Recently, I received the following query from a reader:
I am new and very interested in learning everything I can about investing. Where and how do I learn at a new baby level? We are getting to be middle aged and the fear is setting in for us. We don’t want to be left behind. Thanks.
Investing need not be very complicated. For instance, check out my benchmark Sleepy Portfolio, which is made up of ten components but provides ample diversification. An even simpler example is this portfolio, which has only four funds that track different asset classes. Here’s how you can construct your portfolio:
- Set Your Target Asset Allocation: My benchmark portfolios follow an asset allocation that is suitable for me. Depending on your age and circumstances, you may choose a different allocation model. For instance, someone who is more risk-averse would want to allocate more money to bonds. Once you decide on a target allocation, buy index funds to track the various asset classes.
- Rebalance: In a year or so, your portfolio probably has deviated from your target allocation. Sell the funds that exceed the target and buy the ones that have fallen below the target (or add more new money to the funds that have fallen to bring them back to target).
If the above sounds complicated, you may want to get some advice from a fee-only financial planner. I highly recommend the book A Random Walk Down Wall Street for someone new who wants to learn about investing.
Related Posts:
- The Lazy Man’s Portfolio
- Another Lazy Portfolio
- Couch Potato Portfolio
- The Original Couch Potato Portfolio
Disclaimer: Caveat emptor. I am not qualified to give financial advice. All information provided on this website are for informational purposes only.
