The Long View
Scott Burns: The Case for a Simple Retirement Plan
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Quick takeaways
- Scott Burns recommends a simple two-fund portfolio of a total stock market fund and a total bond market fund, which has often outperformed more complex and diversified portfolios.
- Scott Burns emphasizes the importance of mindful spending in retirement and making choices that align with personal values and priorities, rather than equating wealth with material possessions.
Deep dives
Couch Potato Investing: A Minimalist Strategy for Investing
Scott Burns, author and personal finance columnist, discusses his evolution towards couch potato investing, which involves buying and holding a diversified portfolio of low-cost index funds. He emphasizes that watching smart, articulate fund managers fail to consistently outperform the market led him to embrace this strategy. He found that the expense ratio was the only major variable that consistently predicted mutual fund performance. Scott recommends a simple two-fund portfolio, consisting of a total stock market fund and a total bond market fund. He highlights that the simpler portfolio has often outperformed more complex and diversified ones. He also addresses the fear of missing out on international stocks, but suggests that the U.S. market, with its large overseas exposure and favorable demographic trends, remains a good investment choice. Scott advises investors to choose an appropriate stock-to-bond allocation based on their risk tolerance and job security. He underscores the importance of not being intimidated by numerical precision and recommends the couch potato strategy as a simple and effective approach to investing.
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