03-27-2006, 2:22 PM | Post #171354 |
View Complete Thread
I discoved this "Investment Gem" by Diehard Paul Crafter in Conversation 49022. It is not yet a printed book--but it should be. There are very few books with as much common sense advice on how to invest successfully. I know you will enjoy these excerpts from his free |
"Keep costs as low as possible. Whatever you spend on buying and maintaining your investments comes directly out of the returns you receive."
"There is no need for "Wall Street" language or complicated strategies."
" Risk being generally defined as not having enough money for something important when you need it."
"Don't compare your allocation to those of other investors. It isn't relevant."
"The first thing you need to do when considering your investment strategy is to figure out just how much tolerance for risk you have."
"Retirement is not the end of investing because withdrawals may need to last another 30 years."
"The 1929 market crash was the only one of the top 10 worst that exceeded a 50% loss. The other nine biggest crashes all lost around 40%."
"Down-turns are normal parts of investing, so expect them and do not panic when they occur."
"When making a good assessment of your risk, you have to consider your personal ability, willingness and need to take the risk."
"For most investors, minimum and maximum holdings in stock is somewhere between 15% and 85%."
"How much money you are willing to put into stocks is responsible for most of the risk you take."
" Limit your riskier bond fund exposure to 10%-15% of you bond allocation."
"Almost all indexes are cap weighted -- so your dollar buys the same percentage of a giant company as it does a small company."
"(Professor) Markowitz discovered, using different asset classes not only spreads out risk, it can increase portfolio returns without increasing overall portfolio risk."
"Using a total market fund is accepted by many professionals as one uncomplicated way to gain some exposure to four asset classes at once."
"The fixed income portion of your financial assets is the safe part of your portfolio."
"I-bonds, which are inflation protected and tax deferred, are a good choice for taxable accounts if you don't plan on using the money for at least 5 years."
"Adding funds is the last step in portfolio construction."
"When you invest by purchasing individual stocks, you are competing head to head with professional money managers. Individual stock picking demands a lot more knowledge and attention than most average investors are willing to put into investing."
"Loads have nothing to do with operating the fund - the money goes strictly to the guy who sold it to you."
"The great majority of professional fund managers start off at a disadvantage as their funds have expense ratios and trading costs that are about 2.0% higher than index funds "
"The majority of investors, being unaware of proper fundamentals or historical evidence, believe that looking only at past performance is the way to pick funds."
"Selecting a good active manager is not a simple task the casual investor can do. The selection process requires a lot of time and expertise."
"There is no way you can forecast future returns based solely on past performance. Be very leery of funds with spectacular gains. Look for consistency and discipline."
"Active fund managers played a very active role in fueling the tech bubble in the late 1990s and many went down much harder than the market index."
"Holding steady with index funds virtually guarantees above average performance in the long run."
"Successful investors, however, understand that beating the market is not what investing is about. It is not a competitive game. Those who treat is as a contest usually do not make good investors."
"Investing is always a balancing of risk against reward - not a contest to see who can get the highest returns."
"There is no perfect investment plan. No one fund, no one allocation, or no one strategy will be correct for every investor in all market conditions."
"It is surprising how many investors cannot answer the basic question, "what is your asset allocation?""
"Keep things simple. -- Investing isn"t rocket science."
"The most important reason to rebalance your portfolio is to maintain your desired risk level."
"Rebalancing imposes a discipline that results in an investor buying low and selling high which is the name of the game after all."
"Rebalancing isn't difficult, but it is important and part of your investing discipline."
"Writing down your objectives, goals and strategies declares you are serious, helps you remember the details, and helps you stay focused."
"The first rule for securing your future is planning to pay yourself first."
"Temptation to join the crowd or rein in stock allocations can be very strong. Ninety percent of what you read and see is useless noise and must be ignored."`
"Compounding is why it"s so smart to start early and stick to a regular investment plan
Originally posted in thread: 49073