Solving Investing Problem #1: I have no interest in investing.

 Individuals who have no interest in investing better hire a fee-based advisor.  Whether or not one is interested in the intricacies of investing, it is important to save for retirement or other goals.  Decision number one is whether or not you will manage your own money.  Just remember that paying someone else is going to cost a lot of money and place a performance burden on the portfolio.  Why do I recommend individuals manage their own portfolios?

It all comes down to fees.  If you can read, you can set up a very basic portfolio that has a high probability of outperforming the majority of professional money managers.  At least that is the statistical evidence from academic paper after paper.  Saving 70 to 100 basis points per year adds up to a nice nest egg over a lifetime so why send that money to someone else.  100 basis points on a $100,000 portfolio is $1,000 per year.  Here at ITA Wealth Management you will pick up more ideas for $60 per year (Platinum membership) at a fraction of the cost. 


Asset Allocation: Kenilworth Portfolio

Never mind all the red and purple colors in the Kenilworth asset allocation plan.  This is to be expected when putting together a new portfolio with limited cash.  It takes time to bring the different asset classes into balance.  Let's walk through the following foundation of this portfolio.  I did make some minor Tactical Asset Allocation changes as I will explain below.

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Portfolio Construction


With the advent of commission free ETFs, TDAmeritrade made it simpler to construct a portfolio.  Readers can watch the slow development of the Kenilworth Portfolio as an example.  Once you have selected the 10 to 15 asset classes, just "stair-step" the building process into a robust portfolio.  Here are my thought processes as to how to assemble a portfolio.

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Five Investing Problems and How to Solve Them

Photograph: Boat dock connected to Clark's Fish Camp near Jacksonville, Florida

When talking with individuals about investing, problems and excuses emerge in the conversation.  Here are a few of the issues I hear frequently.

1.  I have no interest in the subject.

Lack of interest is by far the number one problem.  Yes, I would like to build a retirement account and I will count on my 401(k) or 403(b) to take care of the problem.  If this is your case, I have a solution.

2.  I don't know where to begin and I don't have time to start learning.

Not knowing were to start an investing program can be a problem.  The fact you are reading this right now is a step in the right direction.  Continue on and take a little time to learn.  It can be fun to learn a new discipline.

3.  It is a foreign language I don't speak.

This is a common and very understandable problem.  Any discipline comes with its own vocabulary and investing is no different.  A few good basic books will go a long way toward solving this problem.  After all, this is not calculus or physics.

4.  I'm afraid to lose money.

Losing money is a problem we all face.  Taking the long view is very important.  Also, a young saver should be on their knees praying for a bear (down) market as this permits one to enter investments at lower prices.  We want to buy when the market is on sale.

5.  It is too late to begin saving.

It is never too late to begin saving.  The key is to take the first step and then stay disciplined.

This week we will work on helping readers solve these five problems.  In many ways, all five are closely linked, but I will address them one at a time.  Depending on how you handle problem number one, the remaining four may be out of your hands.

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