Vanguard is credited with creating the first index fund founded by John (Jack) Bogle.  To make it easier for investors, Vanguard created Target Retirement Funds that provide an All-in-one fund for people to choose based on their target date of retirement.  For each of the group of ages, the portfolio has a different composition designed to help manage risk while trying to grow retirement savings.  It will gradually move assets to less risky investments as retirement age gets closer. (source: https://investor.vanguard.com/mutual-funds/target-retirement/#/ ) Breakdown Points Major Asset Allocation Breakdown Stock allocation decreases as retirement target date approaches With 45 years to retire, the portfolio had more than 88% stocks (53% US, 35% International) In retirement, the portfolio had slightly more than 29% stocks (17% US, 12% International) Bond allocation increased as retirement target date approaches With 45 years to retire, the portfolio had just almost 10...

 On Tuesday October 19, Proshares Bitcoin ETF BITO (based on futures) began trading on the New York Stock Exchange.  Although it provides exposure to Bitcoin, it isn't as representative as buying it outright on a cryptocurrency exchange like Coinbase or Gemini.  The minor difference will not be noticeable for people using it as a trading instrument, but for those looking to buy and hold for a long time (or HODL - Hold On for Dear Life) the underlying mechanics make it less attractive as performance may deviate. What makes BITO different than Bitcoin? These ETFs being approved do NOT hold Bitcoin as an underlying.  They hold futures.  These futures are contracts that settle to cash on expiration date, so the fund needs to "roll them" (before the current futures contract expires, the fund will sell the current one to buy the next one to maintain exposure to Bitcoin).  From data below when or before October Futures expire it looks like it will cost 930 (selli...

 The Stock Market (S&P 500) has returned on average 10.4% per year.  This data goes back to 1871.  This comprises of an average price appreciation of 6.2% and a historical dividend yield of 4.2%. Distribution of Returns Although it is tempting to use the average returns for forward assumptions, there is one big caveat: the distribution of returns has been large.  The worst year returned -38.3% while the best year returned 53.1%. Percentile Range Another useful way to use the data is to look at the 25th and 75th percentile, which represents the 25th worst return and the 75th best return.  25th = -1.3% and 75th = 20.6%.  This is called the interquartile range and provides a sense of range.  There is also the quartile deviation that is half the value of the interquartile range to provide a measure of dispersion so in this case 11.0%.  With the mean value which is the same as 50th percentile we can get a sense of the middle, so in this case 11.0%....

The average 25 year old will need $ 1,157,492 compounding at 8% a year (or 5.25% above inflation), to match his estimated lifetime spending.  A 45 year old will need $1,132,793 and a 65 year old will need $644,585. Present Value of Savings to match the Average Consumer Lifetime Spending Age Average Lifetime Spending With 2.25% annual inflation 8% annual return (5.75% above inflation) 25 $3,819,103 $7,760,036 $1,157,492 45 $2,498,923 $6,081,902 $1,132,793 65 $1,030,723 $3,201,717 $644,585  A consumer is considered a household (from BLS website: "A consumer unit consists of any of the following: All members of a particular household who are related by blood, marriage, adoption, or other legal arrangements").   The above table illustrates the value of compounding investments as without compounding and average inflation, the average 25 year old will need $7,760,036 to match his expected lifetime spending (without any additional contributions savings).  While comp...

To keep my mind engage in topics about money and to find out about things I don't know, I enjoy listening to podcasts.  I love podcasts because I can enjoy them when I'm not in front of a screen and find the interactions of speakers more revealing than reading plain text.  Also, with advances in software, I can listening to content in the same time with features like trimming silence and speeding up the audio (I usually do about 1.4x). Top Money & Investing Podcasts I enjoy: Planet Money from NPR - The Economy Explained This is my favorite podcast.  I haven't missed an episode since I started listening to it.  I first found out about Planet Money from another podcast This American Life .  They did a special collaboration called 'Giant Pool of Money' that explained in plain English what was the cause of the 2008 Financial Crisis.  I found This American Life because back in 2008 there weren't a lot of podcasts and this was always at the top of the appl...