub funds inside of it. A US stock index
00:16:18
fund, an international stock index fund,
00:16:20
a US bond index fund, and an
00:16:23
international bond index fund. All four
00:16:25
of those are index funds. very very
00:16:27
cheap. But not all target date funds are
00:16:29
composed of only index funds. In fact,
00:16:32
many are not composed of any index
00:16:34
funds. I'm going to pick on Fidelity a
00:16:36
little bit here because I know they're
00:16:38
big enough to handle it. They do offer
00:16:39
an index target date fund like I
00:16:41
mentioned before, but they also offer
00:16:43
active target date funds. They're 2040
00:16:46
active target date fund. The ticker is
00:16:48
FF FFX. That's four Fs and then an X if
00:16:52
you're curious. It holds 15 US stock
00:16:55
funds. all of which are Fidelity funds
00:16:57
and all of which are active. It also
00:16:59
holds 10 international stock funds, all
00:17:01
Fidelity, all active. 15 different bond
00:17:04
funds and a smattering of individual
00:17:05
bonds, too. It's a lot. It's also all
00:17:09
relatively high cost because it's
00:17:10
actively managed and there are more
00:17:12
people at Fidelity working behind the
00:17:14
scenes to manage that account, manage
00:17:16
that fund, I should say. And that's
00:17:17
expensive. Fidelity is far from alone
00:17:20
here. And in Fidelity's defense, that
00:17:22
particular 2040 active target date fund
00:17:25
has performed right in line with
00:17:26
Fidelity's own index target date fund
00:17:28
over the past decade. But the fact is
00:17:30
that many other fund providers also
00:17:32
offer target date funds that hold their
00:17:34
own active funds, only playing with
00:17:37
their own active funds. And just what do
00:17:39
we know about active funds in general?
00:17:40
Well, we know that on average they
00:17:42
underperform their passive counterparts.
00:17:44
You know, it reminds me of the culinary
00:17:46
stories about how a cook can use a bunch
00:17:48
of old, possibly bad food and blend it
00:17:51
together into a soup. That's not the
00:17:52
soup that you want. But what we have
00:17:54
here are fund managers, many of whom
00:17:56
you've heard of, who blend together
00:17:58
their active funds into target date
00:18:00
soup. And they know that target date
00:18:02
soup is a approved investment type. It's
00:18:05
an approved food item inside of the 401k
00:18:08
and 403b plans. and they know that
00:18:10
twothirds of all new dollars going into
00:18:12
retirement funds order some form of
00:18:14
target date soup. To me, this is a very
00:18:17
bad problem. Those are the two biggest
00:18:20
culprits of underperformance here today.
00:18:22
Target date funds provide worse
00:18:23
performance simply due to their often
00:18:26
active management and they do so at much
00:18:28
higher fees than passive funds. Worst
00:18:30
performance plus higher fees equals 1%
00:18:33
per year underperformance. Here's a
00:18:36
quick ad and then we'll get back to the
00:18:37
show. Did you know my written blog, The
00:18:40
Best Interest, was nominated for 2022
00:18:43
Personal Finance Blog of the Year, and
00:18:45
it's been highlighted in the Wall Street
00:18:46
Journal, Yahoo Finance, and on CNBC. I
00:18:49
love writing, especially when that
00:18:51
writing is to share financial education.
00:18:53
And I usually write one or two articles
00:18:55
per week. You can read them all at
00:18:58
bestinterest.blog.
00:19:00
Again, the web address is
00:19:02
bestinterest.blog.
00:19:04
Check it out. Now, I said there were
00:19:06
going to be five negative components of
00:19:07
target date funds, and we've only
00:19:08
covered two. The third one, the next
00:19:10
one, is what they call tactical
00:19:11
allocation changes. So, let's use
00:19:13
Vanguard as our example. Back in the
00:19:15
mid2010s,
00:19:17
Vanguard's target date fund managers
00:19:19
decided on the whole that all of their
00:19:21
target date funds didn't have enough
00:19:23
stock exposure, and so every single one
00:19:25
of their target date funds shifted
00:19:27
higher in their stock allocation. That
00:19:29
was a a strategic long-term shift over
00:19:32
their entire target date portfolio. Now
00:19:35
any fund manager is welcome to do the
00:19:37
same kind of thing or they can say
00:19:39
something like you know what normally
00:19:40
we'd be 6040 US to international on our
00:19:43
stocks but we're going to shift to 7030
00:19:46
or we feel like interest rates are going
00:19:47
to drop so we're going to overweight our
00:19:49
fund into bonds. These are active
00:19:52
tactical decisions that the fund
00:19:53
managers make at some sort of high
00:19:55
allocation level and they are
00:19:57
essentially either changing the
00:19:58
predetermined glide path or they are
00:20:01
chasing returns or predicting returns in
00:20:03
some way. And these decisions on average
00:20:06
reduced the returns of target date funds
00:20:09
by about 10 basis points or onetenth of
00:20:11
a percent per year. That's the third big
00:20:13
issue with target date funds is that
00:20:15
sometimes you have managers who are
00:20:17
trying to be smart. I'm sure they're not
00:20:19
trying to they're not trying to hurt
00:20:21
investors obviously, but on the whole
00:20:23
when those fund managers do something
00:20:25
like that, they do end up hurting
00:20:27
investors. The fourth issue, I guess the
00:20:29
more I think about it, you can make an
00:20:30
argument that the fourth issue I'm about
00:20:31
to say is just a symptom of the first
00:20:33
three issues. But the fourth issue is
00:20:35
the amazingly wide dispersion between
00:20:38
different target date funds. In
00:20:39
professor Brown's study, he found that
00:20:41
the annual rate of return difference
00:20:42
between the best target date funds and
00:20:44
the worst target date funds of the same
00:20:46
vintage, meaning you know the same say
00:20:48
2040 target year, that the best versus
00:20:51
the worst funds had an annualized return
00:20:53
difference that was 3% per year. And the
00:20:56
most egregious quarterly dispersion, so
00:20:58
in a single quarter, was a full 23%.
00:21:01
Meaning during one particular quarter,
00:21:03
fund A might have returned positive 5%.
00:21:06
And fund B returned 18%. Now admittedly,
00:21:10
Professor Brown would admit this. This
00:21:12
is a cherrypicked statistic, but just
00:21:14
imagine two investors who believe they
00:21:16
are invested in basically the same
00:21:18
thing. After all, they both own a 2040
00:21:21
target date fund. One investor though
00:21:23
sees his portfolio go up by 5% in a
00:21:26
given quarter and another investor sees
00:21:28
hers go down by 18% in that same quarter
00:21:31
or another way of looking at it is that
00:21:32
over the next 20 or 30 years their
00:21:34
annualized returns end up differing by
00:21:37
3% per year. That's a massive
00:21:39
difference. Now what happens when one
00:21:41
investor gets say 5% a year for 30 years
00:21:44
and another investor gets 7% a year for
00:21:47
30 years with typical 401k annual
00:21:49
contributions. the difference in their
00:21:51
two returns is easily going to surpass
00:21:54
half a million dollars. I mean, that's
00:21:56
what we're talking about here is the
00:21:57
differences of half a million dollars
00:21:59
between two investors who think they are
00:22:01
invested in basically the same thing.
00:22:03
And the point is that for a fund type
00:22:05
that at least to me is marketed like a
00:22:07
commodity, it's anything but a
00:22:09
commodity. And now what do I mean by
00:22:10
that? I mean that all gasoline, as far
00:22:13
as most of us know, is basically the
00:22:15
same. It's a commodity. sugar and table
00:22:17
salt and white rice are basically always
00:22:20
the same across brands. Milk and eggs
00:22:22
and baby carrots are basically the same
00:22:24
across different brands. And that at
00:22:26
least to me is how target date funds are
00:22:28
at least marketed to us. But what this
00:22:31
study shows and what we're here to talk
00:22:32
about today is that that's not how it
00:22:34
works in reality. A much better analogy,
00:22:37
equally as ubiquitous as gasoline or
00:22:38
baby carrots, would be the common
00:22:40
hamburger. Yes, every hamburger involves
00:22:43
a beef patty between a bun, but every
00:22:45
restaurant from the fast food
00:22:46
juggernauts down to the local diners to
00:22:48
the Michelin star, you know, gourmet
00:22:50
restaurants, they all do hamburgers
00:22:52
their own different way. And to suggest
00:22:54
that all hamburgers are the same, while
00:22:56
yes, they share some common traits, they
00:22:58
are far from identical. And so that's
00:23:01
why my fourth major drawback here is the
00:23:03
dispersion in results. for something
00:23:04
that is marketed at least to the the lay
00:23:07
person as being largely uniform. The
00:23:10
results make us realize it's anything
00:23:12
but. And fifth is what I would describe
00:23:14
as the illusion of choice. So yes,
00:23:17
Vanguard and Black Rockck and Fidelity,
00:23:20
at least on the index side, and some
00:23:21
other providers do have some really good
00:23:24
best-in-class target date funds. But
00:23:26
does your 401k or 403b have those ones?
00:23:29
Maybe not. Most retirement plans only
00:23:31
have one single family or one single
00:23:34
fund provider of target date funds. And
00:23:36
as I mentioned earlier, my very first
00:23:37
401k plan only had Fidelity target date
00:23:40
funds. I don't exactly remember if it
00:23:42
was the active or the index kind. I
00:23:44
don't own it anymore. My previous
00:23:45
employer had only the Black Rockck
00:23:47
target date funds. And I look at
00:23:49
people's account statements all the
00:23:50
time. I've seen many of the target date
00:23:52
fund providers that make up the bad
00:23:54
results that we've covered here today.
00:23:56
So, even though, as we'll discuss in a
00:23:58
few minutes, there are some target date
00:24:00
funds that I believe are on the good
00:24:01
side of this conversation, there's a
00:24:03
stronger likelihood that any individual
00:24:05
person out there is going to have one of
00:24:06
the limited target date fund options in
00:24:08
their retirement plan that's on the bad
00:24:10
side. You know, those target date funds
00:24:11
aren't very good. Let me now slightly
00:24:14
pivot to something called the curse of
00:24:15
average. Some people see this curse as a
00:24:17
total failure of target date funds. I
00:24:19
see it as a a smaller issue than that,
00:24:21
but an issue nonetheless. So the curse
00:24:23
of average is an idea that designing any
00:24:25
product right whether it's an investing
00:24:27
product or something a consumer product
00:24:29
an educational product anything that
00:24:31
designing it for the average user is
00:24:33
just a flawed design strategy because an
00:24:36
average person who perfectly represents
00:24:38
the average in all dimension well they
00:24:41
rarely if ever exist. So when you design
00:24:43
for the average you create a product
00:24:45
that ends up being mediocre for
00:24:47
everybody rather than truly helpful for
00:24:49
any one person. In other words, how
00:24:51
could Vanguard or any other fund manager
00:24:54
design one fund that is supposed to be
00:24:56
quote unquote right for everybody
00:24:58
between ages 43 and 48? How could they
00:25:01
possibly take into account that person's
00:25:03
savings rate if they reach retirement
00:25:05
different from age 65 or if they begin
00:25:07
withdrawing different from age 72? How
00:25:10
can they take into account the outside
00:25:11
investment accounts or how those
00:25:13
accounts are invested? How can they take
00:25:15
into account this person's guaranteed
00:25:17
income in retirement like social
00:25:18
security or pensions? Their withdrawal
00:25:20
needs in retirement, their human capital
00:25:22
and their future earnings potential,
00:25:24
their need, ability and willingness to
00:25:26
take on risk. I mean, the list just goes
00:25:27
on and on. And I think one possible
00:25:29
viewpoint here is well then the product
00:25:32
that tries to answer these questions and
00:25:34
and tries to be this average product, it
00:25:36
should never ever exist in the first
00:25:38
place. It's got a million holes in it
00:25:39
and the curse of average is so glaring
00:25:42
that nobody should ever put money into a
00:25:44
target date fund. I understand where
00:25:46
that argument comes from. I'm not quite
00:25:47
so severe on it. Instead, my take on it
00:25:49
is something I'm going to steal from the
00:25:51
words of John Bogle himself. He said,
00:25:53
"Target date funds are not a panacea,
00:25:56
which if you're like me and found the
00:25:57
SAT reading section a little hard, a
00:25:59
panacea is a solution or remedy for all
00:26:02
difficulties or diseases." And Bogle is
00:26:04
saying that a target date fund is not a
00:26:06
panacea. In other words, it's got flaws.
00:26:08
It's not perfect, but in the right
00:26:10
situations, it is different than saying
00:26:13
it's, you know, outright terrible. It's
00:26:15
never going to be perfect, but it also
00:26:16
doesn't have to be terrible. Imagine
00:26:18
this as an example. Uh, we've got a
00:26:20
45-year-old person who's just discovered
00:26:22
this world of personal finance and
00:26:23
investing for the very first time. This
00:26:25
person is literally at square one.
00:26:27
They're eager and ready to learn.
00:26:29
They've got some money saved in various
00:26:30
accounts, and well, it is invested
00:26:33
really poorly, even if they don't know
00:26:34
it yet. There's no cohesive investment
00:26:37
strategy or financial plan that kind of
00:26:39
defines what they're doing with their
00:26:40
money. They just have, you know, 50
00:26:42
different ticker symbols of just random
00:26:44
funds. And if that person decides on day
00:26:46
one of this their new financial planning
00:26:49
beginnings and if they decide to invest
00:26:51
in a reasonable target date fund based
00:26:53
on their future retirement date, I think
00:26:55
that's a step in the right direction.
00:26:57
It's way better than what they've been
00:26:58
doing before. Is it their set and forget
00:27:00
solution for the next 30 years? No way.
00:27:03
But is it good enough for the next year
00:27:04
or two while they read some books and
00:27:06
some blogs and catch up on some I don't
00:27:08
know maybe they catch up on some
00:27:09
podcasts? Yes. I believe that a a good
00:27:11
target date fund is the perfect kind of
00:27:13
holding pattern while that person tries
00:27:15
to figure things out. That's the curse
00:27:17
of average and and that's the reason why
00:27:19
target date funds are likely never going
00:27:21
to be perfectly designed for you in
00:27:23
particular. But I don't think we need to
00:27:24
throw out the baby with the bath water.
00:27:26
That's just my two cents. Pivoting now
00:27:28
to an important question. What should
00:27:30
you do instead of investing in a cruddy
00:27:32
target date fund? Assuming that's what
00:27:34
you've been doing in your retirement
00:27:35
account. So, going back to the Vanguard
00:27:37
funds we discussed before, there were
00:27:39
five unique investment classes inside of
00:27:41
Vanguard's funds, right? US stocks,
00:27:43
international stocks, US bonds,
00:27:45
international bonds, and then those
00:27:46
tips, inflation protected bonds. And you
00:27:49
might be tempted to recreate or build
00:27:51
your own target date fund using
00:27:53
individual index funds in your 401k.
00:27:56
five individual index funds representing
00:27:58
those five asset classes. Well, I think
00:28:00
that's a little bit overkill actually,
00:28:02
and I'm also just willing to bet that
00:28:03
most of you will not have access to all
00:28:06
five of those asset classes in your 401k
00:28:08
or 403b. But most retirement plans today
00:28:11
do offer some index funds. There have
00:28:14
been enough lawsuits over retirement
00:28:16
plan fees such that low fee index funds
00:28:18
are now usually part of the investment
00:28:21
menu. So, at a bare minimum, if you're
00:28:23
going to try to recreate your own target
00:28:24
date fund, it's really helpful if you
00:28:26
have access to just the following two
00:28:28
funds. A total US stock market index
00:28:31
fund and a total US bond market index
00:28:34
fund. Now, coming in as a really nice
00:28:36
third place would be a total
00:28:38
international stock market index fund.
00:28:40
Or combining number one and number three
00:28:42
would be a total world stock market
00:28:44
index fund including every country
00:28:46
including the USA. Now, if you don't
00:28:48
have a total US index nor a total world
00:28:51
index, but you do have an S&P 500 or
00:28:54
other large cap US index fund, that's a
00:28:57
a fine substitute. The S&P 500 captures
00:28:59
something like 3/4 of the US market and
00:29:02
about half of the global market. So, if
00:29:04
that's all you have access to, well,
00:29:05
that'll do. There are good arguments
00:29:08
both for and against investing in
00:29:10
international bonds. And then this is
00:29:12
speaking as a as an American retiree, as
00:29:14
an American investor. Now, I don't see a
00:29:16
particularly large need to do so. Uh,
00:29:19
and there are many good arguments for
00:29:20
and against investing in inflation
00:29:22
protected bonds tips. I don't think you
00:29:24
really need them in my opinion. But if
00:29:26
you have access to the world of stocks
00:29:27
via a passive index fund and at least to
00:29:30
US bonds via a passive index fund, and
00:29:32
that access comes at really, really low
00:29:34
fees, which it ought to because these
00:29:35
are index funds, then you're golden. you
00:29:37
can now create this specific asset
00:29:39
allocation specific to you to your
00:29:41
financial plan. And that allocation will
00:29:43
hopefully mirror some of what you're
00:29:45
doing or at least take into account some
00:29:47
of what you're already doing in your
00:29:48
other accounts that you own. Now, why am
00:29:51
I keeping it so simple? Well, I'm doing
00:29:53
this a little out of order, but I'm
00:29:54
going to quickly read from a recent
00:29:55
article I wrote because if you
00:29:57
understand bread, yes, the food bread,
00:29:59
you can better understand investing and
00:30:01
specifically this target date fund or
00:30:03
simple investing strategy that we're
00:30:05
talking about today. Because at its most
00:30:06
basic level, bread contains four core
00:30:09
ingredients. And each one serves this
00:30:11
specific role in the chemistry and the
00:30:13
structure of the loaf of bread. Flour
00:30:15
provides structure. There are these
00:30:17
proteins in flour that combine with
00:30:18
water to form gluten. And gluten is the
00:30:21
stretchy network that traps gas bubbles
00:30:23
and allows bread to rise. Water is the
00:30:25
second ingredient. Water hydrates the
00:30:27
flour, activates gluten formation. Yeast
00:30:29
is next. Yeast leavvens the bread, makes
00:30:32
it rise. And then salt. Salt is the
00:30:34
fourth ingredient, controlling the
00:30:35
fermentation of the yeast, improving the
00:30:37
flavor of the bread. Without salt, bread
00:30:39
is usually flat. The dough can become
00:30:41
sticky and weak. And those are the core
00:30:42
four: flour, water, yeast, and salt. And
00:30:45
granted, many people do add more
00:30:46
ingredients. Maybe some sugar or honey
00:30:48
for flavor to feed the yeast. Some fat
00:30:50
like butter, oil, or dairy for
00:30:52
tenderness and richness. Eggs can also
00:30:54
add richness and some structure. Whole
00:30:56
grains or seeds can add some flavor and
00:30:58
nutrition. The point is that bread is
00:31:00
not complex. Each ingredient though has
00:31:02
an important role to play. And what's
00:31:04
the point? Why am I talking to you about
00:31:05
bread? Well, one, it's simple. There
00:31:07
aren't dozens of ingredients. Two, every
00:31:09
ingredient has a specific job, a
00:31:11
specific domain, a reason why it's there
00:31:12
in the in the recipe. And largely, those
00:31:15
jobs don't overlap with one another. And
00:31:18
then three, in varying proportions
00:31:20
though, those very few unique
00:31:22
ingredients can create many, many
00:31:24
different outcomes in bread. Right? You
00:31:26
can reduce the flour and add water, add
00:31:29
seeds, reduce this. You can just play
00:31:30
around with the core four ingredients or
00:31:33
you can play around with the core four
00:31:34
plus a couple more ingredients in
00:31:35
different proportions and create many
00:31:37
different types of bread. I was thinking
00:31:39
about this because I was looking at a
00:31:40
prospective client's portfolio and it
00:31:42
was constructed using a 10 to 20%
00:31:44
allocation of each of the following
00:31:46
eight Vanguard funds. So VTI total which
00:31:49
is a total US stock market. VO which is
00:31:51
a S&P 500 fund. VV which is a large cap
00:31:54
fund. VUG which is a growth stock fund.
00:31:58
MGK which is a mega cap growth fund. VGT
00:32:02
information sector fund. QQQM which is a
00:32:05
NASDAQ 100 fund. And then VO which is a
00:32:07
midcap ETF. And some of you might think
00:32:10
well those are all different
00:32:11
descriptions right? Growth versus
00:32:12
information versus meggaap S&P 500
00:32:15
versus NASDAQ. They're different. It
00:32:17
seems like each fund is probably
00:32:18
providing some different diversification
00:32:20
to this person, but that's not the case.
00:32:22
This is a portfolio of various rappers,
00:32:25
but all of those rappers are basically
00:32:26
holding the same stocks. If instead I
00:32:28
put this portfolio in bread terms, it's
00:32:30
as if their recipe called for two cups
00:32:32
of bread flour, one cup of all-purpose
00:32:35
flour, 1 cup of high gluten flour, half
00:32:37
a cup of pizza flour, 1/4 cup of premium
00:32:39
organic white flour, no water, no yeast,
00:32:42
no salt, no sweetener, just flour. And
00:32:44
that's not good bread. And what I just
00:32:46
read to you wasn't a good portfolio. I
00:32:48
would much rather advocate for a
00:32:50
portfolio where every quote unquote
00:32:51
ingredient has a clear job and just one
00:32:53
job. We don't need a hundred
00:32:55
ingredients. We don't need too many
00:32:57
ingredients doing the same thing. Any
00:32:59
portfolio, but especially a retirement
00:33:01
portfolio, I think needs four vital
00:33:03
distinct ingredients. The first one is
00:33:06
appropriate risk level. Your stocks
00:33:08
versus bonds versus other assets mix
00:33:10
matters far more than which specific
00:33:12
funds you pick. This asset allocation
00:33:15
decision should be related to how much
00:33:16
money you need from the portfolio and
00:33:18
when you need it. It needs to be part of
00:33:19
the financial plan. It needs to be
00:33:21
related to the financial plan. So that's
00:33:23
the first ingredient is appropriate risk
00:33:24
level. The second ingredient is broad
00:33:26
diversification. You want to avoid
00:33:28
concentrated bets. You want to avoid
00:33:30
stockpicking. You want to avoid
00:33:32
redundant funds that own the same
00:33:33
companies. A retirement portfolio should
00:33:35
resemble the entire market. And you can.
00:33:38
You don't have to. And maybe it's not
00:33:40
always a smart thing to do, but you can
00:33:41
accomplish this with one single fund.
00:33:43
Often though, a few funds leads to
00:33:45
better results. Perhaps akin to baking
00:33:47
bread from just one pre-made box recipe
00:33:50
versus combining the ingredients
00:33:51
yourself. So that's the second one is
00:33:53
broad diversification. The third
00:33:55
ingredient, low costs. I don't think
00:33:56
there's really much of an explanation
00:33:58
needed there. And then the fourth
00:33:59
ingredient is behavior you can stick
00:34:01
with. Your portfolio should be simple
00:34:03
enough that you can understand it,
00:34:04
tolerate it during crashes, stick with
00:34:06
it for decades. Now, if you need some
00:34:08
flavor in your portfolio to make it more
00:34:10
tolerable behaviorally, so be it. Some
00:34:13
people, they need cinnamon and raisins
00:34:14
in their bread. And some investors feel
00:34:16
like they need an allocation to gold.
00:34:18
They need to own some Costco stock. They
00:34:21
need to have exposure specifically to
00:34:22
the aerospace sector. Okay, I can live
00:34:25
with it as long as that makes you not
00:34:26
jump off the ride as long as it's, you
00:34:28
know, in relatively small proportions.
00:34:30
Again, think about bread. It's one thing
00:34:32
to say half a cup of raisins in an
00:34:35
entire loaf. It's a different thing to
00:34:36
say three cups of raisins per loaf. You
00:34:39
know, as long as it's done uh tastefully
00:34:41
in small amounts, I I understand why
00:34:43
people sometimes need to add some
00:34:45
flavors to their portfolio to ensure
00:34:47
that it's a portfolio that they can
00:34:48
stick with for the long run. So again,
00:34:50
the takeaway from this bread idea is to
00:34:52
know your ingredients and know why
00:34:53
you're using them. And most investors, I
00:34:56
think, will make it more complex than it
00:34:58
really needs to be. Here's a quick ad
00:35:00
and then we'll get back to the show.
00:35:03
Serious question. Why do podcasters
00:35:05
constantly ask for ratings and reviews?
00:35:07
Yes, they do help highlight our shows to
00:35:10
new listeners. They help strangers find
00:35:11
us on Apple Podcast and Spotify. It's
00:35:14
totally true and a good reason to ask
00:35:16
for ratings and reviews. But I have
00:35:18
something more important, at least more
00:35:20
important to me. I want to know if you
00:35:22
like this stuff. I want to know if you
00:35:24
like my podcast episodes, my monologues,
00:35:26
my guests, the information I share with
00:35:28
you and the stories I tell. I want to
00:35:30
improve and make your listening more
00:35:32
enjoyable in the process. So yeah, I
00:35:34
would love to read your reviews. And
00:35:36
sure, if you throw a rating in there,
00:35:37
too, that's great. If you like what I'm
00:35:40
doing, please share it with me. It's
00:35:42
such a great feeling to read your
00:35:43
feedback. I'd love to read your review
00:35:46
or see a rating on Apple Podcast or
00:35:48
Spotify. Thank you. Back to our
00:35:51
regularly scheduled program about target
00:35:52
date funds. Of those four key
00:35:54
ingredients, which again were
00:35:55
appropriate risk level, broad
00:35:57
diversification, low cost, and behavior
00:35:59
you can stick with. I think we figured
00:36:00
out today that many target date funds
00:36:02
are too broad and too average to
00:36:04
pinpoint the appropriate risk level for
00:36:07
you specifically. So good on average
00:36:09
maybe, but not good specifically when it
00:36:11
comes to risk level. And in some cases,
00:36:13
the costs of the target date fund are
00:36:15
far from being low. As far as risk level
00:36:17
and low costs, different target date
00:36:19
funds simply don't meet muster there.
00:36:22
But I think that many target date funds
00:36:24
do provide broad diversification and
00:36:26
actually they are fantastic
00:36:28
behaviorally. One of the double-edged
00:36:29
swords of convincing people that target
00:36:31
date funds are a one-stop shop is that
00:36:33
target date funds have some of the
00:36:34
lowest amount of investor turnover of
00:36:37
any funds in existence. In other words,
00:36:39
people really do buy and hold and hold
00:36:41
and hold their target date funds. Now, I
00:36:44
think you can and should aim to create
00:36:46
your own portfolio such that it does hit
00:36:49
a risk level appropriate for your
00:36:50
financial plan and that the costs are
00:36:52
really low. If that happens to be
00:36:54
through a target date fund, okay, and
00:36:56
and we'll talk about that in a few
00:36:57
minutes, but oftentimes it isn't. So,
00:36:59
before I dive into a couple target date
00:37:01
funds that I think meet muster, let me
00:37:03
first explain to you my criteria for
00:37:05
evaluating these target date funds.
00:37:07
Again, first was fees. Lower is
00:37:09
certainly better. Uh, and as those fees
00:37:11
start to slide up from say a tenth of a
00:37:13
percent to 0.15% to 2% or higher, I'm
00:37:17
just asking the question why, you know,
00:37:19
why am I paying for a target date fund
00:37:21
that has a fee of half a percent per
00:37:23
year when Vanguard or Fidelity or
00:37:25
BlackRock are selling me an index
00:37:27
passive based target date fund that's a
00:37:29
tenth of a percent. That's, you know,
00:37:30
that's the cost of half a percent. So
00:37:33
fees are very important. Uh, my second
00:37:35
criteria was passive management. This
00:37:37
goes handin-hand with fees. But as we
00:37:38
spoke about earlier, two major causes of
00:37:40
this target date fund underperformance
00:37:42
are both the fees themselves, which will
00:37:44
always have a drag on performance, but
00:37:46
also the choice to go active, which even
00:37:48
before fees are counted, the active
00:37:50
management led to an average of uh 45
00:37:53
basis points of underperformance. So
00:37:55
passive matters a lot, at least to me.
00:37:58
Third, I consider any sort of an exotic
00:38:00
investment inside of a target date fund
00:38:02
to be more negative than positive. If a
00:38:04
target date fund, for example, has real
00:38:06
estate exposure or commodities exposure
00:38:08
or anything like that, I do think we're
00:38:10
over complicating it. And now, what I
00:38:13
didn't do at all was grade the glide
00:38:14
path itself. And the reason why is
00:38:16
because if we're trying to grade the
00:38:18
curse of average glide path over a
00:38:20
60-year investing timeline, I'm really
00:38:22
not even sure how to begin. I think
00:38:23
everyone would probably fail if we're
00:38:25
doing that. Even though we I didn't
00:38:27
grade these funds on the glide path, I
00:38:29
will comment on it in a few minutes.
00:38:31
Now, a few different uh research papers
00:38:33
site between 50 and 60 unique fund
00:38:36
families out there in the American
00:38:38
retirement landscape. Again, Vanguard is
00:38:40
one family. Fidelity has two different
00:38:42
families, passive and active. Black
00:38:44
Rockck has one family. So, there are 60
00:38:46
different families of target date funds
00:38:48
out there. I did not look at all 60, but
00:38:50
I did look at the top five because the
00:38:52
top five families of target date funds
00:38:55
own over 80% of the target date fund
00:38:58
market. They are in order. Vanguard at
00:39:01
37%, Fidelity at 14%, Troll Price at
00:39:05
11%, Black Rockck at 10%, and American
00:39:08
Funds Capital Group at 8%. In short,
00:39:12
Vanguard is best. Great on fees, fully
00:39:14
passive on the exotic investments axis.
00:39:17
I know some investors might stick up
00:39:18
their nose at International Bonds and
00:39:20
TIPS, which are both in Vanguard's
00:39:22
target date funds. Fair enough. But I've
00:39:23
seen far worse since like there is a
00:39:25
spectrum to investing here and having
00:39:27
international bonds and tips isn't that
00:39:30
bad on that spectrum. But anyway,
00:39:32
Vanguard is best. Next for me is Black
00:39:34
Rockck and their life path series of
00:39:36
target date funds. Again, great on fees,
00:39:38
fully passive. They too have a small
00:39:40
exposure to tips. They also have an
00:39:42
exposure to real estate investment
00:39:44
trusts or REITs. One interesting note is
00:39:46
that Black Rockck's life path series
00:39:48
starts at almost 100% stocks for
00:39:50
investors in their early 20s and then
00:39:52
decays down to only 20% stocks by the
00:39:55
time an investor is 85 years old. So
00:39:57
that's just an interesting glide path
00:39:59
there. Uh next in line for me is
00:40:01
Fidelity. A little jackal, a little hide
00:40:04
because their Freedom Index series, the
00:40:06
passive series, Freedom Index, it's a
00:40:09
great family of funds, but their
00:40:10
actively managed freedom series is well
00:40:13
actively managed. I also think it's a
00:40:15
little uh challenging that one one is
00:40:18
called freedom index and the other one
00:40:19
is just called freedom can be a little
00:40:21
confusing. The passive family has fees
00:40:23
of 12 basis points. Excellent. While the
00:40:25
active series costs between 50 and 75
00:40:28
basis points. The passive series is
00:40:30
everything that we want investing wise.
00:40:32
The active series has some serious
00:40:34
flavor to it and I believe it's just not
00:40:37
needed. And that brings us to a tie for
00:40:39
last between Troll Price and American
00:40:42
Funds Capital Group. Can you guess why?
00:40:44
Well, it's because they're all high fee
00:40:46
and all actively managed funds. The fees
00:40:48
are in that 50 to 60 basis point range.
00:40:51
And the portfolios have lots of
00:40:52
expensive exposures to these small
00:40:54
corners of the market with the target
00:40:56
date fund portfolio managers having
00:40:58
discretion over when to jump in and out
00:41:00
of funds, when to overweight or
00:41:02
underweight different parts of the
00:41:03
portfolio, etc., etc. All that behavior
00:41:06
that decade after decade becomes more
00:41:08
and more clear to us that it sounds good
00:41:10
in theory. You know, it sounds good to
00:41:12
have someone smart who is making lots of
00:41:14
changes that they think will be helpful
00:41:16
to us, but that research shows decade
00:41:19
after decade on average is detrimental
00:41:21
to the end investor in practice. The
00:41:24
more active management, the worse the
00:41:26
fund is likely to perform. Troll price
00:41:28
and American Fund Capital Group are two
00:41:30
easy and apparently quite popular
00:41:32
examples of target date funds where I
00:41:34
would highly recommend looking for a
00:41:36
better alternative. And again, when it
00:41:38
comes to, you know, Vanguard, Black
00:41:40
Rockck, and Fidelity's passive funds, I
00:41:42
still don't think you should lean on
00:41:44
these funds as your forever solution to
00:41:46
investing. I don't think that makes
00:41:47
sense for anybody. And the reason again
00:41:49
is the the curse of average, it's the
00:41:51
glide path problem. The idea that these
00:41:54
target date fund providers have gotten
00:41:56
your particular risk exposure correct
00:41:59
for a 60-year period or even a 10-year
00:42:02
period, probably not. So instead, if you
00:42:05
need a place to park your money while
00:42:06
you figure everything out, if you just
00:42:08
if you don't have any other really good
00:42:10
options inside your 401k except for a
00:42:12
Vanguard target date fund, then fine, by
00:42:14
all means, that's where these passively
00:42:17
managed lowcost target date funds can
00:42:20
make sense. They're never going to be
00:42:21
perfect, but they certainly can be good
00:42:23
enough. So today, we discussed what
00:42:25
target date funds are and how they work.
00:42:27
I hope you realize how significant they
00:42:29
are in the American retirement landscape
00:42:31
with many people in your life likely
00:42:32
having big sums of money in these target
00:42:35
date funds. We talked about glide paths
00:42:37
and how the one-sizefits-all might lead
00:42:38
to more problems than solutions. Mainly
00:42:41
though, we focused on the average
00:42:42
underperformance of target date funds,
00:42:44
which tend to underperform by more than
00:42:45
1% per year when compared to a very
00:42:48
similar portfolio of pure index funds.
00:42:50
We talked a little about bread, about
00:42:52
how a few simple independent ingredients
00:42:54
in the right proportions can lead to
00:42:55
many different recipes, successful
00:42:57
recipes, and quote unquote correct
00:42:58
recipes. And last, we talked about how
00:43:00
if you're unsure whether your retirement
00:43:02
plan has a good or a bad target date
00:43:04
fund, how you can make some judgments
00:43:06
for yourself. I really hope this episode
00:43:08
was helpful, maybe even eye opening. It
00:43:10
certainly was eye opening for me. So,
00:43:12
thank you for listening. Let me know
00:43:13
what you thought of this episode. Thank
00:43:15
you for subscribing, for writing in with
00:43:16
your questions and comments. Thank you
00:43:18
for listening to Personal Finance for
00:43:19
Long-Term Investors.
00:43:20
>> Thanks for tuning in to this episode of
00:43:22
Personal Finance for Long-Term
00:43:24
Investors. If you have a question for
00:43:26
Jesse to answer on a future episode,
00:43:28
send him an email over at his blog, The
00:43:31
Bestinterest. His email address is
00:43:33
00:43:35
Again, that's jessevestinterest.blog.
00:43:39
Did you enjoy the show? Subscribe, rate,
00:43:41
and review the podcast wherever you
00:43:43
listen. This helps others find the show
00:43:45
and invest in knowledge themselves, and
00:43:48
we really appreciate it. We'll catch you
00:43:50
on the next episode of Personal Finance
00:43:52
for Long-Term Investors. Personal
00:43:54
Finance for Long-Term Investors is a
00:43:56
personal podcast meant for education and
00:43:59
entertainment. It should not be taken as
00:44:01
financial advice and it's not
00:44:02
prescriptive of your financial
00:44:04
situation.
