Goshen News, Goshen, IN

Community News Network

December 30, 2013

10 easy-to-do steps to lower economic stress in 2014

(Continued)

2. Invest with a basic asset-allocation model. Don't try to outguess or beat the market. The odds are greatly against your doing so.

Instead, capture what the market gives you: multiple streams of beta. This means owning a variety of asset classes — preferably in their cheapest configuration, ETFs or lowest-cost funds.

A basic model might look something like this: 10 or so holdings, in various weightings of U.S. equities (total stock market, value, growth, large cap, small cap), non-U.S. equities (mature, emerging markets), fixed income (Treasurys, munis, high-yield bond, corporates), then an REIT and a commodity holding. A typical middle-of-the-road portfolio is 70/30 stocks vs. bonds. Rebalance annually. Repeat until retirement.

Multiple streams of beta means you may never know which asset class is going to do especially well in any given year, but you participate in all of them and win over time. Low cost, low turnover, low probability of error.

3. Stop trading. The evidence is overwhelming: You are not a good trader. You individually, as well as the rest of your emotional, irrational species. You lack the temperament, the discipline, the ability to set aside ego and make cold, calculating decisions. No wonder algorithms are replacing people on so many trading desks.

For those of you who just cannot quit, try this: Put 5 percent of your investable assets in a trading account. Track how well your trading does vs. what I described above. If after five years you have outperformed your real investments net of fees, taxes and all other expenses, you can pull an additional 15 to 20 percent into this account.

Experience teaches that most of you will close this account long before five years elapse.

4. Max out tax-deferred accounts. The math on this is incontrovertible: Income you invest before taxes starts out with about a 40 percent advantage vs. post-investment cash. It's that simple.

Text Only
Community News Network
Parade
Magazine

Click HERE to read all your Parade favorites including Hollywood Wire, Celebrity interviews and photo galleries, Food recipes and cooking tips, Games and lots more.
AP Video
Death Penalty Expert: 'This is a Turning Point' House Committee at Odds Over Obama Lawsuit Raw: MH17 Victim's Bodies Arrive in Netherlands Raw: UN School Used As Shelter Hit by Tank Shell Raw: Gunmen Attack Iraqi Prison Convoy Plane Leaves Ukraine With More Crash Victims The Rock Brings Star Power to Premiere Raw: Families Travel to Taiwan Plane Crash Site Arizona Execution Takes Almost Two Hours Gen. Odierno Discusses Ukraine, NATO at Forum Gaza Fighting Rages Amid Cease-Fire Efforts Mint Gives JFK Coin a Face-lift Creative Makeovers for Ugly Cellphone Towers Ariz. Inmate Dies 2 Hours After Execution Began Crash Kills Teen Pilot Seeking World Record LeBron James Sends Apology Treat to Neighbors Raw: Funeral for Man Who Died in NYPD Custody Migrants Back in Honduras After US Deports Israeli American Reservist Torn Over Return
Poll

Last weekend (July 12) the Goshen Parks Department held its Kid’s Try-athlon to promote childhood fitness and this week (July 18) the new bicycle trail is open to the fairgrounds in Goshen, offering residents a healthy way to get to the annual agriculture exposition. Have you joined the local fitness movement?

Yes, I work at eating healthy and exercising
No, I am happy with my fitness level
Changing my diet and exercise frequency is a work in progress
     View Results