Comments on: Successful Investing-Not Magic http://frugaldad.com/2009/10/13/successful-investing-not-magic/ Money Saving Insights: Coupons, Smart Spending and Promotional Codes Sun, 12 Feb 2012 17:23:02 +0000 hourly 1 http://wordpress.org/?v=3.2.1 By: Investment Mistakes in a Bear Market | Frugal Dad http://frugaldad.com/2009/10/13/successful-investing-not-magic/#comment-33317 Investment Mistakes in a Bear Market | Frugal Dad Fri, 30 Oct 2009 12:26:34 +0000 http://frugaldad.com/?p=3919#comment-33317 [...] know bear markets hurt, but you trying to “improve” things will only make things worse. Successful investing is not magic, just keep things simple and maybe follow few investing and money rules of thumb and you’ll be [...] [...] know bear markets hurt, but you trying to “improve” things will only make things worse. Successful investing is not magic, just keep things simple and maybe follow few investing and money rules of thumb and you’ll be [...]

]]> By: Steve http://frugaldad.com/2009/10/13/successful-investing-not-magic/#comment-32840 Steve Mon, 19 Oct 2009 12:06:48 +0000 http://frugaldad.com/?p=3919#comment-32840 Hi, Bob's response is very typical of passive investing strategy. He insists that passive investing has people staying the course no matter what. and then cherry picks the disasters to make his point without considering the investor's age. Heck, a young person should take advantage of disasters and buy all of those ETFs when they are cheap. An older retired person should never have 80% stocks and 20% bonds. I was ok last year because I had 30% stocks and 70% bonds not because I was so smart, but because I was retiring and that is what an allocation to stocks and bonds should be in or near retirement. Rebalancing is changing to the current situation. Rebalancing is selling what's hot into buying whats cold. It is very difficult to do psychologically. I slowly rebalanced into a 30/70 over several years and it paid off handsomely. What is the alternative to passive investing? For the average investor like me, I will NEVER use managed active fund managers again. NEVER. They are too expensive, they are wrong most of the time and they think they can beat the averages. Anybody who tells you that they can beat the averages is nothing but a sales pitch. RUN! I like the averages. In fact, if I just had the averages all of these years, I would be much better off than I am now, but I am not complaining. 11% per year in the 500 index since 1976, Wow! Great article Steve Hi,
Bob’s response is very typical of passive investing strategy. He insists that passive investing has people staying the course no matter what. and then cherry picks the disasters to make his point without considering the investor’s age. Heck, a young person should take advantage of disasters and buy all of those ETFs when they are cheap. An older retired person should never have 80% stocks and 20% bonds. I was ok last year because I had 30% stocks and 70% bonds not because I was so smart, but because I was retiring and that is what an allocation to stocks and bonds should be in or near retirement. Rebalancing is changing to the current situation. Rebalancing is selling what’s hot into buying whats cold. It is very difficult to do psychologically. I slowly rebalanced into a 30/70 over several years and it paid off handsomely.
What is the alternative to passive investing? For the average investor like me, I will NEVER use managed active fund managers again. NEVER. They are too expensive, they are wrong most of the time and they think they can beat the averages. Anybody who tells you that they can beat the averages is nothing but a sales pitch. RUN! I like the averages. In fact, if I just had the averages all of these years, I would be much better off than I am now, but I am not complaining.
11% per year in the 500 index since 1976, Wow!
Great article
Steve

]]> By: TraderBots http://frugaldad.com/2009/10/13/successful-investing-not-magic/#comment-32834 TraderBots Mon, 19 Oct 2009 05:06:12 +0000 http://frugaldad.com/?p=3919#comment-32834 Getting people who haven't been individual investors in the past to start managing their own portfolio is extremely risky. All my friends are jealous of my performance, especially when their portfolios were crashing. They wanted to become individual investors, but I told them don't jump all in. I told them they should allocate a small portfolio, maybe 10k, and try it out. Just because they have a few wins, don't get too excited (or greedy). After a year of success, you can consider investing more. What do you think? Trader Bots http://www.traderbots.com Getting people who haven’t been individual investors in the past to start managing their own portfolio is extremely risky.

All my friends are jealous of my performance, especially when their portfolios were crashing. They wanted to become individual investors, but I told them don’t jump all in.

I told them they should allocate a small portfolio, maybe 10k, and try it out. Just because they have a few wins, don’t get too excited (or greedy). After a year of success, you can consider investing more.

What do you think?

Trader Bots
http://www.traderbots.com

]]> By: The Biz of Life http://frugaldad.com/2009/10/13/successful-investing-not-magic/#comment-32795 The Biz of Life Sat, 17 Oct 2009 02:48:10 +0000 http://frugaldad.com/?p=3919#comment-32795 All the items in this list are important.... I'd probably add invest at regular intervals. And would also say, asset allocation is one of the most important things in determining investment performance, risk tolerance and the emotional fortitude to stay the course even when things turn bad. More money is made in bear markets than at any other time, but many people can't take the temporary declines in value and pull their money out of the market. All the items in this list are important…. I’d probably add invest at regular intervals. And would also say, asset allocation is one of the most important things in determining investment performance, risk tolerance and the emotional fortitude to stay the course even when things turn bad. More money is made in bear markets than at any other time, but many people can’t take the temporary declines in value and pull their money out of the market.

]]> By: Stanley http://frugaldad.com/2009/10/13/successful-investing-not-magic/#comment-32781 Stanley Fri, 16 Oct 2009 14:37:15 +0000 http://frugaldad.com/?p=3919#comment-32781 I am all for DIY investing to an extent, but I think if someone is part of the large segment of people who do not know the first thing about investing, paying for an hour or two with a financial advisor could be money well spent. One thing I have noticed is that without proper education, many people don't realize the true risk in certain investments (e.g. REIT's), so they get develop a portfolio that is inappropriate for their risk tolerance. Everything is good in the bull market, but then suddenly that risk materializes and people panic and sell, losing big. They probably shouldn't have taken that level of risk, and perhaps a good financial advisor could have spent 2 hours to explain these things and design a diversified portfolio that was more appropriate for them. I wouldn't hand over your investments to be "managed" by someone else though, I just think a lot of people need to have a better education before risking their life savings. Just my 2 cents observation. I am all for DIY investing to an extent, but I think if someone is part of the large segment of people who do not know the first thing about investing, paying for an hour or two with a financial advisor could be money well spent. One thing I have noticed is that without proper education, many people don’t realize the true risk in certain investments (e.g. REIT’s), so they get develop a portfolio that is inappropriate for their risk tolerance. Everything is good in the bull market, but then suddenly that risk materializes and people panic and sell, losing big. They probably shouldn’t have taken that level of risk, and perhaps a good financial advisor could have spent 2 hours to explain these things and design a diversified portfolio that was more appropriate for them. I wouldn’t hand over your investments to be “managed” by someone else though, I just think a lot of people need to have a better education before risking their life savings. Just my 2 cents observation.

]]> By: Financial Samurai http://frugaldad.com/2009/10/13/successful-investing-not-magic/#comment-32731 Financial Samurai Wed, 14 Oct 2009 03:11:29 +0000 http://frugaldad.com/?p=3919#comment-32731 You're right, there is a lot of noise. Successful investing is when you have money in a bull market, like it is now! Suddenly, everybody is a financial genius. You’re right, there is a lot of noise.

Successful investing is when you have money in a bull market, like it is now!

Suddenly, everybody is a financial genius.

]]> By: David @ Money Under 30 http://frugaldad.com/2009/10/13/successful-investing-not-magic/#comment-32725 David @ Money Under 30 Tue, 13 Oct 2009 16:54:28 +0000 http://frugaldad.com/?p=3919#comment-32725 Well put! I'm consistently telling my readers to "ignore the noise" and simply invest in ETF index funds and perhaps no load mutual funds. Invest and forget! Although I agree with comment #4 that you still should have some idea of how financial markets work and what you're doing...you don't want to invest for the "long term" and then panic the first time the market dips and sell everything off. Well put! I’m consistently telling my readers to “ignore the noise” and simply invest in ETF index funds and perhaps no load mutual funds. Invest and forget! Although I agree with comment #4 that you still should have some idea of how financial markets work and what you’re doing…you don’t want to invest for the “long term” and then panic the first time the market dips and sell everything off.

]]> By: FFB http://frugaldad.com/2009/10/13/successful-investing-not-magic/#comment-32722 FFB Tue, 13 Oct 2009 15:40:16 +0000 http://frugaldad.com/?p=3919#comment-32722 I like the tips in this article. I think many are afraid of investing because it's seems so over their heads. You hear the financial portion of the news and you are bombarded with terms that are unfamiliar and as a result you stay out of investing. But I think as Ray is pointing out, it doesn't have to be overly complicated. Investing can be something anyone can do. Once we start to talk about changing up allocations based on the valuations of stocks at different points in the market you lose that simplicity and thus lose a lot of potential investors. Could there be better systems for investing than what is outlined here? Sure. But I think this system can still help get a person who isn't confident about investing a good shot at a decent return over the long run. I like the tips in this article. I think many are afraid of investing because it’s seems so over their heads. You hear the financial portion of the news and you are bombarded with terms that are unfamiliar and as a result you stay out of investing. But I think as Ray is pointing out, it doesn’t have to be overly complicated. Investing can be something anyone can do.

Once we start to talk about changing up allocations based on the valuations of stocks at different points in the market you lose that simplicity and thus lose a lot of potential investors. Could there be better systems for investing than what is outlined here? Sure. But I think this system can still help get a person who isn’t confident about investing a good shot at a decent return over the long run.

]]> By: Amber Weinberg http://frugaldad.com/2009/10/13/successful-investing-not-magic/#comment-32721 Amber Weinberg Tue, 13 Oct 2009 15:38:43 +0000 http://frugaldad.com/?p=3919#comment-32721 If you have USAA, they have a great fund program that helps you choose the best funds, based on your age, goals, amount of money and investing risk comfortability. Well worth checking out. :) If you have USAA, they have a great fund program that helps you choose the best funds, based on your age, goals, amount of money and investing risk comfortability. Well worth checking out. :)

]]> By: kenyantykoon http://frugaldad.com/2009/10/13/successful-investing-not-magic/#comment-32720 kenyantykoon Tue, 13 Oct 2009 15:36:35 +0000 http://frugaldad.com/?p=3919#comment-32720 i agree with all you have said but i think that you could have added that one needs a firm knowledge base vi-a-vis the financial world. it makes no sense to jump into a river that you have no idea where it is heading. read as much as you can about the preferred investment and then get in and learn more- instead of getting into a rude shock as you get wiped out in your first day i agree with all you have said but i think that you could have added that one needs a firm knowledge base vi-a-vis the financial world. it makes no sense to jump into a river that you have no idea where it is heading. read as much as you can about the preferred investment and then get in and learn more- instead of getting into a rude shock as you get wiped out in your first day

]]>