Investing 101

It is so easy to get down into the gears of investing and lose sight of the big picture.  Pulling back from portfolio management, necessary as that is, and laying out the long-range picture of investing is essential from time to time.  That is the situation today, so here are some fundamentals to investing.

  • Follow "The Golden Rule of Investing" by saving as much as you can as early as you can.
  • Determine if you are going to manage the portfolio on your own or seek outside help.  Each investor needs to make this decision.
  • Will the investment approach be active or passive.  Those terms are defined in great detail elsewhere on this blog.  While I stress a passive approach to investing, the act of developing an asset allocation plan places one on the semi-active team.  Once the Strategic Asset Allocation (SAA) plan is in place, temper active management and take a passive approach.
  • Diversify all over the world through the use of non-managed index funds or non-managed ETFs.  It is too bad one now needs to stress non-managed ETFs, but as this market grows, so will the desire to actively manage ETFs.  Such was not the case ten years ago.
  • Rebalance the portfolio.  There is an ongoing debate as to how frequently this should occur.  Instead of using a specific time frame, rely on the Dashboard of the TLH spreadsheet as a guideline when to rebalance.  The most recent version of the TLH spreadsheet includes a data table show how many shares of the ETF representing each asset class need to be purchased or sold to bring the asset class back into balance.
  • Read.  Educate yourself by reading books suggested on this blog. 

If any of the above ideas are not clear, post your questions in the comment section provided below.  For most readers this material is a review.

About Lowell

Retired physics teacher. My hobbies are photography, reading and classical music. And my latest hobby - taking care of my dog, Kipling.


  1. Hi Lowell,  I think I may be in trouble if I am not able to make it through a 101 post!  I am probably going to expose my ignorance here, but here it goes anyway.  Here is where we stand:  We have the Golden Rule just about mastered and have been saving since our early 20's in a 401k (we are currently in our late 30's).  We would prefer to manage our portfolio, but our ignorance may prevent that from being possible.  We'd prefer to invest passively once the asset allocation plan is in place, which we assume means only get involved when rebalancing is necessary.  We have no idea where to start with diversifying (because we aren't very diversified) and keeping our portfolio balanced.  Perhaps you could direct me to some of your other posts that would be helpful for me or maybe a specific book from your reading list would help fill some of the gaping holes in my knowledge.  Write when you can.  I appreciate any guidance you can give.  Thanks!

  2. Hi Dori,

    Congratulations on mastering The Golden Rule of Investing.  Discipline is a major key to investing and a savings plan requires this character trait. 

    If you have not read any investment books, there are two basic ones to use as starters.  Neither are long or expensive.  1)  "The Investment Answer" by Daniel Goldie & Gordon Murray is a good starter.  There is an entire story behind Murry, who died this past February.  2) "The Elements of Investing" by Burton Malkiel and Charles Ellis.  Both fellows have written other popular investment books.  Either of these books is a good starting point.

    On the right-hand edge of this blog is a Category titled Beginning Investors.  Read those posts as you have time.  Then move on the Critical Information.

    There are two very young portfolios I am starting on the blog.  They are the Kenilworth and Franklin portfolios.  Follow the development of those portfolios.  You will find links under ITA Portfolios.  The Franklin is an existing portfolio I started tracking last Friday.

    Do you have any experience or knowledge working with Excel spreadsheets?

    Keep the questions coming.  I'll try to help where I can.

    Lowell Herr

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