By Josh Katzowitz, WCI Content Director
Taylor Larimore is one of the most important Bogleheads to ever grace the internet forums and chatrooms, and as he enters into centenarian status this month, let’s take a celebratory look back at his life and then ask him a few questions as he begins his second century on earth.
He served in World War II as a paratrooper during the Battle of the Bulge, and he was one of the American soldiers who helped surround the Germans in Bastogne in 1944, but he didn’t necessarily consider himself a hero. As Larimore, who earned five combat decorations, wrote in 2010, “We must never forget: The real heroes of World War II (and other wars) are those who never came back. And some who did. A few years ago, I went into a severely disabled ward at our VA hospital. It was so sad I went into the bathroom and cried.”
After returning from the war, Larimore began his investing career. When he was 25 years old in the late 1940s, a friend talked him into joining an investment club, and he recalled in a Bogleheads interview:
“The idea was that we would have a revolving ‘investment committee’ who would pick a few stocks for the club to buy—and later we would split the profits. The problem was there were no profits, and after a couple of years, we disbanded. Only our broker made money.”
After marrying in 1951, he sold life insurance (he later worked for the IRS as well), and he began investing with a buddy who was a Merrill Lynch stockbroker who put them in “churned” stocks and mutual funds. Though his broker/friend assured the couple they were doing well with their returns, Larimore later realized how badly they were underperforming the market.
He was already 62 years old when he and his wife, Pat, moved their securities from Merrill Lynch to Vanguard. Back then, he had built a portfolio of more than a dozen actively managed funds, but in the midst of reading two books (Bogle on Mutual Funds by John Bogle and A Random Walk Down Wall Street by Burton Malkiel), he eventually changed his strategy and switched to index funds.
With his discovery that he could buy and sell mutual funds without having to pay a commission to Vanguard, he still attempted to beat the market by researching more than a dozen market-timing publications at the Miami Public Library. After learning what he thought was the answer, he began writing a four-page monthly newsletter on how to time the market and sent it to about 40 friends. But his market recommendations got hammered in the 1987 bear market—a moment he called one of the most embarrassing episodes of his life.
That stopped his market-timing ways.
He went on to write his own books (including The Bogleheads' Guide to Investing, The Bogleheads' Guide to Retirement Planning, and The Bogleheads' Guide to the Three-Fund Portfolio), and he became a prolific poster on the Bogleheads forum (tens of thousands of posts and counting). Not surprisingly, he counts John Bogle as his inspiration, and in return, Bogle called Larimore the King of the Bogleheads.
On January 25, 2024, Larimore celebrated his 100th birthday, and to commemorate this titan of financial information and know-how, we wanted to celebrate his life and achievements. Since I’ve been a journalist most of my career, I celebrate by asking questions. Recently, I emailed Larimore with some queries, and a few hours later, I had his answers in my inbox.
Here's our email conversation:
Josh Katzowitz: This is probably an obvious question that you’ve probably been asked 100 times, but what’s your secret for making sure the money you saved for retirement has lasted until you reached 100 years old?
Taylor Larimore: When I was 80, my wife and I bought a Single Premium Joint Life Annuity. We liked it so much that we bought another a year later. These two lifetime annuities, together with my government pension and Social Security, gave me more guaranteed lifetime income than I can spend.
JK: What was the first major financial decision you made as a young investor, and how did it work out?
TL: We had a good friend who was a Merrill Lynch broker. Over time, he put us into about a dozen expensive Merrill Lynch mutual funds. Every year, he would take us for a ride in his lovely sailboat. Fortunately, I learned about Vanguard’s no-load index funds in 1986, and we have been with Vanguard ever since. Our good friend stopped inviting us to go sailing.
JK: I’ve been reading Morgan Housel’s book The Psychology of Money, and he asked a question to an economist that I want to ask you: What do you want to know about investing that we can’t know?
TL: I may miss your point, but I would like to know the best investments in advance.
JK: Looking back on the several decades of your investing career, what makes you the most proud?
TL: Mr. Bogle and I became good friends. Being able to share his investment philosophy on the Bogleheads Forum gives me great satisfaction.
Money Song of the Week
One of the early hip hop classics, Paid In Full by Eric B & Rakim, touches on a rags-to-riches type story (or at least the hope of a rags-to-riches story), and it’s interesting that, a half-decade after this 1987 classic hit the radio airwaves, a disagreement about money and how they should be paid for their work led to the demise of the duo for more than two decades.
Turns out that much like your spouse, if you’re not on the same page financially as your rapping partner, the relationship can fall apart.
First, the song which features lyrics like,
“Thinkin' of a master plan/'Cause ain't nothin' but sweat inside my hand/So I dig into my pocket, all my money spent/So I dig deeper, but still coming up with lint/So I start my mission, leave my residence/Thinking, ‘How could I get some dead presidents?’”
AND
“'Cause I don't like to dream about gettin' paid/So I dig into the books of the rhymes that I made/So now's a test to see if I got pull/Hit the studio, 'cause I'm paid in full.”
This recording eventually sold more than 1 million copies, and the album was certified platinum. It made somebody plenty of money. By 1992, though, the duo had broken up because of a business deal gone bad.
As Rakim said in this 2020 interview with The Believer, he and Eric B split over how they were supposed to be paid.
“It was a deal that he came up with,” Rakim said. “Eric said, ‘Yo, Ra, we got three more albums left on our contract. A cool way of doing it would be, I’ll do an album and keep all the money, you’ll do an album and keep all the money, then we’ll get back together and do a third album, finish the contract, and get more money. Then we’ll sign a new contract.’ Sounded like a great plan. All right, Eric B. So he did his album and, long story short, when it came time to do mine, we got into a problem. He didn’t want to do it. That’s when the love was lost.”
Eventually, the two reunited (only 23 years later!), but the impact this song made on hip hop (and the lessons that can be learned for how hard work can make you money) continues to reverberate nearly 40 years later.
More information here:
Every Money Song of the Week Ever Published
Tweet of the Week
Older clients ask about gold coins. Younger clients ask about #bitcoin . I've observed this for a few years. Now, with ETFs available, the older clients are asking about it. The conversation is shifting. At least that's my experience.
— Ross Marino, CFP®, CeFT® (@Ross__Marino) January 16, 2024
Be careful with cryptocurrency, especially as it gets easier to buy/speculate.
Have you followed Taylor Larimore during his tenure as King of the Bogleheads? What lessons have you learned from him?
[EDITOR'S NOTE: For comments, complaints, suggestions, or plaudits, email Josh Katzowitz at [email protected].]
Without a doubt one of the kings of bogleheads.
I believe SPIAS have a place but something to consider in regards to if you will be as happy as he is with his purchase.
He purchased at a time of relatively high interest rates followed by prolonged lowering of interest rates. Thus the following years, people couldn’t get “as good a deal”. There was also no serious inflation spikes especially early on. It’s hard to know the future but if interest rates rise substantially or immediately there are substantial spikes in inflation then folks might be less happy even though the product did exactly as advertised. When someone really needs the guaranteed income, you just bite that bullet. When not, be sure you know yourself and understand this issue. You are always trading one risk for another.
Long live the king.
So here’s my summary of today’s amusing column: ask the broker taking you for a sail “where are all the customers’ boats?” and if someone proposes “I’ll take the profits this job, you get them the next one” say “alright but I get to go first!” or even more realistically “let’s just keep splitting each job.” (How inebriated was the guy to believe, either foolishly that the follow on album would definitely/certainly do just as well as the next one, or selfishly that it would do even better than the one where his partner kept all the money?) I understand though that young idiots trust people; I’ve made that mistake myself. But not for several decades.
How awesome to e-mail Taylor and amazing he’s still sharp at the century mark! Josh, if you can e-mail him back I’ve always wanted to ask him if the original name of the Bogleheads, the Diehards, was based on the movie. Let me know man if you ask him!
Diehards came from Morningstar. A group of Vanguard fans (probably included Taylor) originally asked for their own Morningstar forum called the Bogleheads. Morningstar basically said no, we’re going to name the forum the Vanguard Diehards.
Actually I think Taylor had an even bigger part to play in that than I thought. He was basically heading it up.
The absolute king! Learned so much from him. Happy birthday!
Interesting conversation. He basically has 2 govt pensions, great for him but not applicable to most today.
If you read carefully, you’ll see he also BOUGHT two pensions at age 80 and 81. You can do that just as easily today. In fact, SPIA rates today are actually pretty good with the higher interest rates.
One additional thing to know, for a while now you can at times actually get more guaranteed income from an index or variable annuity with an income rider. That might not seem to make sense at first but it is true. So if considering a SPIA, one should look at this as well. Needs to be a short deferral period like one year in my view to be a valid comparison and I wouldn’t purchase either typically otherwise for several reasons. Could be a great post from one of the agents you deal with/advertise. Again only talking about guaranteed for life income.
It sure is hard to compare apples to apples doing that. The thing I like about a SPIA is the I, immediate. You start getting paid next month. Of course you should get more income if you put that off for a year.
Yes but it’s enough that you will see if you ask an agent who is knowledgeable that it’s likely worth it. It’s also more than a deferred income annuity. There are reasons for this based primarily on the fact that this isn’t the way they try to sell it. Obviously I’m no insurance lover.
You think the insurance companies have systematically mispriced the income riders?
Not really although possible and it depends on where interest rates go. Most of these sales are for income later on like 10 years or more. The fee of that adds up on the actual account value. 10 years or whenever later some people won’t activate what they paid for bc health or think they can do better. Additionally almost everyone is healthy who buys a SPiA. You just don’t know what you will be far out and some didn’t see that coming. It’s like a lapse support pricing.
One aspect of index investing that doesn’t get much focus is the spiritual side of it. I believe there’s a lot of peace to be had with an investment goal to realize the returns of the market, and the ability to achieve it through cost effective index funds. Or at least there’s a lot of envy and other nonsense to be avoided. You might ask him about that.
I cannot post at Bogleheads but it sounds like Taylor is unwell. Please convey my best wishes and immense gratitude to Taylor. He’s a first class gentleman.
You’ll be pleased to hear he posted yesterday but has been feeling unwell for weeks/months. Nothing specific he says, just old age. I mean, the man is 100.
Question: What kind of moron buys an annuity at age 80 then a second annuity at 81?
Answer: The kind of moron that lives past 100!
Happy Birthday Taylor!