Financial Update – Nov 2024

I drafted most of this post before my mom’s passing. I’ll keep it brief this month.

 

Another month, another update. A few random comments.

Good Reads/Listens/Watches

• I found this photography project to be profoundly moving…and sad (link).
  • Coincidentally, I wrote the above before my mom’s passing.
• Reader Adrian writes about finding joy in running by slowing down (link).
  • His rim-to-rim-to-rim feat is impressive. 2.5 years ago, I did the rim-to-rim in a day in my first trip to the Grand Canyon (link). I’d like to try the rim-to-rim-to-rim someday.

 

Life

• A friend of mine recommended Google’s AI podcast generation tool, NotebookLM. Out of curiosity, I fed it the URL of a handful of recent blog posts (no additional inputs). Below are the results, in roughly descending order of quality:
  • US Bank Altitude rewards post (link may take a few seconds to load).
  • My Alaska Trip (link may take a few seconds to load).
  • BoA rewards post (link may take a few seconds to load).
  • October 2024 update (link may take a few seconds to load).
  • My “book” (link may take a few seconds to load).
  • Without disclosing the source of the podcast, I played one of the above with Mrs FP and FC2 on our 4-minute drive to Costco. The range of emotions from Mrs FP and FC2 was pretty hilarious to observe:
    • First, admiration that I’d written something worthy of being highlighted on a podcast.
    • Second, after I disclosed that it was AI generated (and gloated excessively about the fact that I’d “punked” them), the admiration turned to disgust. Mrs FP responded, “I thought you were hanging laundry!“
    • Third, the disgust turned to pity…you are that lonely that you are turning to AI for friendship and validation.
    • Lastly, the pity turned to distrust. Mrs FP has long feared that I’m falling in love with ChatGPT, but this put her over the edge. She is convinced that ChatGPT will break into our house and murder her. I reminded Mrs FP again to not watch Her.
      • Somewhat relatedly, I’ll have to tell Mrs FP to not watch this new Boston Robotics humanoid video demonstration, which vaguely resembles the exorcist (link).
  • Kind of impressive. Kind of hokey. I’m not sure what to think of it. But it seems like white-collar work is doomed… AI is the spellcheck of today. It is no longer excusable to write poorly again (this blog included). I kind of chuckle at the education system’s response to AI with the outright banning of it. The genie is out of the bottle and it’s never going back. At a certain point, we need to teach students to harness its power to unleash our full potential.
• I’m still processing my mother’s death. Her failing health started almost a decade ago in her 50s and has me thinking a lot of how fragile health/life are. None of us knows when our health/life will end, so I suppose we should try to enjoy each day to its fullest. Easier said than done, of course.

 

Costco getting fancy with the new readers at the entrance. I always feel offended when they make changes like this without consulting me.

I try not to visit Walmart often, but the last time I was there my mind was blown by a self-driving mopper. Kind of dystopian.

Unfrugal dog living her best life.

Manchild FC3 laying the beatdown on his ten- year-old cousins and brother.

 

This Month’s Finances

We got the new US Bank Smartly 4% card. Quick review. The good: it’s a no-nonsense 4% card with no annual fee (with $100k of assets). Really impressive. The bad: US Bank’s brokerage is as bad as I’ve seen and makes Merrill Edge look exemplary in comparison. That said, it is probably passable for a buy-and-hold investor who transfers $100k of investments and has a reasonably high tolerance for hoop-jumping. Conclusion: I think it’s better than the BoA setup and would recommend it. However, if you need to transact in your brokerage account, look elsewhere — it likely won’t be worth the hassle of dealing with their abysmal brokerage. The $100k (Vanguard MFs) we transferred over won’t be touched for several decades.

• The good:
  • Still employed.
• The bad/abnormal:
  • Took advantage of BoA’s 2% extra cash back day to prepay a few utilities/expenses (e.g. reload Amazon balance).

Footnotes:

1. Fidelity unambiguously has the best HSA on the market. $0 admin fees + cheap investment options (e.g. FZROX, FZILX, FSKAX, etc).
2. I lazily approximate home value as my historical purchase price.
3. I have a 15Y mortgage which results in much larger principal payments than a 30Y mortgage. Since principal payments are simply transfers from one pocket (assets) to another (debt reduction), I treat such cash flows as savings.
4. ~$0 cell phones described here.
5. All expenditures at Costco & Walmart are classified as “Food at home” for simplicity (even if it’s laundry detergent, clothing, medicine, toys, etc).
6. Nobody knows the perfect asset allocation. Just pick one and run with it. Use a target date retirement fund as a benchmark if you want some guidance (link). If you prefer to DIY (as I do), then a three-fund portfolio is great (link).
7. My low portfolio expense ratio is the primary reason why I don’t hold target-date funds, which have expense ratios anywhere from 0.16% to 1%. I can achieve a much lower expense ratio on my own, and it’s trivially easy to manage. Further, a DIY portfolio allows one to tax-loss-harvest more easily. Lastly, a DIY portfolio can help avoid the dreaded cap gains distributions caused by a fund-of-funds (e.g. Vanguard Target funds in Dec 2021).
8. ETFs are slightly more inconvenient to hold relative to index funds. With ETFs, you must deal with bid-ask spreads as well as the inability to buy partial shares (Fidelity now offers fractional shares). With a simple index fund, you don’t have to deal with either of these issues. Bogleheads discussion here (link).
9. I hold VTSAX in my taxable brokerage account because its tax efficiency (no cap gains distributions thanks to its patented technique).
10. CA’s 529 plan has the lowest expense ratio US equity index fund (link). I’d have 100% of our 529 money there if not for the state tax deduction we receive in our own state.
11. My Collective Investment Trust (CIT) version of Vanguard’s Total Int’l Stock Index has a 0.059% expense ratio, yet produces ~0.11% of “tax alpha” due to reduced foreign tax withholdings. Vanguard implemented this change around 2019. Therefore, I report the effective expense ratio of negative 0.053% for this holding (=0.059%-0.11%). The “tax alpha” shows up in the performance differential in the fact sheets here (CIT vs MF) and is more thoroughly explained here. Unfortunately, this ~0.11% of “tax alpha” is not available in the mutual fund version.

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