*Investors Blog*

[Astro14]

Buffet said "diversification guarantees mediocrity".

That's an oversimplification.

Further - what is mediocrity? Serious question.

If mediocrity means market results without fees over the long term, ala a Vanguard S&P 500 Index fund (they created the product), then you have outperformed 95% of the actively managed funds - and a 95th percentile performance may be "mediocrity" for some, but for nearly every single small investor - that is a grand slam.

Buffett has a team of hundreds, who can do research, go to companies, put "boots on the ground". No small investor, myself included, can ever hope to match that level of analysis.

So stop trying.

Be very, very happy with mediocrity - start early, don't panic, stay the course, and that mediocrity will lead to you being a millionaire.

Simple.

 

[johnmyster]

Be very, very happy with mediocrity - start early, don't panic, stay the course, and that mediocrity will lead to you being a millionaire.

Simple.

Being a millionaire in your investment account is mediocre.

 

[rijndael]

Being a millionaire in your investment account is mediocre.

Depends on age. Doing it by 30 is way different than doing it by 72.

 

[Astro14]

Being a millionaire in your investment account is mediocre.

Depends on your age - and millionaire is a threshold, not an absolute value.

The first million is hard.

The rest are easy.

 

[alarmguy]

Being a millionaire in your investment account is mediocre.

eh ... not according to the percentages.
The Fed states less than 4% of Americans have over a million so if you have that you are above the other 96%
20% over 50 years old have nothing.

"If you have more than $1 million saved in retirement accounts, you are in the top 3% of retirees. According to EBRI estimates based on the latest Federal Reserve Survey of Consumer Finances, 3.2% of retirees have over $1 million in their retirement accounts, while just 0.1% have $5 million or more."
Source (but many others) https://foolwealth.com/insights/are-you-in-the-top-3-of-retirees

https://moneywise.com/managing-mone...r-401ks-but-its-probably-fewer-than-you-think

 

[johnmyster]

eh ... not according to the percentages.
The Fed states less than 4% of Americans have over a million so if you have that you are above the other 96%
20% over 50 years old have nothing.

"If you have more than $1 million saved in retirement accounts, you are in the top 3% of retirees. According to EBRI estimates based on the latest Federal Reserve Survey of Consumer Finances, 3.2% of retirees have over $1 million in their retirement accounts, while just 0.1% have $5 million or more."
Source (but many others) https://foolwealth.com/insights/are-you-in-the-top-3-of-retirees

https://moneywise.com/managing-mone...r-401ks-but-its-probably-fewer-than-you-think

You can be better off than the masses of broke people and still be mediocre. Being above average doesn't mean great if the average is a dumpster fire.

 

[Astro14]

You can be better off than the masses of broke people and still be mediocre. Being above average doesn't mean great if the average is a dumpster fire.

View attachment 272793

So, what net worth level would you consider to be "not mediocre"?

 

[Pablo]

So, what net worth level would you consider to be "not mediocre"?

0.43$

 

[johnmyster]

So, what net worth level would you consider to be "not mediocre"?

Meh, I'm not trying to achieve net worth. Net worth is a tool to provide continued income to my family soon enough that I can retire before my body limits my ability to enjoy life.

A million dollars won't do that, so I consider that mediocre.

EDIT - or enough net worth for my family to land on their feet if something happens to me. The self-insured version of life insurance, if you will. Achieving either of those things is not mediocre.

 

[Astro14]

Meh, I'm not trying to achieve net worth. Net worth is a tool to provide continued income to my family soon enough that I can retire before my body limits my ability to enjoy life.

A million dollars won't do that, so I consider that mediocre.

So, achieving a net worth that replaces your income would be "not mediocre"?

Bob Brinker used to call that "critical mass" - where the income from your investments exceeds the income from your job. You no longer need to work - the reaction is now self-sustaining.

No argument on your definition of a comfortable retirement - but how does one get there?

A million is on the way, is it not?

 

[johnmyster]

So, achieving a net worth that replaces your income would be "not mediocre"?

Bob Brinker used to call that "critical mass" - where the income from your investments exceeds the income from your job. You no longer need to work - the reaction is now self-sustaining.

No argument on your definition of a comfortable retirement - but how does one get there?

A million is on the way, is it not?

It is, but the point was that mediocre gains year over year makes you a millionaire. I think the sentiment was that average gains (not trying to shoot for the moon) achieved consistently yields some amazing outcome...a million dollars. My point is that merely aiming to be an investment millionaire at some point in the future is not nearly sufficient unless you've done the math and are aiming for something far more mediocre than the typical proactive investor.

Just being in the 96th percentile is a start, but it may not yield financial independence. My spreadsheet isn't trying to get me to a finish line relative to other people. It's trying to get me to my finish line.

 

[tbm5690]

It is, but the point was that mediocre gains year over year makes you a millionaire. I think the sentiment was that average gains (not trying to shoot for the moon) achieved consistently yields some amazing outcome...a million dollars. My point is that merely aiming to be an investment millionaire at some point in the future is not nearly sufficient unless you've done the math and are aiming for something far more mediocre than the typical proactive investor.

Just being in the 96th percentile is a start, but it may not yield financial independence. My spreadsheet isn't trying to get me to a finish line relative to other people. It's trying to get me to my finish line.

What you said originally was that having a million dollars in your investment account was mediocre...which is why everyone is arguing with you. What you should have said is that having a million dollars in your investment account at the point of retirement is mediocre...then we could have saved all of this conversation.

 

[johnmyster]

What you said originally was that having a million dollars in your investment account was mediocre...which is why everyone is arguing with you. What you should have said is that having a million dollars in your investment account at the point of retirement is mediocre...then we could have saved all of this conversation.

I stand by the statement. Having a million dollars in your investment account is mediocre. Especially after many years of whatever average returns compounding, which was the stated case.

If you want to add qualifiers like age and anticipated retirement lifestyle, then maybe it's sufficient even while being mediocre. But as a generalization, it's mediocre. Do mediocre things, mediocre effort, have mediocre goals, get mediocre results. Want to never retire, aim to have a million dollar net worth.

 

[alarmguy]

I stand by the statement. Having a million dollars in your investment account is mediocre. Especially after many years of whatever average returns compounding, which was the stated case.

If you want to add qualifiers like age and anticipated retirement lifestyle, then maybe it's sufficient even while being mediocre. But as a generalization, it's mediocre. Do mediocre things, mediocre effort, have mediocre goals, get mediocre results. Want to never retire, aim to have a million dollar net worth.

Mediocre is a matter of opinion

 

[Zee09]

Unlike you heavy hitters I needed
some lunch money....12 minutes later and I was happy to sift...

 

[supton]

I stand by the statement. Having a million dollars in your investment account is mediocre. Especially after many years of whatever average returns compounding, which was the stated case.

If you want to add qualifiers like age and anticipated retirement lifestyle, then maybe it's sufficient even while being mediocre. But as a generalization, it's mediocre. Do mediocre things, mediocre effort, have mediocre goals, get mediocre results. Want to never retire, aim to have a million dollar net worth.

I'm a big fan of mediocre--perfection is the enemy of the good enough.

I'm looking forward to hitting a mil in a few years. Won't be my stopping point. I'm sure some have cleared a mil in less than 10 years but I won't, I'm fine with that.

But in retirement, mediocre returns are what I expect, as I'll derisk my portfolio, so as to better handle the swings. The more I have the more I could leave in "risky" or growth vehicles, but a large core will be only doing min gains.

I'm not sure why net worth is being used--I can't spend my house value. I'd rather focus on more liquid things, unless if the plan was to liquidate the house and rent for my final years--which I don't plan to do.

 

[Pablo]

My preset sell limit on SQQQ went off

 

[JeffKeryk]

I'm a big fan of mediocre--perfection is the enemy of the good enough.

I'm looking forward to hitting a mil in a few years. Won't be my stopping point. I'm sure some have cleared a mil in less than 10 years but I won't, I'm fine with that.

But in retirement, mediocre returns are what I expect, as I'll derisk my portfolio, so as to better handle the swings. The more I have the more I could leave in "risky" or growth vehicles, but a large core will be only doing min gains.

I'm not sure why net worth is being used--I can't spend my house value. I'd rather focus on more liquid things, unless if the plan was to liquidate the house and rent for my final years--which I don't plan to do.

In retirement, dividends are wonderful, as are (in my case) double tax free CA Muni bond funds...
But for me the big thing was to minimize recurring costs.

 

[Astro14]

I stand by the statement. Having a million dollars in your investment account is mediocre. Especially after many years of whatever average returns compounding, which was the stated case.

If you want to add qualifiers like age and anticipated retirement lifestyle, then maybe it's sufficient even while being mediocre. But as a generalization, it's mediocre. Do mediocre things, mediocre effort, have mediocre goals, get mediocre results. Want to never retire, aim to have a million dollar net worth.

The statement comes off as arrogant braggadocio. Truly.

Most people would be thrilled with a net investment portfolio of $1 million.

And we were talking portfolio, not net worth.

But that’s still more than about 95% of the people in the US will achieve by the time they retire. If you’re in the top 5% of anything, you’re doing fairly well, and that must include finances.

My goal was to inspire, to paint a pathway, not to state what number works for you.

By implication, though, because I was trying to portray the path to achieve $1 million to somebody else, and you replied directly to me, and continued the argument, you’re saying that I’m mediocre, have applied mediocre effort in my life, that I’ve set mediocre goals and that I have accomplished mediocre things.

I assure you that that has never been the case.

 

[SC Maintenance]

I'm not sure why net worth is being used--I can't spend my house value. I'd rather focus on more liquid things, unless if the plan was to liquidate the house and rent for my final years--which I don't plan to do.

I don't. Expensive house is nice, but it costs more to maintain, insure, is taxed higher, and as mentioned you can't spend it. You need a place to live, but beyond that its a non productive asset.