With a 40 yr time horizon, you can afford to be agressive.  But what's the point??  You could invest $2000 a year in VTSMX - Vanguard's Total Market Index, be diversified, take less risk, and still be a millionaire by the time you're 65.

I'd dump the clipper fund.  It seems like a mediocre performer.  VHCOX is another large cap fund, which is fine.  And I would certainly cut way back on the emerging markets fund.  Emerging market should be considered a supporting player, but not a core holding in one's portfolio. 

Sure you can diversify with just 3 or 4 funds.  Hard core indexers do it with Total Market index & Total International Index.  And then they might add Total Bond index for some additional diversification & fixed income exposure.   

You might want to consider jsut about everything in a fund such as a retirment fund which is targeted for a 40 year horizon...that way you'd get excellent diversification and the trustee would automatically adjust your holdings very slowly over the long run so that by the time it's time for you to retire you'd be holding a much tamer fund...I know this takes the "fun" out of investing in a sense, but it takes the guessing out of holding your investment..

 

Might want to set up a separatge 3 to 6 months in money markets or cd's as an emergency fund.

 

Regards,

Bob

If I were your age I would have all or most of my equities in emerging markets and just add to them when the market pulled back, which of course it will... those markets may be frothy at the moment, but with such a long time horizon you have to take some meaningful risk... and there are hardly any market experts (even conservative ones) who would dispute that emerging markets are generally the place with the strongest returns for some time to come...

Dont listen to us old fogys around here... stick with your aggressive strategy and get used to the bumps

Ajw
 

Hi,

 

Here is an advice from 1 newbie to another.

 

When a house is built you think of foundation then you think of extensions.

Treat your investing in the same way.  From what you wrote .. your following the crowd and if you invested last year why are u moving money. A mutual funds history is looked for 3 years before investing so also should your investment horizon be.

 

Start with a core fund and then go running around for sectors.

Truth is bitter but it leaves a sweet taste. 

 

thanks

amit

 

You're on the right track by remaining debt free. Here are a few tips:

 1. Only keep just enough to pay bills & other expenses in your checking account.

 2. Keep 3-6 mos. of living expenses in the vanguard money market

 3. Dump PRMSX & CFIMX and move the $ to the Vanguard Tot. Stk market index (50%) & Vanguard Total International stk mkt index (50%) - you get global diversification

 4. Add the Vanguard reit index for additional diversification (later).

Hope that helps,

Greg

To all,

Thanks for the input.  Reading your replies gives me another question.  Is there any reason I shouldn't invest all my money in a few high risk, high return areas?  If I have the self control not to move my money for 20 years, shouldn't I put it in a group of investments designed to maximize my return over that time period? 

Ajw seems to agree with me, while the rest of you want me to be more cautious.  Over the last 20 years, Ajw's advice certianly would have been right.  Is there any reason to expect that over the next 20 years that won't be the case as well?

my advice would be to have a go anywhere/multicap funds like cgmfx,jsvax,fairx etc as ur funds..let the mgr decide what country/sector is good for investment

regards

 

The vanguard total international stk index fund contains stock from Europe, Pacific & Emerging mkts. Having this much exposure within one fund reduces fees and expenses, which equals more money working for you.

 Greg

10 year total returns/average annual return             growth of 10k

PRMSX - 14.14%                                                   $37,279

VGTSX - 7.04%                                                       19,635

Risk and return are correlated.   The TRowePrice fund biggest one year drop was -26.35% while the Vanguard total int index was -20.15%.  For fun, I charted the Russia fund LETRX which had a total return of $61,539.  It shows a big drop early in the ten year period so the risk is clearer than when comparing the other two.  Emerging markets crashed in about '96 which has now disappeared from the returns.

It's easy to say you can tolerate volatility and risk but it's very different when you're living through it and watching money go down the drain.  It changes your perception of risk and you find if you really do have the risk tolerance you thought you had and the more money that's involved.

It involves finding the balance between the amounts conservatively invested and those that are very risky.  I have two sons.  When things are bad one just ignores it and keeps investing and the one with more money can't force himself to throw more good money in.  No one can foretell your risk tolerance.  Just don't let a bad experience make you withdraw totally from the market as so many people do.

Roberta