Ultra-Conservative Portfolio

This morning I came across an ultra-conservative portfolio that I thought would be of interest to Platinum members.  When a portfolio projects to outperform the S&P 500 by 275 basis points, with much lower risk and carries a Diversification Metric of nearly 70%, one takes notice.  Here is that portfolio.

Platinum membership is available for $5.00 per month.  Three dollars off the first month through 4/2/2011.

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Solving Investment Problem #4: Fear of losing money.

The fear of losing money once it is invested in the stock market is quite natural.  Investing in the market from early 2000 through early 2009 was a particularly volatile period and not one to inspire investor confidence.  The alternatives to building adequate savings for retirement are limited.  Banks are paying zero to very little interest.  CDs are also generating low interest rates.  The best way I know to reduce risk over the next 30 to 50 years is to dollar-cost average into the market over the next two to three year, assuming one has a large account.  If you are adding dollars on a monthly basis, as is the case with the Kenilworth Portfolio, then build the different asset classes much as one would raise a brick or cement block building.

Diversify all over the world.  We can easily do this using VEU and VWO for starter ETFs.  These two ETFs will put us in the developed international as well as emerging markets.  As William Bernstein recommends in his three investment books, we want to be diversified in hundreds of stocks and the only way to do this is to use index mutual funds and/or index ETFs.  My preference is ETFs as they generally carry lower expense ratios and are more tax efficient.

While the stock market is not risk free, index investing through the use of ETFs places the law of averages on our side.  It is time to get involved in building a retirement nest egg.

Photograph: Castillo de San Marcos Fort in St. Augustine, FL

Platinum membership available for $5.00 per month.