 Okay, so we have a bunch of questions that have come in. Alan, Mike, and Christine will be answering them. And we're going to try and go through them fairly quickly because there's quite a bit. So starting off, we have a question as to why ETFs are considered more tax-efficient than mutual funds. And like as I would add to that, are there particular asset classes or types of assets where that difference is significant or not significant? The reason gets pretty technical. Also, this reason, by the way, doesn't apply to Vanguard. You can ignore it for Vanguard because with Vanguard specifically, and this might change in the near future as Vanguard had a patent on a way of creating their funds, that patent expires and how other companies are copying it. And so at Vanguard, the ETFs and mutual funds are literally the same fund. They're just different shared classes. So the taxes are going to be the same. So at Vanguard, it's not true that ETFs are more tax-efficient than mutual funds. At other companies, it often is. And the reason for that is when a mutual fund needs to raise cash, it has to sell stuff often. And the mutual fund often has to raise cash whenever investors sell shares of the fund. So investors sell shares of the fund, which happens sometimes. So the fund has to sell stuff. So you've got capital gains. And then the remaining shareholders are stuck with the tax bill for those capital gains. With an ETF, that's not how it works. With an ETF, we have what we call authorized participants who are huge, like investment banks, Goldman Sachs, Chase, things like that. And the fund company can basically swap giant shares of the ETF. So this is a bit of a simplification. Giant shares of the ETF for securities with one of those other companies. And when they do that, they can raise cash without having to sell something. They can hand over the securities to another company. And that's not considered a taxable event, essentially. And they can, in fact, pick the securities that have the lowest cost basis. So those would be the ones that, if they sold them, they would have the highest gains. So they could just periodically get rid of those without actually having to pay tax. And so it's just like a neat trick that ETFs have that mutual funds don't, although we're probably going to see that change as other companies copy the thing that Vanguard's doing. I think that was a great way of dealing with a complicated topic. Alan, you spoke about selling high and buying low. The question is, how do you know when to rebalance a portfolio? You know, as long as you rebalance, it's a good thing. Some people say every six months, every year, whatever. My personal opinion is to set a tolerance. So for instance, if you set a 60% stock portfolio, you might want to set a tolerance of 6 percentage points. Below 54, you have to buy. Above 66, you have to sell. Now the main reason to do that is so that you're keeping your risk level relatively constant. Now it happened to work out brilliantly because of the March 2020, between February 19th and March 23rd, 33 days in 2020, stocks fell 35%. As I mentioned, I was out of tolerance. I had to buy. I'd be lying through my teeth if I said it was easy. So as long as you rebalance, I think it's a good thing. I personally believe in setting a tolerance so that on average, it's once or twice a year. OK. We had a question talking about index funds. But we know, we all see, that there are always some funds that beat the market in any given year and sometimes for longer. So why not choose the funds that beat the market? If I had a crystal ball, I would. I would also be a billionaire. There's no persistence in Bill Miller's value trust that beat the S&P 500 for 25 years in a row, and he ended up losing more people than he ever made for others. I can just add a little bit of color to that. We have a ton of data at Morningstar. And when we mine that data to look at the factors that contribute to good or bad fund performance, it comes back to costs much more than performance. And so index funds have that built in advantage of very low costs. Costs also tend to be persistent. If a fund has low costs, it tends to continue to have low costs. And so the benefits accrue to index funds for that reason. I would also say as a caveat, when we slice and dice our data, what we see when we look at the subset of active funds that have very low costs, so I would add Vanguard's active funds into the mix, we start to see a much more competitive universe. So if you do want to own some active funds around the margins or even as core holdings, I would just do yourself the favor of starting with the very inexpensive subset, because at least that group has a fighting shot at performing reasonably well relative to an index fund. This one is for Mike Piper. Can you talk about when you should consider converting funds from a traditional IRA to a Roth, given that you'll need to pay taxes when you do that? Should it be during the accumulation years or during retirement years? So a Roth conversion is when you take money from a tax deferred account and you move it to a Roth account. And when you do that, you have to pay tax on the money that you move over. And the general idea is that you would do that whenever your income is unusually low, because an unusually low income typically means an unusually low tax rate. And so the idea is you're taking advantage now of this temporarily low tax rate that you have pay tax now at this low tax rate on a part of the tax deferred money. Then it's in a Roth account going forward and you don't have to pay taxes on it later. So most of the time, the times that we have an unusually low tax rate in our lives are we've retired and Social Security hasn't started yet. That's the typical window. But there are some years during the accumulation stage where you might have an unusually low tax rate, like if you take a sabbatical or something like that. But typically Roth conversions are more likely to be a retirement tax planning tool. We had a question about something that was mentioned almost in passing at the session. What is factor investing? Yeah, can you hear me? Okay. It's active investing. It's picking certain stocks that you think will outperform. So for instance, small companies and value beaten up companies had a very long history of beating the market. Again, that was backward looking and it did not work going forward. And by the way, it was never billed by Eugene Fahman and Ken French as a free lunch. It was compensation for taking on more risk and that risk has really shown up. And the only way to guarantee that you're going to get the full return of the market and beat most investors is to have every factor. So in other words, not tilt, own every stock, taking all the knowledge of the investors and buying a total stock index fund or total international. I would just add a quick point on that front. I agree with everything Alan just said. One subset that I'm interested in from the standpoint of factor investing would be kind of a dividend growth strategy. So Vanguard has a couple of great funds in this realm. Vanguard dividend appreciation, which is the pure index fund and Vanguard dividend growth, which is an active fund. And the reason why I find them intriguing, especially for retirees or people who are moving into drawdown mode, is that they have a pattern of much lower volatility, not much, but meaningfully lower volatility than the total market. So I feel like if they help a retiree make peace with the equities that they should have to outrun inflation over time, I feel like maybe adding a bit of that to a total market index is not a bad factor to tilt toward because it is a way to bring down the volatility in the portfolio. This tends to be a higher quality subset of the whole market. So that would be one factor that I would be like, that kind of makes sense to me. And a somewhat related question, what are your thoughts on market weighted versus equal weighted indexes? It's active investing. It was really hot a long time ago. It is really underperformed. Guess what? It was something like, well over a quarter of the US stock market are now in the fantastic seven. The conventional wisdom was those large cap growth companies were way overvalued. Guess what had just about all of the return of the global stock market this year, those seven. So just to be clear, you're saying that an equal weighted index is active management because it's not following the market weight. Yeah, exactly, because you're way underweighting the Apple and Alphabets and Nvidia and underweighting those that are at the bottom of, I'm sorry, overweighting those that are at the bottom. So in other words, passive investing is taking all of the knowledge of millions of investors around the world and harnessing that knowledge and guaranteeing that you're gonna beat most people in that stock market. I'm not opinionated. A question for Mike on 529 plans. Can you invest in what you want in a 529 or is it only in predefined portfolios? It's generally gonna be predefined portfolios. So firstly, there's state specific plans and sometimes you might have some state tax benefit for contributing to the plan that is run by your state, like maybe you get a state tax credit. And so then you're kind of just stuck with whatever investment options that they provide. Otherwise you can, if there isn't a state tax benefit that you're trying to get, then you can pick any 529 plan. And so while you can't literally invest in anything in the plan because you're still limited to whatever options they make available, the fact that you can pick from so many different plans sort of means that you could pick whatever you want. Thank you. Here's a sort of a specific scenario, but I think it maybe has broader implications as well. The question is, my husband and I will have two kids in college for a two year overlap. We have stocks that have done well over time. If push comes to shove and we need dollars for tuition, do we sell the stocks or do we take out a loan? I would say evaluate the tax consequences, but my bias would be to, especially with interest rates going up and loans getting much more expensive than they were. My bias would be to use that appreciation to help pay for school. I would concur. I mean, it does depend, investing as simple taxes are. It depends on a whole lot of things, but in general, you would not want to take out a loan in my opinion. Yeah, there are some tax strategies like gifting the appreciation, if the kids aren't on your tax return, and they may be in a 0% long term capital gains rate, and that's a wonderful strategy, but there are just zillions of permutations and combinations of tax strategies. One thing, it wasn't super clear from the phrasing, but it sounded like maybe the stocks there are individual stocks, in which case, if that is the case, I'd be extra inclined to just say, hey, this is a great excuse to diversify away from that, to eliminate that risk in our portfolio. Or an expensive active fund. Which relates to the next question, is if someone wants to lighten up on their high fee funds and move the money into low cost funds, such as Vanguard index funds, how do you manage a transition like that? Carefully. You want to look at marginal tax brackets, you want to look at how expensive those active funds are, you want to look at all the details of the taxes that you're going to pay now, and it's really a timing issue, because eventually you're going to pay taxes unless you die, and step-up basis. So it's a security by security analysis, and a lot of what I do are the... You know, trying to deal with the complexities of moving towards implicitties and lower costs. And I just jump in too, I would say, you know, obviously if it's, or maybe not obviously, if it's in some sort of tax sheltered account, just prune away at that high cost investment, and not worry about it, because you won't pay taxes to make that trade. The other thing I would say about high cost active funds is that many of them have been serial capital gains distributors, especially active funds, and so if you've been receiving those distributions and having to pay taxes on them, you're able to step up your cost basis to reflect that. So you may have sort of, it's not ideal, but you may have kind of prepaid your tax bill that would be due on making those changes, so check your cost basis to see where you are, and you may find that you're fairly close to the fund's current NAV, and selling and getting into a lower cost investment portfolio might also be tax efficient going forward, and it will also potentially not cost you that much in terms of a tax bill. Okay, I wanna thank the three of you very much, and give us a few minutes to wrap up with a few final remarks from Christine. Well thanks, Karen. I wanna thank all of you for being here for day one of Boglehead's University. I wanna thank all of our instructors, and just have a couple of parting comments. One is that we have a cocktail reception in an hour, so starting at five o'clock. It'll be in this room, but the hotel staff will get it all changed out to suit a cocktail reception. We'll have someone at the door handing out tickets. Each person will get one drink ticket that you can use however you see fit, or give it away if you don't want it, and then we will switch to a cash bar if you want additional drinks beyond that one drink ticket. So just grab your ticket when you come in, and I think that's all I had. Thank you all for being here today. We really appreciate it.