Ask Paul: July 21 (Premium)

Well, I wasn’t expecting another mammoth installment of Ask Paul, but here it is, with another terrific set of reader questions and a lot to read.
Invest in yourselves
jrzoomer asks:

Paul, with all your industry knowledge, do you invest in individual companies like MSFT, NVIDIA, GOOG etc? Do you have restrictions on owning individual companies?

I don’t invest in any companies in the tech industry, especially Microsoft, for ethical reasons: it is unethical to invest in a company when you earn a living writing about that company and might be influenced to bias your writing to manipulate that company’s stock price. It’s probably illegal, too, or should be. But it’s definitely unethical.

I don’t invest in any companies generally because we (my wife and I) are financially conservative and feel that doing so is a fool’s errand. Statistically, few people benefit from doing this and those that do are either lucky or were able to manipulate the stock price (insider trading or see above).

Or just generally how do you do your investing?

I think of what we do as investing in index funds, but since my wife handles our finances, I asked her for clarity (my brain is a set-it-and-forget-it kind of thing: I trust her, she does a great job at this kind of thing, I forget the details). And what we actually do---it’s all coming back to me---is invest in target date retirement funds, a mix of index funds and bonds based on a retirement date. That is, the further you are from retirement, the more aggressive the investment will be (more stocks, fewer bonds) and the closer to retirement you are, the more conservative you will be (more bonds, fewer stocks).

I have probably discussed this notion that, barring some horrible tragedy, I will never retire per se. I expect to write for my entire life, and at most, I could see myself perhaps writing less over time. And given this, and my wife’s correction of my notion of our retirement plans, I was curious what the date was in this target date retirement fund. She told me it was 2035, because we need a date, and that's when I will be 69 years old, but that this was arbitrary because we set that to keep the mix shifted towards the aggressive (more stocks than bonds) for now.

My son, who turned 25 this year, just set up his own target date retirement fund, and his date is 2065, when he turns 67. It’s aggressive now, of course, because he’s so young.

As with the health matters I’ve started discussing again lately, I’m not a financial expert and I’m not giving anyone advice here. I am simply describing what it is my wife and I are doing. But as with health matters, I have some resources that help to explain how we arrived here if you are interested. (And as with the health stuff, I suspect this may trigger some further and perhaps contradictory resources from readers.)

The core resource is a book by JL Collins called The Simple Path to Wealth: Your Road Map to Financi...