Well I do, and I've pretty easily managed an average 10-12% annual return over the long term.
Making money investing in index funds is easy, as your own advisor. The most basic rule: buy low, and sell high. Plan for both bear markets and bull markets, and use each to your advantage. Make a simple plan, and stick to it. I've got 4 index funds with Vanguard which comprise 70% of my Roth IRA (total stock market, small cap, REIT, and international), and then 30% in either cash or their Ginnie Mae bond fund. I set targets as a percentage of the portfolio for each fund, I think they are something like 25% total stock market, 20% small cap, 15% international, and 10% REIT. I picked these funds as they all are relatively decent as long term investments and also because they tend to move up or down in price independently or with different speed. The total market fund and the small cap both tend to move in the same direction at the same time, but the small cap moves faster. REIT gives me exposure to commercial real-estate. The International index will sometimes follow the US markets but sometimes will not. Vanguard recently added a technology index fund, VITAX, and I've been considering that as an addition which will track the NASDAQ and has lots of volatility but very good long term returns. Dollar-cost average with monthly automatic purchases. If you want to get a little sophisticated and love to play with spreadsheets, you can value-cost average instead of dollar cost average. Value-cost average means that every month, you look at all the index funds in your portfolio, and you make your purchases to try to keep the portfolio balanced (i.e. you buy what is low, compared to the other funds). I don't have enough time for this, but if I were starting over 30 years ago, I'd probably do this. Once a year, I re-balance, which forces me to sell what is high and buy what is low. This is key. Re-balancing forces you to automatically sell what is high (relative to the rest of your portfolio) and buy what is low. By low, sell high, THAT is a good part of how you make your money. Rebalance once a year, or you can go two years if you're lazy. Simple, slow and steady, no excitement, no need to pay someone else. When the stock market tanks, THAT is when the FUN begins, because STOCKS are ON SALE! I've got 30% of my portfolio in cash or GNMA (my dry powder), so I just need to buy when they ring the bell when the market hits the bottom. You didn't hear the bell ring? Neither did I, ever. The best I can do is bracket it. When the market is down 10% or more, I plow in some cash. If it goes down to 25% or so, I buy some more, and if it keeps falling, I keep buying, until I'm all in or it starts rocketing back up. Ride the market back up, which takes 6 months to a year or maybe longer, and then I take my cash back out at a nice fat profit. The stock market is cyclical, and stock prices tend to fluctuate. Keep this in mind, have a plan for when the bear market comes because it WILL come around every 5-10 years or so, and use that bear market to buy stocks on sale and come out stronger on the other side. Stay invested for the long term (at least ten years) so you get full advantage of the bull markets. ------------- Max Charleston SC On Fri, Jan 1, 2021 at 4:08 PM Andrew Strasfogel via Mercedes < mercedes@okiebenz.com> wrote: > *If you're investing in market index funds, you don't need an advisor.* > > Yes, but who has the discipline? And if the market tanks then what? > > On Fri, Jan 1, 2021 at 3:44 PM Jim Cathey via Mercedes < > mercedes@okiebenz.com> wrote: > > > Even 6-12mo slush fund wouldn't have worked for me. Without a mortgage > > (or rent), though, even > > a fairly modest fund can stretch out well. IIRC, the two biggest > expenses > > are mortgage, followed > > by health insurance premiums. Those keep draining funds at a fixed (and > > high) rate no matter what. > > Everything else you can push back on. Stop going out, learn to cook > more, > > take better care of your > > wardrobe, read instead of going to shows, wear more sweaters and turn > down > > the heat, etc. You can, > > of course, let the health insurance go too, but that's a big gamble. > > Fairly dangerous. > > > > -- Jim > > > > > > _______________________________________ > > http://www.okiebenz.com > > > > To search list archives http://www.okiebenz.com/archive/ > > > > To Unsubscribe or change delivery options go to: > > http://mail.okiebenz.com/mailman/listinfo/mercedes_okiebenz.com > > > > > _______________________________________ > http://www.okiebenz.com > > To search list archives http://www.okiebenz.com/archive/ > > To Unsubscribe or change delivery options go to: > http://mail.okiebenz.com/mailman/listinfo/mercedes_okiebenz.com > > _______________________________________ http://www.okiebenz.com To search list archives http://www.okiebenz.com/archive/ To Unsubscribe or change delivery options go to: http://mail.okiebenz.com/mailman/listinfo/mercedes_okiebenz.com
