However, ETFs can be expensive to own if you buy and sell a lot because you have to pay a commission each time you do a transaction.ĭon’t feel bad about what you’ve spent, feel good about what you won’t spend anymore. Usually it will have even lower management fees than an index fund. You select the year closest to when you want to retire and simply put all your money into it.ĭon’t wait for someone else to provide for you…do it yourself.Īn ETF is like an index fund, but you buy and sell it like a stock. There is no easier choice than a targeted retirement fund. One bit of advice before you take the leap into a work-at-home opportunity: Take an inventory of your talent, add a dash of creativity to your thinking and come up with a plan that suits you. companies get a huge share of their sales outside the U.S., so 40 percent domestic ultimately takes me to an effective 25 percent true domestic ownership.
People often ask me why I’m not at 75 percent international if 75 percent of capitalism is overseas? The reason is that larger U.S. That way you can cover major investment categories and draw on the expertise of more than one manager. I have been asked how many mutual funds make sense to own if you are actively going to build a portfolio, and the most common answer is 12. My stock funds are 40 percent domestic and 60 percent international. Because of my age, I am 50 percent spread among stock choices and 50 percent bond choices. And staying in the game makes you more money over the long haul.Īs I built my portfolio, I set it up to work as follows: Total stock market, small cap, international index, emerging market, high-yield tax exempt, long-term tax exempt, intermediate-term tax exempt and short-term tax exempt. Over time, putting money in this way reduces the possibility of panic in you and keeps you steady as you go. One of the big knocks on using mutual funds to invest is that the tax treatment of them is rotten.ĭollar cost averaging is a way to pace your investing so that you’re buying more shares when prices are low and fewer when they’re high. You can make it ultra simple with just three to five index funds or go crazy with as many as 15. The older you are, the more bonds you want to have.
The younger you are, the more stock oriented you want to be. If you decide to build your own portfolio, don’t bet the farm on any one sector of investing.
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