Thought this may be interesting. My wife and I just began building our portfolio and I find it kind of addicting. While we aren't huge earners we do sometimes have stuff left over we can invest. Interested to hear how others are investing for the long term.
Last edited by breakingtime91; 08-14-2017 at 09:48 AM.
We have a set asset allocation that we follow religiously (85% stocks and 15% bonds further sub-divided into specific types of stocks and bonds). Essentially everything we own is in index funds and the expense ratio for our portfolio is 0.1%. I've made no substantive changes in 11 years. I highly highly recommend The Intelligent Asset Allocator by William Bernstein.
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R, I would strongly recommend you visit (and join) the Bogleheads.org website. It is a great source of excellent information.Originally Posted by breakingtime91
If I were starting over today I'd look to keep it simple and well balanced which you can achieve with just a few low cost index funds in either taxable, Roth or traditional IRA accounts. A total market domestic fund, a total market international fund and a domestic or global bond fund is really all you need. There are even funds available which do the work for you and combine each within one fund. But then you have to be comfortable with the allocation to each sector.
The ratios of equities to fixed income will vary according to the time frame you intend to invest the money and your ability, willingness and need to take additional risk.
I would recommend a very basic book by John Bogle called The Little Book of Common Sense Investing. There is much wisdom in this little, easy to digest volume and it's a good place to start.
I like the Vanguard Funds but there are other worthy fund families as well.
ETA:
Pangloss mentioned Bill Bernstein and he is right up there in the pantheon of investing greats whose work I enjoy. I have corresponded with Bill many times over the years. He can be a bit complex in some areas but he also has some very simple "platitudes" which make a great deal of sense.
I also enjoy the work of Larry Swedroe quite a bit and of course, Mr. Bogle, as mentioned above.
Look into making an "Investment Policy Statement" for yourself. It can be simple enough to write on a cocktail napkin but it will give you a basis for steering your investments (only) as required over the coming years.
Last edited by blues; 08-14-2017 at 09:26 AM.
There's nothing civil about this war.
Vanguard is amazing for long term investments. Great returns, and great risk management, hundreds of types of funds to choose from that fit everyone. Beats doing it yourself and messing up. You won't become filthy rich over night but can help build that retirement egg...
I would love to know your allocation. And approximate age
I was active on the Bogleheads forum for several years. It is a truly fantastic resource and I benefitted greatly from it!
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Investing for the long term at my age has to be viewed retrospectively. While not really cutting edge or glamorous (ok, actually pretty boring) I initially just chose a good mutual fund and invested a set amount every month, just as though it was another bill that had to be met. Time is the magic that makes long-term investments work, or at least that's how it worked for me. Of course, when I started the DJIA was around 1000 and the speculation was focused on what happens when it would hit 1100! I got a little too confident with some initial success and after a bit speculated with precious and non-precious metals in the futures market. Lost enough for me to realize my limitations and it was back to that steady mutual funds. Tax deferred investments won't surprise you with EOY capital gains, on which you get to pay now for what you intend to enjoy in the future. As one vet to another, you might get some good advise from USAA if you're a member - they've given me straight answers in the past.
I am not particularly active anymore but I do post from time to time and I check new posts fairly regularly to see what's up.
There's nothing civil about this war.
Compound interest is your friend, as well as a long time horizon. Even a small amount every month can add up, and starting now is a good bet. At the same time, overly high fees can be a killer. An increase in fees that seems small (e.g. 0.5%) similarly compounds over time, and eats into your returns over the next 30-40 years.
You can run some estimates in excel to see what the impact is of compound interest is. For example, you could compare saving 5K a year for the next 10 years and stopping and letting your investments compound, then doing the same starting 10 years from now until retirement age. Similarly, you can compare an expected return, then subtract x% in fees off that return a year and see where you end up.
The other thing is you need to know you and your wife's psychological response to losses or gains. If you can hold the course on your strategy, can you live with the anxiety? I read a thread of some guy that was leveraging his investments near the bottom of the market since he was young and mathematically he likely will come out ahead than just investing directly. He did okay financially in the end, but the stress absolutely was not worth the potential monetary gain (IMO). Similarly, if you go 100% stocks and the market crashes, will you pull out until the market is soaring again, effectively buying high and selling low? Or if one of you can hold on, but the other cannot, will it be worth the stress in the relationship?
I know that doesn't help you craft a specific strategy, but hopefully those are some things that will be helpful to think about for you guys.
I am currently investing through USAA. Great to work with and they have been guiding me into a "modertly conservative" investment plan. As of right now that focuses on things other than stocks or bonds. I plan on upping that in the coming months by building my stock portfolio and as I age adding bonds (been reading Blues recommendation @ bogleheads)
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