A Few Useful Finds for Life After Work — Issue #11

Hi from Stefan,

Welcome to the eleventh issue of this biweekly newsletter.

Nothing here is sponsored or written for compensation.

I answer a reader’s question about TIPS ETFs

The Best Third user Pablo emailed to ask “What is your opinion on TIPS Maturity ETFs like IBID, IBIJ and 30 year TIPS LADDER ETFS like Northern Trust TIPD ?”

That is a great question and I wrote a new blog post explaining how these ETFs work. The punchline: if you don’t have a lot to invest in TIPS, they’re inexpensive and convenient.

If like most The Best Third users, you look to TIPS for a significant amount of guaranteed base income, I would stick with a ladder of individual TIPS.

WSJ vs. WSJ

Robert Pozen on the op-ed page writes You’re Probably Overinvested in Bonds “The usual advice is to hold only 60% of your assets in stock. If you’re wealthy, a 90/10 split is far better.”

A few days later in the markets news section: The Risk Premium for Holding Stocks Over Bonds Is Vanishing “Gap between market’s earnings yield and bond yields has narrowed, a measure that has at times predicted subpar stock returns”.

My own view is closer to Pozen’s. Nobody can reliably time the market, and stocks have outperformed bonds in a large majority of multi-year periods.

That said, TIPS are there to guarantee spending in any market scenario.

Ten more tricks

In an earlier newsletter I linked to Allan Roth’s Don’t Be Fooled By These 3 Investing Tricks. Allan is back with an additional Ten Nasty Financial Tricks Predators Play.

What I’m listening to

Shortly after I finished the audiobook of Justin Baer’s new House of Fidelity: The Rise of the Johnson Dynasty and the Company That Changed American Investing, the Acquired podcast released its episode about Vanguard, another company that changed American investing. Engaging stories about two very different companies.

Fidelity, the for-profit family business that built its reputation on full-fee stock-picking; and Vanguard, which counter-positioned itself against the rest of the fund industry with low-fee index funds, where the fund shareholders own the management company. Fidelity’s Ned Johnson publicly scoffed at Vanguard’s John Bogle when he introduced the first index fund. Fidelity came to manage index funds years later, slowly, and in a separate subsidiary away from its active managers.

Despite the differences, each company became massive by delighting tens of millions of investors.

Warmly,
Stefan Sharkansky, PhD
Founder of The Best Third