Bill Bernstein- 1% of investors

[jacoavlu]

LOL, only 1% of people have the ability...

I don’t think “99% don’t have the ability” is Bernstein’s assertion

[Tangler]

LOL, only 1% of people have the ability to manage their own retirement or investments. This is anathema to what the white coat investor community should be promulgating and this perpetuates the myth that investing and personal finance is too complex for the average individual or physician to handle. BS.

Piggy 🐷 I love you, and generally agree with your wisdom, but you are wrong here.

People suck with money.

Bernstein is right.

1% can do it.

I am surprised you are giving the human race too much credit (a little unlike the pig i remembered from old posts).

But yes, you are dead wrong here.

Not because it is complicated, but because we are irrational emotional overconfident pattern-seeking primates.

Evidence/logic:

1. All little piggies know that to have $ you must spend less and save more.

2. Few little piggies have any savings

What does this mean?

Answer: We suck with money.

[VentAlarm]

If you do not have at least 5% of your portfolio in asteroid mining you are making a big mistake. You are not diversified at all and limiting yourself to the resources of earth. There is a big universe out there and you are going to miss the boat.

Close, but no cigar. Asteroid futures with covered call on earth. Also, I’m bullish on Pluto coming back as a planet - the markets can’t stay irrational forever.

[jfoxcpacfp]

Pulling numbers out of my butt, I'd say 50% of physicians are willing to live below their means and save extra for early retirement or least the option of it. Out of that 50%, all are capable of learning to do a simple 3 fund portfolio. Half or more of those will probably get their asset allocation wrong and jump in and out of the market according to what the experts/news media/friends say.

The ones not interested in learning about finances or the ones that can't learn to sit on their hands are the ones that would benefit from someone managing their money.

As for those that chose to dabble in alternative investments, there are people out there that can beat the market on a consistent basis. Physicians are people and can do the same. The odds aren't in any particular person's favor, but it's possible. It's important for physicians just learning that with a high paying job, index investing does work and is already a ticket to success. For those that think they are in the minority that can beat the market, it's worth learning about as long as they know the odds aren't in their favor. For taking that risk, they get the potential reward of speeding up retirement plans or a much higher net worth faster than what indexing could do.

Apologies for not believing this, but I just cannot believe that “50% of physicians are willing to live below their means and save extra for early retirement”. With sincere respect, not in my limited experience.

As for “there are people out there that can beat the market on a consistent basis” - where do we find these people? Are you referring to WB or just random investors who share experiences in the doctors’ lounge, or some other group? Is this documented? Would like to learn more about your opinion. Thank you!

[Lordosis]

I can get behind 50% saving something for retirement but I would guess those saving enough is only 10-20%.

[Nysoz]

Apologies for not believing this, but I just cannot believe that “50% of physicians are willing to live below their means and save extra for early retirement”. With sincere respect, not in my limited experience.

As for “there are people out there that can beat the market on a consistent basis” - where do we find these people? Are you referring to WB or just random investors who share experiences in the doctors’ lounge, or some other group? Is this documented? Would like to learn more about your opinion. Thank you!

https://medium.com/swlh/can-you-really-beat-the-market-by-buying-your-own-stocks-935e3010b38e

https://bankeronfire.com/the-people-who-beat-the-stock-market

then there are people like myself and others that get lucky with an investment that 5x their portfolio in a year or 2. Even with underperforming for the next decade, I’ll have better annualized returns than the index. Or someone that invests in the majority index funds and invests in Amazon/Apple as their sole stock pick. One of the old crnas I worked with used technical indicators and leveraged funds over 20 years to beat the market. So yes I think it’s possible to beat the index. Now for the same risk is a different story. I also know for every story like mine there’s the opposite that’s true as well.

as for doctors not saving for fire, I’ll admit I pulled the percent out of my butt, but the stereotype of the rich doctor in the rich doctor house driving the fancy car that owns boats/planes and has a taste for expensive alcohol and food is a stereotype for a reason. American doctors are still American and have spending problems. The ones that are still working at 70 because they have 4 ex wives and 7 kids. They usually max out their 401k but have no idea what a bd Roth is. They’re afraid of/don’t trust the stock market to open a taxable account so they have a bunch of land and horses. They buy “rare” diamonds because it’s a good investment. They start side business selling guns and duck calls. They have million dollar houses (not in California) and are still hoping for pslf. These are just the examples from my circle of friends and Facebook.

[CordMcNally]

Close, but no cigar. Asteroid futures with covered call on earth. Also, I’m bullish on Pluto coming back as a planet - the markets can’t stay irrational forever.

The whole Pluto story is like a reverse Enron.

[Kennyt7]

As a 26 year old nothing wrong with 100% stock. Nowadays an advisor fee is much less than in previous yrs where you paid 1%AUM plus higher expense ratios and more costly investing when there were not index funds. No reason that any professional cannot manage their own investments. Look at BOGLEHEADS or here to see some portfolio reviews with complex portfolios from advisors. No need to pay more than a few grand yearly max if using an advisor

[Kennyt7]

I would recommend Ric Ferri for a portfolio review if you want to verify you are on track; a highly knowledgeable advisor

[afan]

I'm sorry, but managing your investments is simple. A quick check suggests that anyone who passed 4th grade math has all the tools required to implement an asset allocation. Or skip that step and go with a target date fund.

You want to compare after tax returns of taxable bonds to munis? 4th grade math.
Want to use turbotax to do your returns? Does not even require addition and subtraction.

It is not that people can't. They just don't want to. So they hire someone to do it for them and convince themselves that whatever their adviser says must be right. Bizarre, but I have colleagues who behave this way. We cannot even discuss finances because they do whatever their guy says, without any understanding what is happening.

How much do their guys (the advisers are all men) cost them? THEY DON'T KNOW!!??!!!

These folks are simple employees with W2 income. No private business that they own as part of their work. If they have complex taxes, it is because their advisers created the situation.

They clearly COULD manage their investments themselves. They just have decided not to.

Since all docs did well enough in high school math to pass their college science courses I assume ALL of them could put their money in a target date fund. All could choose taxable vs munis, shop for a mortgage and do any rational tax return. This stuff is not complicated.

[Lordosis]

I'm sorry, but managing your investments is simple. A quick check suggests that anyone who passed 4th grade math has all the tools required to implement an asset allocation. Or skip that step and go with a target date fund.

You want to compare after tax returns of taxable bonds to munis? 4th grade math.
Want to use turbotax to do your returns? Does not even require addition and subtraction.

It is not that people can't. They just don't want to. So they hire someone to do it for them and convince themselves that whatever their adviser says must be right. Bizarre, but I have colleagues who behave this way. We cannot even discuss finances because they do whatever their guy says, without any understanding what is happening.

How much do their guys (the advisers are all men) cost them? THEY DON'T KNOW!!??!!!

These folks are simple employees with W2 income. No private business that they own as part of their work. If they have complex taxes, it is because their advisers created the situation.

They clearly COULD manage their investments themselves. They just have decided not to.

Since all docs did well enough in high school math to pass their college science courses I assume ALL of them could put their money in a target date fund. All could choose taxable vs munis, shop for a mortgage and do any rational tax return. This stuff is not complicated.

I agree but you don't know what you don't know. Average Joe might not know what he should be looking for and miss some things. Accidentally pay tax on your back door Roth and you just cost yourself more then a CPA.

My old advisor did not know HSA was Deductible. I am doing it on my own now because I trust myself to do the best job. However I enjoy nerding out on this and put in the time.

[artemis]

I'm sorry, but managing your investments is simple.

The problem is that a lot of people honestly don't believe that.

[Random1]

Since all docs did well enough in high school math to pass their college science courses I assume ALL of them could put their money in a target date fund. All could choose taxable vs munis, shop for a mortgage and do any rational tax return. This stuff is not complicated.

The hardest part is not messing with it once it is in the fund and not listening to other hot tips. The problem with physicians , there are a lot of type A personalities who are good at what they do, so they think they can beat the market because they are good a lot of other things in life

[Lithium]

I think most doctors could learn investing passive investing 101 in a few minutes, or less than an hour if they wanted to slice and dice. I think most docs need more help with matters such as developing a written financial plan, managing cash flow, determining how much they need to save for various goals (retirement, college, etc), understanding available retirement accounts, investing in a tax efficient manner, making decisions of paying off debt vs. investing, asset decumulation strategies, estate planning, etc. The problem is that fee-based and AUM advisors are not rewarded for doing any of these things. It’s like expecting primary care docs to spend thirty minutes with every patient discussing the importance of eating fresh vegetables, wearing seat belts, and preparing living wills.

[jfoxcpacfp]

I think most doctors could learn investing passive investing 101 in a few minutes, or less than an hour if they wanted to slice and dice. I think most docs need more help with matters such as developing a written financial plan, managing cash flow, determining how much they need to save for various goals (retirement, college, etc), understanding available retirement accounts, investing in a tax efficient manner, making decisions of paying off debt vs. investing, asset decumulation strategies, estate planning, etc. The problem is that fee-based and AUM advisors are not rewarded for doing any of these things. It’s like expecting primary care docs to spend thirty minutes with every patient discussing the importance of eating fresh vegetables, wearing seat belts, and preparing living wills.

And now you know why there are so few “real” financial planners. It’s not nearly as financially rewarding as you might assume and it’s a heck of a lot of work, especially compared to AUM advisors.