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Posted: 8/11/2007 6:18:03 AM EDT
Hello,

I have been watching the "10K Portfolio" thread for a few months now and I have some questions. It appears that Omar is investing/trading in different stocks that he continously researches while Ar-jedi appears to have four funds that he has invested in. I was wondering if investing in a spread of funds like that would be a good idea. Currently I max out my Roth and have a 403b at work that I contribute the max that my employer will match. Would investing say $2000 into a setup like Ar-jedi's be a good idea? I am keeping the vast majority of my savings at Emigrant and am looking for another place to invest for retirement.
Link Posted: 8/11/2007 5:33:05 PM EDT
yes
Link Posted: 8/12/2007 2:57:07 PM EDT
What are you invested in now? You may be well diversified already.Dan
Link Posted: 8/13/2007 3:16:51 PM EDT

Originally Posted By stealthregal:
I have been watching the "10K Portfolio" thread for a few months now and I have some questions.


excellent -- that thread is pretty much designed as an educational tool.


Originally Posted By stealthregal:
It appears that Omar is investing/trading in different stocks that he continously researches while Ar-jedi appears to have four funds that he has invested in.


as you have already noticed, Omar and i are using two of the most common approaches to investing in equity markets. there is not one "right" way to do it, and how you approach long term investing is a matter of your current finances, risk tolerance, timeframe, time available for research, tax situation, and other factors.


Originally Posted By stealthregal:
I was wondering if investing in a spread of funds like that would be a good idea.


yes, i would say that diversified investing is a good idea. :)

seriously... in a nutshell, a balanced, value-oriented portfolio will reward you when the markets are moving up, and shield you when the markets turn down. how to construct such a portfolio is fortunately quite straightforward, and is documented both in online tutorials and in lots of good texts.

see the following thread for some starting points:
ar15.com/forums/topic.html?b=1&f=133&t=574419
see also this thread with recommended texts:
ar15.com/forums/topic.html?b=1&f=133&t=536034
i strongly encourage you to pick up the following:
- Bernstein, "The Four Pillars of Investing"
- Larimore et al, "The Bogleheads Guide to Investing"
- Ferri, "All About Asset Allocation"

approximately 99.99% of what you need to know about successful long term investing is contained in those three books. for an investment of about $40 total and a couple of weeks of reading, you can out-invest just about everyone. there are really just two contraints needed by you in order for complete success: (1) don't listen to anyone on TV, and (2) don't read any published-monthly magazines.


Originally Posted By stealthregal:
Currently I max out my Roth and have a 403b at work that I contribute the max that my employer will match. Would investing say $2000 into a setup like Ar-jedi's be a good idea?


one key to successful long term investing is to look at "the big picture" -- by this i mean that you should not compartmentalize your various accounts. sit down with a piece of paper and total up your portfolio as a whole. your Roth, your 403b, and your taxable accounts -- all of it. this is your starting point. from there you will say, for example, "ok, i'm 25 years old; i need a short term emergency fund, i need to buy a house in 5-7 years, and i need to invest for retirement." now the process of dividing the pie begins.

so let's say you have $20K total in all of your accounts right now. you might decide that $6K is a good emergency fund amount. that leaves $14K for investments.

1) you should hold your emergency funds in your taxable account in a high-yielding money market fund. for your purposes this means your Emigrant account. here it will earn 5%+ while it sits waiting for some problem to come along.

2) next, you have to figure out how to allocate the remainder between equities and bonds. this split is dependent on many factors, but i could give an example with a 70/30 split. so 70% of your money would be in stocks, and 30% in bonds. for the time being, you can just drop the 30% ($4,200) into a money market fund paying 5%. that rate will not last forever, but for now it's a riskless good deal.

3) the other 70% ($11,200) should be split up similarly to how i show in the 10K Portfolio thread. the example portfolio, as you saw from the initial analysis (2nd post in that thread), has a mix of domestic, international, large cap, mid cap, and small cap stocks. this is the portfolio diversification that i alluded to above.


Originally Posted By stealthregal:
I am keeping the vast majority of my savings at Emigrant and am looking for another place to invest for retirement.


some questions first:

do you have any debt?
do you feel that you have your emergency fund sufficiently funded?
are you contributing the max annually to your Roth IRA?
are you contributing the max annually to your 403b?
if you total up all of your current savings/investments, what percent is in tax-advantaged (Trad IRA, Roth IRA, 403b) accounts, and what percent is in taxable (Emigrant, bank account, mutual fund/brokerage) accounts?

ar-jedi

ps:
see also
ar15.com/forums/topic.html?b=1&f=133&t=586834
and
ar15.com/forums/topic.html?b=1&f=133&t=576187
and
ar15.com/forums/topic.html?b=1&f=133&t=565067
and
ar15.com/forums/topic.html?b=1&f=133&t=602721

Link Posted: 8/16/2007 5:23:55 AM EDT
height=8
Originally Posted By ar-jedi:
some questions first:

do you have any debt?
do you feel that you have your emergency fund sufficiently funded?
are you contributing the max annually to your Roth IRA?
are you contributing the max annually to your 403b?
if you total up all of your current savings/investments, what percent is in tax-advantaged (Trad IRA, Roth IRA, 403b) accounts, and what percent is in taxable (Emigrant, bank account, mutual fund/brokerage) accounts?

ar-jedi


Thanks for the reading suggestions! To answer your questions:

height=8
do you have any debt?

I currently have a small car loan that I plan to have paid off by the end of the year. That is it, college is paid off and I do not carry a balance on my credit card.

height=8
do you feel that you have your emergency fund sufficiently funded?

Yes, I have enough that I can maintain my current standard of living for 2 years if I lost my job tomorrow.

height=8
are you contributing the max annually to your Roth IRA?

Yes, I have maxed it out for the past two years.

height=8
are you contributing the max annually to your 403b?

No, right now I am contributing the most that my employer will match.

height=8
if you total up all of your current savings/investments, what percent is in tax-advantaged (Trad IRA, Roth IRA, 403b) accounts, and what percent is in taxable (Emigrant, bank account, mutual fund/brokerage) accounts?

A rough calculation would be 15% in tax advantaged accounts and the rest in taxable. (A large chunk of my taxable savings is for a house. I hope to start building next year.)

I really appreciate the help, I will check out the other threads and Amazon for the books you suggested.
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