One of the challenges that I’ve had to deal with during my (admittedly short) investing career is avoiding the persistent urge to tinker.
There’s this thing that I think happens to a lot of us as we begin to learn more about investing. We start devouring a lot of information and get a handle on what we think is the best way to invest. Then we digest more information – which starts to add complexity and various nuances to what we initially thought. Eventually, we start second-guessing ourselves, which leads us to tinker some more with our money.
You see this especially if you ever read posts in the major investment forums, with people debating over what sort of asset allocation is the correct one. There’s a lot of quibbling over the details – things like what percentage of your investments should be in domestic and international equities, or how much small-cap or medium-cap or large-cap you should have, or what’s the proper bond allocation given your age. And eventually, someone will come along and scare you by telling you that some seemingly reasonable asset allocation is going to leave you broke.
I fell into this second-guessing and handwringing when I started investing years ago. Since I didn’t know what to do, I turned to robo-advisors, which I loved because they gave me a low-cost, diversified portfolio that seemed to make sense and that could be backed up with research.
Knowing that I wasn’t totally messing things up is why I decided to use Betterment when I opened my first Roth IRA back in 2015. Yes, I could have set things up directly with Vanguard and created the same portfolio on my own. But the problem for me was that I didn’t really know what I was doing. I took comfort in knowing that Betterment was making sure I was doing things right.
My work-sponsored retirement plans were a little more difficult for me to figure out since there initially weren’t any robo-advisors for those types of accounts. My first 401k automatically put my contributions in a balanced Vanguard fund (50% stocks, 50% bonds), which was likely too conservative for where I was in life. Eventually, I learned about Target Date Funds and moved my investments into one of those. Then, robo-advisors hit the 401k market and I found a company that could create what it said was the correct asset allocation for my age and risk tolerance. I paid $1 per month for this service and I was happy with it since I felt like, at a minimum, I wasn’t doing anything disastrously wrong with my 401k.
Then, a few years ago, I read JL Collin’s Stock Series and his excellent book, The Simple Path to Wealth. This led me to start tinkering again. This time, I was going to go with a US Total Stock Market Index Fund – specifically VTSAX. The explanation for why this fund was sufficient convinced me. And the fact that John Bogle (the founder of Vanguard) seemed to hold the same belief further made me think this was the right way to go about with my investing strategy.
https://youtu.be/P54trh0Rre8
But as I’ve gained more knowledge about how investing works and have become more comfortable with managing my own portfolio, I’ve started to get a bit more nervous.
Maybe this strategy is a little bit too simple. Maybe I need to diversify into more asset classes. A lot of people much smarter than me have said as much.
And as I get more and more nervous, the urge to tinker keeps on growing.
The Urge To Tinker
My guess is that many of you reading this have probably done this same thing. You make an investing plan and pick an asset allocation that you think makes sense, but then you start tinkering with it as you read more stuff. Sometimes, the tinkering is justified. Other times, it might just be tinkering for the sake of tinkering. A lot of the time, I think we tinker out of fear that we’re doing something wrong.
I told myself a while back that the VTSAX plan was the one I was going to stick with. It made sense to me and I knew the worst thing I could do was to keep changing what I was doing.
So, when I created a Solo 401k for all of my side hustles, I put all of it into Fidelity’s version of VTSAX, called FSKAX. When I started investing inside my HSA, I put it all into a Vanguard S&P 500 Index Fund, since that was the closest option I had to VTSAX. And then, when I finally moved my Roth IRA directly to Vanguard, I put all of it into VTSAX.
I did the same thing for my wife’s retirement accounts. We opened her Roth IRA with Vanguard about two years ago and put it all into VTSAX. We did the same thing with her 401k, also putting all of her contributions into VTSAX.
The only notable exception to this 100% VTSAX strategy is that I left my 457 plan the way I had it – it’s currently set up with 40% in a Vanguard US Large Cap Fund, 12% in a Vanguard US Mid-Cap Fund, 8% in a T-Rowe Price Small-Cap Fund, and 40% in a Vanguard Total International Fund. This was the allocation that the robo-advisor I used created for me many years ago and I’ve decided to let this ride as is, although admittedly, I’m not sure why.
I also use have money set up in taxable accounts with M1 Finance, SoFi, and Axos Invest (formerly called WiseBanyan), which all have a significant international allocation in their portfolios. M1 Finance and SoFi are used primarily just as regular, small investment accounts to see how they work. Axos Invest is where I put money as part of my strategy for longer-term goals. I like all three of these robo-advisors since they don’t charge any management fees.
Is VTSAX Alone Enough? Who Knows?
Is investing it all into VTSAX and similar index funds the perfect way to invest? The obvious answer is – of course not. The truth is, perfect isn’t really an attainable state. And even if you could do things perfectly, there’s really no way to know without the benefit of hindsight.
More important than perfect is whether it’s good enough. The point of saving and investing money for the future is to have enough to do whatever it is we’re trying to do. It doesn’t require hitting home runs and getting everything right. All we have to do is not screw things up too much along the way – we just need to cross the finish line.
And there are legitimate reasons to believe that going solely with VTSAX is good enough to get across the finish line. There’s no need for me to rehash it all here, so I’ll just point to people much smarter than me. JL Collins has his post that lays out his rationale. John Bogle has his rationale too. And Banker On Fire recently wrote a great post that lays out a very reasonable rationale for why a 100% US equity portfolio is enough (I especially enjoy this post since it’s written by someone not based in the US).
I don’t see this mentioned as often, but another factor that makes me think a 100% VTSAX strategy is good enough has to do with the natural geographic advantages that helped make the United States as dominant as it is today – features that few countries in history have ever had. That includes:
- Two oceans with a lot of natural harbors, helping to facilitate trade. Access to the world ocean also has few natural chokepoints.
- A large network of navigable rivers leading into the interior that allows for even more trade and low-cost movement of goods.
- A large, fertile interior that can support a big population base (very different compared to other large countries that have large swaths of non-arable land).
- No major enemies nearby that can rival the country – and the nearby countries all have major geographic challenges that limit their ability to challenge the US (too much inhospitable land to the north, too much desert in the south).
(Readers Note: I’ve been watching a lot of geography videos, and reading geography books, including Prisoners of Geography, which I think is a great book for anyone interested in geography and how it impacts countries)
All this isn’t to say that this is the right strategy. But, as Vin Diesel said in The Fast and The Furious, it doesn’t matter if you win by an inch or a mile. Winning’s winning. And in this case, winning doesn’t mean beating everyone else. It just means getting yourself to the end.
More Important Than Anything – It’s Sticking With It
No, this plan I have isn’t the right one. It could very well be the wrong one. I think the chances that it completely fails, however, is probably close to zero.
At a minimum, I do think that it’s a reasonable plan. And that’s what matters. So long as it’s reasonable, it should be enough to get me to the finish line. In the grand scheme of things, I’m still very early in my investing career. At this point, what really matters aren’t the returns I get – it’s the brute force savings that I’m able to do over the next 10 or more years of my life.
But that urge to tinker is still there, especially when I read investment forums that tell me that I’m making a terrible mistake following this VTSAX only advice. Look to almost any Boglehead post where someone asks about investing 100% in a US Total Market Index Fund and you’ll see dozens of people say, in completely certain terms, what a bad decision that is – as if they know the future.
Perfect is what we all want to achieve. But that’s only available in hindsight.
So what can we do? The only thing we can do – make a plan that’s reasonable that can get the job done. Then, stick with that plan. And quit the tinkering!
Note: If you really want an easy strategy that does include a significant international allocation, it seems like investing 100% in a fund like the Vanguard Total World Stock Index Fund (VTWAX) is one potential way to do it. It’s divided into about 55% US and 45% international and with an expense ratio of only 10 basis points, it’s super cheap.
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More Recommended Ebike/Scooters
Check out these other ebikes and scooters I've reviewed:
- Urban Arrow Ebike – Last year, I made one of the largest purchases I’ve ever made – I bought a $9,000 electric cargo bike from Urban Arrow. In my Urban Arrow review, I will discuss what it is and why I decided to buy this bike, as well as discuss how impactful a bike like this can be on your journey to financial independence.
- Troxus Explorer Step-Thru Ebike – The Troxus Explorer Step-Thru is a fat-tire ebike that I’ve had the pleasure of riding for a while now. It has amazing power, great looks, and awesome range. If you’re looking for a great fat-tire ebike that offers a lot for the price, the Troxus Explorer Step-Thru is definitely one for you to consider. Check out my Troxus Explorer Step-Thru Review.
- Hovsco HovBeta Ebike – The HovBeta is a folding ebike with great specs and a lot of interesting features, and importantly, it’s sold at a good price point. I’ve had a blast commuting with it and using it to do deliveries with DoorDash, Uber Eats, and Grubhub. Check out my Hovsco HovBeta Ebike Review.
- Vanpowers Manidae Ebike – The Vanpowers Manidae is a fat tire ebike that I’ve been riding as my primary winter commuting bike and have also been using it to do food delivery with apps like DoorDash, Uber Eats, and Grubhub. After clocking in a decent number of miles with this ebike, I wanted to write a post sharing what my experience with the Vanpowers Manidae ebike has been like. Check out my Vanpowers Manidae Review.
- Sohamo S3 Step-Thru Folding EBike Review – A Great Value Folding Ebike – The Sohamo S3 Step-Thru Folding Ebike is an entry-level folding ebike that offers a lot of value for the price point. I’ve been riding the Sohamo S3 for a while now, putting the bike through its paces, and I have to say, this bike has exceeded all of my expectations. Check out my Sohamo Review.
- KBO Flip Ebike – The KBO Flip is an excellent bike. I’ve had a great time riding it and think it’s a versatile bike that can be used for a lot of purposes and can fit a variety of lifestyles. It’s worked out great for me as a general commuter bike and as a food delivery bike. Check out my KBO Flip Review.
- Hiboy P7 Commuter Ebike – The Hiboy P7 is an excellent electric commuter bike that’s offered at an affordable price point. The range and speed of this bike are both very good, so you won’t have any trouble getting anywhere you need to go with it. As a food delivery vehicle, this is also good – with how much range it offers, you’ll be able to work all day on a single charge. Check out my Hiboy P7 Commuter Electric Bike Review.
- Himiway Escape Ebike – The Himiway Escape is an interesting bike for anyone looking for a moped-style ebike. If you’re a gig economy worker, the Himiway Escape is particularly interesting and it’s possible to think of it as an investment, especially if you can opt to do deliveries with the Himiway versus using a car. It’s not cheap, but you can definitely make your money back when you compare the mileage you’ll put on your car versus using an ebike. Check out my Himiway Escape Bike Review.
- Espin Sport Ebike – The Espin Sport is a good ebike for someone who is looking for an ebike that feels and rides more like a regular bike. There are many ebikes that are really only bikes in name. In reality, they’re basically electric mopeds. The Espin Sport, by contrast, is a bike you could probably ride without the battery and you’d feel like you’re just riding a regular bike. Check out my Espin Sport Review.
- Varla Eagle One Scooter – The Varla Eagle One is an excellent scooter that can make sense for a lot of people. It can work as a primary mode of transportation. You can use it to work on gig economy apps like DoorDash, Uber Eats, and Grubhub. And it can also be a recreational vehicle if you’d prefer to use it for that. Check out my Varla Eagle One Review.
- Varla Falcon Scooter – The Varla Falcon is an excellent scooter that offers a good amount of power at a lower price point compared to more powerful scooters. It’s not exactly an entry-level scooter, nor is it a high-powered scooter. I think it fits somewhere in-between those two categories – an intermediate scooter if I had to give it a category. Check out my Varla Falcon Review.
- Hiboy S2 Scooter – The Hiboy S2 is an excellent entry-level commuter scooter that's perfect for someone looking to save some money in transportation costs and improve their commute. Check out my Hiboy S2 Review.
- Hiboy S2R Scooter – The Hiboy S2R is one of the more interesting electric scooters I’ve been able to test out. It’s not a high-powered scooter, but for an everyday transport option, it’s very useful, especially given some of the unique features that it has. Indeed, for the price, the Hiboy S2R might be the best value scooter I’ve used. Check out my Hiboy S2R Review.
- Fucare H3 Scooter – The Fucare H3 is a fun scooter and I’ve enjoyed testing it out. For a daily commuter or quick trips or errands, the Fucare H3 is probably the scooter I’ll use. It’s portable and easy to maneuver, so it’s just easier to take on the road when I need it. Check out my Fucare H3 Scooter Review.
More Recommended Investing App Bonuses
For additional investing app bonuses, be sure to check out the ones below:
- M1 Finance ($100) – This is a great robo-advisor that has no fees and allows you to create a customized portfolio based on your risk tolerance. You also get $100 for opening an account. Check out my M1 Finance Referral Bonus – Step-By-Step Guide.
- SoFi Invest ($25) – SoFi Invest is an easy brokerage account bonus that you can earn with just a few minutes of work. Use my SoFi Invest referral link, fund your SoFi Invest brokerage account with just $10 and you’ll get $25 of free stock. I also have a step-by-step guide for the SoFi Invest referral bonus.
- Webull (20 free stock shares) – Webull's current promotion gives you 20 free shares valued between $3-$3,000 each if you open an account using my referral link. Here’s a guide I wrote about how to earn your free shares using Webull.
- Moomoo (15 free stocks) – Moomoo is a free investing app currently offering 2 different referral bonuses if you open an account using a referral link. Read my Moomoo referral bonus guide for more information.
- Robinhood (1 free stock) – Robinhood gives you a free stock valued between $2.50-$225 if you open an account using my referral link.
- Public (1 free stock) - Public gives you a free stock valued between $3-$70 if you open an account using my referral link.
More Recommended Bank Account Bonuses
If you’re looking for more easy bank bonuses, check out the below options. These bonuses are all easy to earn and have no fees or minimum balance requirements to worry about.
- Upgrade ($200) – Upgrade is a free checking account that’s currently offering a $200 referral bonus if you open an account and complete a direct deposit. These bonus terms are easy to meet, so it’s well worth doing this bonus as soon as you can. Here’s a post I wrote with more details: Upgrade $200 Referral Bonus – Step By Step Directions.
- Ally Bank ($100) – Of all the banks out there, Ally is, without a doubt, my favorite. At the moment, Ally is offering $100 to customers who open an eligible Ally account and meet the requirements. Here are the step-by-step directions to earn your Ally Bank referral bonus.
- Fairwinds Credit Union ($175) – Fairwinds Credit Union is offering a referral bonus for users that sign up using a referral link. Fairwinds has no fees or minimum balance, so this is a particularly easy bonus to earn. Since this is a smaller credit union, my gut instinct tells me this offer won’t be around long, so if you’re in a position to meet the bonus requirements, grab this bonus before it’s gone. Here is my step-by-step guide on how to earn your Fairwinds Credit Union bonus.
- Chime ($100) - Chime is a free bank account that offers a referral bonus if you use a referral link and complete a direct deposit of $200 or more. In practice, any ACH transfer into this account triggers the bonus. This bonus is easy to earn and posts instantly, so you’ll know if you met the requirements as soon as you move money into the account. I wrote a step-by-step guide on how to earn your Chime referral bonus that I recommend you check out.
- US Bank Business ($900) – This is a fairly easy bank bonus to earn, since there are no direct deposit requirements. In addition, you can open the Silver Business Checking account, which comes with no monthly fees. Check out how to earn this big bonus here.
- GO2Bank ($50) - GO2Bank is an easy bank bonus that I recommend people take advantage of if they have an easy way of meeting the direct deposit requirement. I like that it’s easy to open the account and that the bonus pays out quickly. Check out my step-by-step guide on how to earn your GO2Bank $50 referral bonus.
- Current ($50) – Current is a free fintech bank that’s offering new users a $50 referral bonus after signing up for an account using a referral link. Current is an easy bonus to earn and also gives you access to three savings accounts that pay you 4% interest on up to $2,000. That means you can put away up to $6,000 earning 4% interest. That’s very good and makes Current an account I recommend to everyone. Check out my step-by-step guide on how to earn your Current Bank bonus.
- Novo Bank ($40) - Novo bank is a free business checking account that’s currently offering a $40 bonus if you open a Novo business checking account using a referral link. In addition to being a good bank bonus, Novo is also a good business checking account. It has no monthly fees or minimum balance requirements and operates a good app and website. Indeed, it’s the business checking account I currently use for this blog. Check out my post on how to easily open a Novo account.
- Varo ($25) – Varo is a free fintech banking app similar to Chime or Current. It’s currently offering a $25 bonus to new users that open a new Varo account with a referral link. The bonus for this bank is very easy to meet, all you need to do is spend $20 within 30 days of opening your Varo account. Check out my step-by-step guide to learn how to earn this bonus.
Kevin is an attorney and the blogger behind Financial Panther, a blog about personal finance, travel hacking, and side hustling using the gig economy. He paid off $87,000 worth of student loans in just 2.5 years by choosing not to live like a big shot lawyer.
Kevin is passionate about earning money using the gig economy and you can see all the ways he makes extra income every month in his side hustle reports.
Kevin is also big on using the latest fintech apps to improve his finances. Some of Kevin's favorite fintech apps include:
- SoFi Money. A really good checking account with absolutely no fees. You'll get a $25 referral bonus if you open a SoFi Money account with a referral link, and an additional $300 if you complete a direct deposit.
- 5% Savings Accounts. I'm currently getting 5.24% interest on my savings through a company called Raisin. Opening a Raisin account takes minutes to complete, it's free, and all of your funds are FDIC-insured. I explain how it works, why I'm now using it to store my emergency fund and any other cash savings I have, and why I recommend everyone check it out in this review.
- US Bank Business. US Bank is currently offering new business customers a $900 signup bonus after opening a new account and meeting certain requirements.
- M1 Finance. This is a great robo-advisor that has no fees and allows you to create a customized portfolio based on your risk tolerance. You also get $100 for opening an account.
- Empower. One of best free apps you can use to monitor your portfolio and track your net worth. This is one of the apps I use to track my financial accounts.
Feel free to send Kevin a message here.
My story and investments are similar to yours, tho I’m older than you. So funny that you just wrote this post because I’d long been thinking about tinkering. Having decided last week to rollover an old 401(k) into my IRA, it dawned on me that I could put the money into REIT and bond index funds I’d been eyeing and thereby realize almost to the exact percentage the diversification I wanted. It’s tinkering — which I was sort of loath to do — but something that feels more “right” for us. I don’t see this new portfolio changing for a long time, if ever.
You gotta do what feels right for sure. Going all US equities makes sense to me and I’m confident it’ll get the job done. So long as it gets the job done, that’s all that matters!
I’m 100% in VTSAX myself and also decided to stick with it. How much more can you expect to earn if you did spend all the time to learn how to develop the “perfect plan”? I highly doubt it would be enough to make it worth me giving up so much of my time to keep up with everything. So like you said, if it’s good enough, I’ll spend my time elsewhere and still end up with plenty of money over time.
Yep. I’m not going to say we’re right or that it’s the best way to invest. But it’s not an unreasonable plan to stick with.
This, I think, is what I was trying to say in the comments of your last post- it’s not luck that grows wealth, it’s more consistency. Though! Admittedly I’ve been reading all sorts of stuff, and very tempted know that I know enough to be dangerous- should I put my investments in dividend stocks rather than the index funds I now have them in? Should I do more real estate investing with REITS and crowdfunding? So many choices especially now there’s a lot more fee-free trading, and I’m self-employed. Yikes. It’s hard to just chill a little for me, since I’m a “have more time than money” kind of person, usually I optimize my resources with knowledge. Almost wish I didn’t have so many choices.
Fee-free trading and access to lots of information make for a big tendency to tinker. Consistency I agree with – overall, you just gotta pick a plan that’s good enough and stick with it over time.
wo – thank god – is all I can say. My wife has FXAIX in her 401K. I guess that’s almost the same as FSKAX.
Yep, FXAIX isn’t too far off. The big companies make up the vast majority of the total market anyway.
I blog in this space and also help manage over sixty million dollars of foundation investments as a volunteer yet my personal portfolio is split among Personal Capital, Betterment and Vanguard managed accounts. I just don’t enjoy investing my own money and am willing to pay the fees to have others do it for me. I can’t really explain why other than I don’t like doing it myself and I don’t want all my eggs in one basket. Plus it keeps me from tinkering.
I like the robo-advisors because there’s some comfort in knowing that you are doing it right (I think those robo-advisors are all fiduciaries, although not 100% sure). The main thing is they aren’t crazy expensive to use (some are even free).
Kevin, great post and thanks for the callout (I had no idea you were a reader – flattered!)
There’s always a danger that tinkering will get us into a “active passive” territory which is something we all want to avoid. Much better to focus our efforts on making more money – or better still, having more leisure time.
Cheers
Damian (aka Banker on FIRE)
I’ve been lurking, haha! That’s a good term – the active-passive. I think a lot of us do that at some point. I know I’m tempted to do that even right now!