Today is the 58th edition of our periodic guest post series called 10 Questions and a Pizza Place. (The 1500′s are pizza fanatics.) We have a list of 17 questions we pose to fellow financial bloggers, and they are free to pick and choose 10 or answer all of them. Let us know if you would like to be featured in a future edition of 10 Questions.
This is the last edition featuring our old questions and I can’t think of a better way to end them than with James Collins from jlcollinsnh.com. Mr. Collins writes some pretty great stuff, but he is most known for his excellent stock series.
Confession: I have come to believe that index funds should be the core of any healthy portfolio, but before I started blogging, I barely knew what an index fund was. I’m a pretty stubborn guy, but Mr. Collins’ stock series convinced me to abandon my stock picking ways in favor of Vanguard index funds. I’m in the process of moving it all to Vanguard. Thanks Jim!
Besides the investing stuff, Mr. Collins is a pretty interesting guy. He has:
- played with mummy heads
- collected a vast assortment of Beanie Babies (just kidding, kind of)
- been featured on Mr. Money Mustache
- traveled to Goa and Eleuthera (never even heard of either of those)
- come up with a pretty awesome list of quotes.
- written a bad-ass manifesto
And really, I’m just at the tip of the iceberg. However, I’ll stop talking now and turn things over to Mr. Collins.
Tell me about your blog and why it’s great.
If you have to ask, you wouldn’t understand.
What is the worst financial mistake you made?
Thinking I, or anybody, could pick individual stocks successfully over time. Yes, I know Warren Buffett has. That’s why he’s famous. I can’t get in the ring with Mike Tyson either. If you think you can, let me know and I’ll sell the tickets.
What would you do if you inherited $1,000,000 (after taxes) today?
It would go into VTSAX and I would spend the ~4% sustainable annual withdrawal rate. This is how to think about money: Not as what it can buy, but how what it earns can provide for you forever. Oh, and were I younger, I’d reinvest rather than spend the earnings.
What kind of car do you drive?
I haven’t had a car since ~2002 when I last had a job I needed to commute to. It was a Honda Accord. Now when I need one, I borrow my wife’s. She drives a 2014 Mazda 3 Hatchback we bought in late 2013. We passed her 2007 Subaru Forester on to our daughter. We loved that car. This summer our daughter is likely going into the Peace Corp or to Europe to live. Either way, the Subaru will come back to us. It will be interesting to see which one we keep.
The Mazda is newer and great fun to drive. The Subaru holds more and older cars have the advantage of being less of a worry when some yahoo in a parking lot throws open their door into your fender.
And, of course, in the better weather I have the Triumph.
Mr. 1500 note: Mr. Collins is referring to his motorcycle here. Once, he had an awful car that was anything but a triumph to own, despite the name.
Who inspires you?
Jack Bogle. A great man and not just on the financial stuff. The more I read about and from him, the more impressed I become.
What is the best financial move you have made?
Index Funds, specifically VTSAX.
What’s your favorite tip for saving money?
Think of it as spending. What you are buying with it is your freedom.
What is your favorite pizza place?
“JB’s!!! Free Coke with every pizza!!” Of course this was 40 years ago in Rogers Park, Chicago. It might not still be there…
What is your fondest memory?
Slowly she unbuttoned her blouse….
What is your favorite movie?
Too many to list. But the movie I’ve seen the most frequently is, hands down, The Lion King. It came out when my daughter was about 3 and prone to become obsessed with a specific movie. I’ve watched it with her at least 100 times. Fortunately, it’s a pretty good movie.
What are your favorite personal finance websites?
The Mad Fientist is a financial blogger who does some travel posts. Go Curry Cracker is a travel blogger who does some financial posts. Both make me sit up and take notice when they post. Both have introduced me to new concepts or new takes on old ones. When you’ve been knocking around this stuff as long as I have, that’s no small thing.
Can I Retire Yet? gets high marks for clear, detailed explanations on how this financial stuff works.
Rumor has it 1500 Days to Freedom has it going on, but the smart money says the posts the Mrs. writes are the ones to watch for there. 😉
Mr 1500 note: Mr. Collins is obvious retaliating here for the comment about Beanie Babies…
Dogs or cats?
Both, but I admire cats for their independence and ease of maintenance. Unfortunately, I’ve developed allergies to both.
Jake is our now 12-year-old hypoallergenic miniature Poodle. About 17 lbs and a foot at the shoulder, the perfect size in my view.
I resisted getting a Poodle for all the standard reasons. Now I wonder that anyone chooses any other breed. Wicked smart and great disposition. Equally at home roaming through the woods with me or having my daughter dress him up in baby clothes. Exceedingly handsome, as long as you avoid giving them goofy haircuts.
What is the worst personal finance mistake you see people making?
Overall: Taking on debt. Doing so is pledging yourself to a life of slavery.
Investing: Thinking “Hey, Warren Buffett made his money picking stocks. So can I.”
What product or service epitomizes consumerism?
Wal-Mart
What is your favorite recipe?
Chile. First you start your compost pile. Five years later you are ready to grow the vegetables you’ll be using. The rest is secret…
What was your favorite job?
I put myself through college taking down trees that were being ravaged by Dutch Elm Disease. I was young, fit and strong and the work was physically hard, outdoors and dangerous. It also brought me into contact with and taught me how to deal with people very different than I. This will be very useful should I ever go to prison.
What would you do with a billion dollars. And a time machine?
….back in 1997 I would have bought Sue. She went for only $8,362,500. after all.
Then I would have bought a mansion with an entry hall large enough to display her and the Field Museum would have been out of luck.
I hope you enjoyed this because next month, I’ll be featuring an epic 3 part series with Mr. Collins. In the meantime, show him some love over at jlcollinsnh.com.
Join the 10s who have signed up already!
Subscribing will improve your life in incredible ways*.
*Only if your life is pretty bad to begin with.
This is the kind of fantastic writing that gets me hooked, thanks for doing this one – Mr. Collins’ blog is the latest rabbit hole I have crawled down.
Can’t wait for the 3 part series!
Cheers
Thanks, Brian…
I try to make my stuff entertaining as well as useful, so that’s high praise indeed!
jlcollinsnh recently posted…Case Study #12: Escaping a soul-crushing job before you’re 70
Two of my favorites in one article/post! Great Uncle Jim just might be The Godfather of financial independence blogging. Nice job,fellas.
Ha!
Great Uncle Jim, The Godfather of financial independence blogging has a nice ring to it. Other than making me sound (as I am) old.
Oh, and you meant, “Nice job, Good-fellas,” right?
jlcollinsnh recently posted…Case Study #12: Escaping a soul-crushing job before you’re 70
Jim is the man. He’s the guy who turned me on to index funds and simplified investing. Between him and MMM, we had the foundation we needed.
Done by Forty recently posted…Central Europe Travel Hack
Thanks DbyF…
Glad it resonated with you!
jlcollinsnh recently posted…Case Study #12: Escaping a soul-crushing job before you’re 70
What would your net worth have been today if you had been indexing instead of stock picking?
Just curious.
Thanks,
Martin
Ha, you caught me! My stocks have done very well. Google, Apple and Chipotle are all 10 baggers. I’ve almost tripled my money with facebook in 2 years. At this time, I’m doing much better as a stock picker than if I would have with index funds. The key three words there are “at this time.”
I’m sure there were a lot of folks who did really well with Blackberry or RIM. I have no clue how my fickle tech stocks will be doing in 10 years. Way too much risk to hold on to long term.
Thoughts?
You made some really good calls on those stock – congratulations!
It makes sense to reduce risk in your portfolio once you’ve reached your financial goals. You are frugal so you know when enough is enough 🙂
My thinking is similar; also it may not be good to leave individual stocks to heirs as they may not know how to manage them.
Best regards,
Martin
There is one good reason to leave highly appreciated stock to your heirs:
Upon your death the cost basis of those shares is adjusted to the price at the time.
Your heirs start fresh and the potential capital gains tax on the appreciation during your lifetime is avoided.
jlcollinsnh recently posted…Case Study #12: Escaping a soul-crushing job before you’re 70
Very interesting! I didn’t know that. I wonder if it the same in all countries?
Best regards,
Martin
Hi Martin….
I beat myself up all the time trying to figure out that question! 🙂
Truth is I hit FI while I was still picking stocks and fund managers. So there is money to be made doing it.
The problem is, that as exhilarating as the winners are (and boy howdy they are exhilarating!) inevitably you have losers in the mix. Looking at them together, you might be making money (I was) but not as much as with simple old VTSAX.
The sad truth is, it took me a long time to come to indexing. I spent decades making all the same arguments against it I hear made today. This might be why I’m a little impatient with them: They remind me of my own stubbornness and it saddens me to see people making my mistake.
Looking back over time, my best guess is, with compounding, my net worth today would be ~50% higher had I started indexing near the beginning.
By the way, it really impresses me that Mr. 1500 has done so well with his stocks and yet is still able to see the flaws in being a stock-picker v. indexing. That takes an amazing amount of self awareness and perception. Certainly more than I would have had.
jlcollinsnh recently posted…Case Study #12: Escaping a soul-crushing job before you’re 70
Mr. 1500…
I just had the occasion to sing your praises regarding your wisdom and humility in a conversation with Lilpappy here: http://jlcollinsnh.com/2012/05/23/the-college-conundrum/#comment-4212706
Feel free to add your thoughts there. 🙂
jlcollinsnh recently posted…Stocks — Part XXVIII: Debt – The Unacceptable Burden
Haha first answer is classic, followed by the rest of them. I just went to the American Museum of Natural History and saw Sue’s cousin. Quite impressive! And now I have to go read the story about falling trees…
Fervent Finance recently posted…About Fervent Finance
The American Museum was actively engaged in the bidding for Sue back in the day.
Seems nobody expected her to sell for so much and so they hadn’t raised enough funds.
I was amazed that she sold for so little! I mean, Sue is the largest and most complete T-Rex ever found. Talk about one of a kind!
jlcollinsnh recently posted…Case Study #12: Escaping a soul-crushing job before you’re 70
No more stock picking 1500’s? It’s interesting, how many personal finance bloggers haven’t read the boglehead investing book?
Elroy recently posted…Israel – Jerusalem
Just say maybe. right now, almost half of our portfolio is in stocks. I’d be OK with it being less than 20%.
My ideas are few and far between as well: Google (2004), Apple (2007), facebook (2012) and Lending Club (2014). So, I hardly ever buy stocks to begin with. I’m fortunate that ones I’ve bought have done well, but that creates another problem in that they’re taking over my portfolio.
It is so absolutely true that when you save money what you are actually doing is “spending” the money to buy your freedom. Once I fully grasped that concept, refraining from a frivolous expenditure and banking the money instead never felt like a sacrifice ever again.
As financial “tips” go, that one is truly priceless.
Retired To Win Alex recently posted…How I Heat My House Frugally
Hi Alex,
At the first Chautauqua I was having a conversation with the wife of one of the attendees. Her husband was enthusiastic about this stuff and she was trying to get on board.
But she had been raised in a wealth family and grew up spending money with no concerns. The feeling of not shopping was like not breathing to her.
Somehow that idea that saving and investing is a form of spending just hit me. I expressed to her and her eyes lit up. It was a way she could comfortably look at the concept. The reaction was so powerful I decided to add it to my presentation the next morning.
At one point I said to the group,
“I have a confession to make. I have spent every dime I’ve ever made and moreover I have spent them almost the moment I got them.”
Again this angle on the concept seemed to deeply resonate. I’ve used it ever since.
Glad to hear it resonates with you as well.
jlcollinsnh recently posted…Case Study #12: Escaping a soul-crushing job before you’re 70
Great interview 1500 (but sad this is the last one!) – and thanks for putting J Collins back on my radar – I spent many months absorbing all his posts some time ago, and am well overdue for a return visit!
My (nearing 3 year old) daughter also loves Lion King, but I’ve probably only watched it around 30 times so far – fortunately she has about 15 other movies on high rotation which I’ve also seen nearly 30 times, not sure which one will stand out as being my favourite in the long run…
Must be a little frustrating trying to give this stock investing advice J Collins when you had to go through these personal experiences yourself to ‘see the light’ – some people still won’t listen to the indexing argument I’m sure, and just need to learn for themselves one way or another. I confess I still invest in individual stocks, and it will be interesting to look back on my own investing history and philosophy many years in the future…
Jason@Islands of Investing recently posted…A great investment – but a bad decision?
Not really frustrating as I’m not really interested in persuading anyone.
I started writing this for my daughter, sharing what has worked for me and what has kicked me in the ass. I’m still amazed (and honored) anyone else is interested.
It’s more embarrassing. It holds a mirror up and reminds me of a mistake I made for far too long: Long after I’d come across the data to know better.
Had I come across a blog like mine back in the day, I don’t think I would have been able to accept it. So sometimes I assume others won’t either. Then I read a testimonial like Mr. 1500 and I realize not everybody is as slow as I am. 😉
jlcollinsnh recently posted…Case Study #12: Escaping a soul-crushing job before you’re 70
I too bought too many different stocks. I wish I would have been a Boglehead much earlier. I was a index fund guy in the early 90s, but when the internet stocks were headed up, I fell for the speculation.
No Nonsense Landlord recently posted…Are you getting Your Landlord Discounts (also homeowners)?
Ha!
Me too NNL. Sigh.
That was the last really expensive mistake I made. The good news is it burned away the last of my doubts.
jlcollinsnh recently posted…Case Study #12: Escaping a soul-crushing job before you’re 70
Great write up !
” she slowly unbuttoned her blouse”
🙂 haha..
Great writing.
Mr.1500 can’t wait to see new series.
“Think of it as spending. What you are buying with it is your freedom.”
This is my favorite answer of all time. I have a similar outlook, but the only tweak is that I remind myself that every dollar I use for consumption instead of saving/investing is really worth 5 times as much to my future self in 20 years.
Because if you assume a 8% growth rate it gets you pretty close to 5X.
It makes it pretty easy to make purchase decisions. The item may be $1,000 today, but would I be willing to spend $5,000 (and thus steal $4,000 from my future self)?
Thanks for sharing.
Gen Y Finance Guy recently posted…My Love/Hate Relationship with Tax Season
Hi Jim,
I have read your site off and on over the past few months ( depending on my time availability). I was curious if you had taken the time to research why your picks didn’t do as well? Were you making large bets on single securities, or were you chasing hot tips (or maybe doing something else)?
I am also curious, would there ever be time when index funds are not worth purchasing? I am also curious, do you think there would be time at which index funds would not be good investment ideas? In other words, how do you know when your strategy is not working – what would cause you to abandon indexing.
I wish you good luck in your investing journey!
DGI
Dividend Growth Investor recently posted…Twelve Companies Providing Investors with Dividend Raises
Hi DGI…
What? There are things more important in your life than reading my blog?! 😉
Not only researched it, but agonized over it. 🙂
I spent decades fooling with individual stocks and if there is a mistake that can be made that I missed, well, it’s only ’cause I missed it.
But the biggest eye opening experience was the time I spent working for an investment research firm. Our analysts were some of the best in the business. More than one had been honored in the press as “Analyst of the Year”
Each focused on one, maybe two industries and perhaps 6-10 stocks. They lived and breathed these few companies.
They knew each inside and out. They knew the top executives. They knew the middle-managers and the front line people. They knew the customers. They knew the suppliers. They knew the cute receptionists. They open access. They spoke to them all weekly. Sometimes daily. They had every resource available.
They issued reports our institutional investor clients paid dearly for. And yet, predicting stock performance remained frustratingly elusive.
Seeing this work in action, I was suddenly stunned at my hubris in thinking I could beat these guys, who in turn didn’t beat the market (we also ran mutual funds), working at it part-time, across multiple industries with info like last year’s 10K. If you’re interested I wrote more about this here: http://jlcollinsnh.com/2011/06/02/why-i-cant-pick-winning-stocks-and-you-cant-either/
Index funds are a brilliant match to how the markets actually work and have been well proven over 40 years of hype-active challenges (after all, Wall Street makes huge money on active management and individual stock pickers).
The only thing I can think of that might alter this is if indexing were to truly dominate the entire market. That might create an opportunity for an active management approach. But the chances of this happening are very remote, for reasons I discuss here: http://jlcollinsnh.com/2012/01/06/index-funds/
Hope this helps!
While you didn’t ask, but since you are a dividend growth investor, if you are interested here’s my take: http://jlcollinsnh.com/2011/12/27/dividend-growth-investing/
Good luck in your journeys as well!
jlcollinsnh recently posted…YNAB: Best Place to Work Ever?
Thank you Mr 1500 for sharing the Godfather’s wisdom with us
Jim, if you decide to pursue a new path at any point, I think you could make some big bucks on the comedy circuit
And wow, thank you for your amazing compliment. Speechless
Jeremy recently posted…Reader Financial Review: Escape From New York
It’s hard to argue with Vanguard’s low cost funds like VTSAX to easily diversify without getting hit with big fees.
At least it’s caused some innovation in the space, we’ve found some good alternatives with Schwab and Fidelity that have the same or lower expense ratios and no min investments. VTSAX is still the original king though!
Collins has it right with the simplicity.
Chris@TTL recently posted…Buying the Total US Stock Market: VTSAX vs VTI and Alternatives