My employer changed their donation matching policy such that I now have an incentive to lump 2 years’ donations into a single year, so I can claim the standard deduction during the year that I don’t donate, thereby saving around $1200 every 2 years. I’ve been donating between 10 and 12.5 percent for the last few years. This year I would be donating around 21%. Has anyone here been audited because they claimed a large fraction of their income as charitable contributions? How painful was the experience? I doubt it’s worth paying $1200 to avoid, but I thought I’d ask.
banx
My temporary solution is to max out my employer’s annual match. That the maximum match is somewhere between 10 and 15 percent of my income is very convenient, as that makes me feel like I’m contributing the “expected” amount for an EA (this feeling is only important for fuzzies) but still leaves me with what seems to be a good amount to save and spend. It also allows me to avoid committing an answer to the question of whether to donate now or invest and donate later. The guaranteed, almost-immediate, soon-to-expire 100% return provided by the match wins pretty clearly over the EV of investing and donating later, and since I feel like I’m donating enough for now, I can evaluate what to do with what’s being invested later on, based on my wants and needs.
If you want to take one more step of complexity (and assuming you have at least $6000 to invest) you can split your money between VTSMX and VGTSX as Unnamed mentioned. In doing so you would be diversified across the global economy, instead of just across the US economy. You would want 20% to 50% of your funds that are in stocks to be in international stocks.
Vanguard Target Date funds (e.g., VFIFX) are also a good option if you want something you never have to manage, and they have a minimum investment of $1000. They allow you to invest in a pre-determined allocation of domestic and international stocks and bonds, and keep you balanced at a target allocation that gets more conservative as you get closer to retirement age.
You should also strongly consider investing in a Roth IRA if your income is not over the limit for contributions (and if it is, there are ways around that). Contributions to a Roth IRA can be withdrawn at any time, though there are restrictions on accessing the investment returns. Your employer’s 401(k) plan is another good option for long-term investments.
The Bogleheads wiki and forum are excellent resources for learning about low-cost long-term investing.
But I agree with everyone else: if you want to do the simplest thing and stop thinking about it, invest in VTSMX.
Is it always correct to choose that action with the highest expected utility?
Suppose I have a choice between action A, which grants −100 utilons with 99.9% chance and +1000000 utilons with 0.1% chance, or action B which grants +1 utilon with 100% chance. A has an expected utility of +900.1 utilons, while B has an expected utility of +1 utilon. This decision will be available to me only once, and all future decision will involve utility changes on the order of a few utilons.
Intuitively, it seems like action A is too risky. I’ll almost certainly end up with a huge decrease in utility, just because there’s a remote chance of a windfall. Risk aversion doesn’t apply here, since we’re dealing in utility, right? So either I’m failing to truly appreciate the chance at getting 1M utilons—I’m stuck thinking about it as I would money—or this is a case where there’s reason to not take the action that maximizes expected value. Help?
EDIT: Changed the details of action A to what was intended
How is the world different if I make a donation?
It doesn’t avoid the problem if people want to vote with a percentage < 1%, and try to do so with a 0-100 value (e.g., .5 meaning .5% rather than 50%).
From GW’s perspective, each of their top charities can consume a certain amount of additional money before the expected value of an additional donation decreases by some amount. Their goal is to move money such that each charity hits that target, and then they’ll reassess. So they recommend donors split donations so that, as a whole, these targets are hit and EV is maximized. From your perspective, you may decide that concentrating your entire donation in one organization has a higher EV, since that organization has a generally higher EV relative to the others and since your action isn’t going to affect the actions of the rest of GW’s audience.
So you’re claiming that there is no way in which the US police and justice systems treat black people differently that isn’t reducible to intelligence or conscientiousness differences?
Here’s Optimal Employment, where the working in Australia idea is discussed, and here’s the Optimal Employment Open Thread.
Some people may make arguments for morality based on things similar to Coherent Extrapolated Volition. I don’t find those arguments convincing. I help people I don’t know because when I think about the alternatives, I prefer the world in which one fewer person is suffering to the one where I’m better off in whatever way (e.g., I have more money in my bank account) because I didn’t help. That preference is based on empathy, which was evolved, but I don’t particularly care where it came from. At some point that preference gets outweighed by selfish preferences, which is why I haven’t given all of my money away.
I don’t think maximally helping others is a particularly good way to maximize your own quality of life unless you already want to do that. Both (a) and (b) are true, but if your goal is maximizing your own quality of life you’re almost certainly going to do better if you focus on that directly. At least, in my particular case, there’s some amount of warm fuzzies I get from helping people and from identifying as someone who tries to effectively help people. So in that way my quality of life is improved. But I think that if I wanted to I could get that amount of fuzzies at a lower cost.
What do folks here think about blood donation? Is the consensus that it’s not an efficient way to help people?
Does she know that you (presumably) don’t believe in supernatural things? Does she know why? How do you explain (to yourself) her stories about seeing spirits. Those seem to be a lot more serious than simple beliefs in absurd things like “healing powers” (or astrology, etc). Do you really believe she’s not crazy? Is she making it up? (If so, why?) Using drugs? Believes they’re there but doesn’t actually see them, just “senses” them or something?
I remind myself that I care about each individual that can be helped by my action. Even if there are huge numbers of individuals I can’t help, there are some I CAN help, and helping each one is worthwhile.
Given this definition, I don’t see why only stocks and bonds qualify.
My claim is that equity and fixed income are the important pieces for reaching that goal. With a total stock index fund and a total bond index fund you can achieve these goals almost as well as any other more complicated portfolio. Additional asset classes can add additional diversification or hedge against specific risks. What other asset classes do you have in mind? Real estate? Commodities? Currencies?
True, but given that you said “cash and CDs” I thought your idea of cash excludes deposits.
Fair enough. I was unclear.
What’s the criterion of importance?
Important to the goal of increasing one’s wealth while managing the risk of losing it. Certainly there are other possible goals (perhaps maximizing the chance of having a certain amount of money at a certain time, for example) but this is the most common, and the one that I assume people on LW discussing basic investing concepts would be interested in.
Um.… I hate to break it to you...
I’m not sure if you’re referring to the fact that popular banks are returning virtually zero interest or if you’re interpreting “cash” as “physical currency notes”. If the former, I have cash in bank accounts that return .01%, 1%, and 4.09% (each serving different purposes). If the latter, I apologize for the confusion. The word is used to mean different things in different contexts. In the context of investing it is standard to include in its meaning checking and savings accounts, and often also CDs.
Yes, but those are the important ones. Stocks for high expected returns and bonds for stability. You can generalize “bonds” to include other things that return principal plus interest like cash and CDs.
I don’t know for sure, but the answer is very probably yes. I recommend searching http://www.bogleheads.org/forum/ for Australia-specific info.
You could also just think that GiveWell doesn’t currently have as much room for more funding as the recommended charities do, even though GiveWell may disagree with that assessment.
Has this been demonstrated for home environments in the developing world or sub-middle class home environments in the developed world? My prior understanding was that it had not been.
Survey completed, besides the digit ratio.