Sunday, October 23, 2011

Bogelish Investing

With 401(k) Meeting Calendar!

One more post about putting something away for later. And where to put it:

Vanguard Founder John Bogel's Rules for Investing

Live Below Your Means -- You need to save a significant portion of your income every month in order to have the money you will need in the future to comfortably retire. ...

Simplicity -- A single total market stock index fund contains thousands of stocks, including all styles and company sizes. Total bond market index funds contain thousands of different bonds with maturities ranging from less than one year to over thirty years. ...

Asset Allocation -- Holding bonds is essential. What percentage in bonds? That’s the basic question of asset allocation. The decision needs to balance your ability and your need to take risk. ...

Buy Low Cost Funds That Are Widely Diversified -- Buy funds that are widely diversified, or approximate the whole market. This guarantees that the investor will receive the average return of all equity investors. ... [T]he vast majority of funds perform worse than average after you take into account the high fees ...

Tax Efficiency Matters -- The most important rule for tax efficiency is to take full advantage of tax-advantaged accounts such as 401(k)s and IRAs. ...

Stay the Course -- [W]ith the crash of 2008, many investors panicked, or at least wavered in their commitment to buy and hold investing. ... But the only real course correction needed is to rebalance once per year to bring stock/bond allocations back to pre-set levels. ...

This is the secret of smart investing: It's simple in concept, but difficult in execution. Everyone thinks there is some magical, silver bullet to riches, except there isn't. Market Timing doesn't work. The genius Financial Advisor is difficult to find and usually charges too much. (Just ask the former clients of Bernie Madoff.)

Somebody who knows zip about stocks and bonds could still end up with a nice stash of cash after thirty or forty years if they put their 401(k) and Roth IRA contributions into the Vanguard Target Income Fund or the Vanguard Target Retirement 2015 Fund. Both are conservative, both are broadly diversified, and both would likely grow at a comfortable clip over three or four decades.

Can't get much simpler. But here's what makes the execution hard: When one market sector goes rocketing up, or several market sectors crash, then lots of investors want to bail out of their stodgy, diversified investment plan and hop aboard the latest bullet train. Human beings are hard-wired to chase the hot trend. (Just look at studio moguls.) But those that can resist the impulse, come out the other side of their 401(k) Plans and IRAs with souls and wallets intact.

Upcoming TAG 401(k) Meetings

DreamWorks Animation - TUE - Oct 25 10 am - Dng rm b & c

Cartoon Network - WED - Oct 26 11 am - conf rm

WB Anim - THUR - Oct 27 2 pm - Bldg 34R conf rm


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