MONEY matters

You’ve probably read or heard about these tips many times, but it never hurts to remember the basics for smart investing. And in this Vanguard article, Major League Tips for Avoiding Financial Errors, the tips are prefaced by what are known as 'Yogi-isms' after the late, great Yogi Berra. 

Yogi claimed that "we make too many wrong mistakes," but if you stick to a plan, diversify, invest for the long term, and pay attention to costs and taxes, you can help eliminate some costly errors that could keep you from reaching your goals.

As a teenager playing baseball, I remember watching a few of my teammates hit home runs over and over again. I remember my coach, knowing I was not the homerun slugger type, encourage me to go for the singles and doubles instead. But being the young rebel I was then and probably still am, I aimed for the bleachers anyway.

And guess what? I kept striking out over and over again.

Here we go again…The stock market roller coaster ride is back with a vengeance.

As for Bogle, he’s plenty happy with his age-based investing formula. “I’ve always had in the back of my mind this incredibly simplistic idea, that your bond position should have something to do with your age,” he said.

In his retirement portfolio today, he’s got two-thirds of his bond portfolio in the Vanguard Total Bond Index fund VBMFX

For many investors, low cost index funds are just too boring. Here’s an article from the New York Times by Paul Sullivan titled, Index Funds, Dowdy to Some, Get Notable Endorsement, that adds some gravitas to the fans of index funds.

He interviews Burton Malkiel, author of investment advice books,who practices what he preaches. In his retirement portfolio, he says "all the serious money is indexed."

You may have noticed the vast amount of new products being churned out by Wall Street lately.  Now I’m all in favor of more options, yet the amount of new “products” being introduced to investors on a daily basis is staggering. Besides regular old fashioned mutual funds, stocks and bonds, we now have a slew of ETF’s, ETN’s,  ishares, global ETF’s, brand new sector funds, and the list goes on. The marketing departments of these large investment houses are well aware that investors like the shiny new objects in the window and as such are catering to our need for buying something new and exciting. Index funds, diversifying your portfolio is so 2008 they’ll tell you, come over here and play the new game…

I like ETF’s and for many investors, they compliment your investment portfolio very nicely.  But just because the marketing departments have sliced and diced markets into a zillion new ways to invest, doesn’t mean that it’s the right option for you.