tag:blogger.com,1999:blog-5465015914589377788.post1442446793057044695..comments2024-02-17T11:07:06.232-05:00Comments on Michael James on Money: Getting Started with Index InvestingMichael Jameshttp://www.blogger.com/profile/10362529610470788243noreply@blogger.comBlogger12125tag:blogger.com,1999:blog-5465015914589377788.post-50503359270143949362011-11-18T23:56:39.079-05:002011-11-18T23:56:39.079-05:00There are two things that determine one's tota...There are two things that determine one's total take by the time they retire:<br /><br />1) What year they start investing. I think you could start at 25, invest for 10 years, stop, and still have more at the end than someone who starts at 35 and invests for 30 years. Just an example, but the point is time is your friend.<br /><br />2) Asset allocation determines 95% of your returns, whatever your investment vehicle.timber investmentshttp://www.greenworldbvi.com/alternative-investments-options/bamboo-forestry-timber/noreply@blogger.comtag:blogger.com,1999:blog-5465015914589377788.post-23769558725481566072011-11-18T18:17:34.622-05:002011-11-18T18:17:34.622-05:00@JTN: TD eSeries funds are a little expensive com...@JTN: TD eSeries funds are a little expensive compared to the best ETFs, but are a fine way to build a portfolio. <br /><br />Be careful about your tactical moves. Always remember that you're trading against institutional investors who are convinced that the opposite tactical move is correct.Michael Jameshttps://www.blogger.com/profile/10362529610470788243noreply@blogger.comtag:blogger.com,1999:blog-5465015914589377788.post-58335562742475119442011-11-18T18:02:01.122-05:002011-11-18T18:02:01.122-05:00It really is too bad that the index mutual funds o...It really is too bad that the index mutual funds options are so poor in Canada. To those who are starting out I say look at TD's eSeries index Mutual Funds. They're a good way to learn about purchasing funds and asset allocation.<br /><br />I also use my eSeries account for mini rebalancing by adding where necessary and for small tactical (market timing) purchases as their is no cost to exchange funds that have been held for 90 days. Otherwise, I agree it is wise to have a minimum amount before making a trade (mine is also $3,000).JTNnoreply@blogger.comtag:blogger.com,1999:blog-5465015914589377788.post-63956722187903964542011-11-16T08:03:21.111-05:002011-11-16T08:03:21.111-05:00@Mark: Investing can be very exciting, but you...@Mark: Investing can be very exciting, but you're right that successful investing tends to be pretty boring.<br /><br />@Gene: That's a good point about higher commissions for smaller accounts. For someone in this situation, I think it makes even more sense to not worry about the perfect asset allocation early on and just make larger trades.Michael Jameshttps://www.blogger.com/profile/10362529610470788243noreply@blogger.comtag:blogger.com,1999:blog-5465015914589377788.post-78337763324562546902011-11-16T00:59:12.470-05:002011-11-16T00:59:12.470-05:00I scoff at you indexers! To you guys, "borin...I scoff at you indexers! To you guys, "boring is the new exciting!"<br /><br />I'm just kidding. Indexing is the only method I feel comfortable recommending to others, even if I use individual securities. It's a solid strategy.<br /><br />Back to the topic: your post assumes $10 stock trades. Amy might have trouble qualifying for these low commissions unless she shops around. Questrade would be a good option for her, though some people have had horrific experiences with them.<br /><br />You've got some practical advice here, hopefully it helps some new investors.genehttps://www.blogger.com/profile/05608927986297939720noreply@blogger.comtag:blogger.com,1999:blog-5465015914589377788.post-61725242883192820002011-11-15T21:20:19.046-05:002011-11-15T21:20:19.046-05:00Sound advice Michael.
I have to agree (and like ...Sound advice Michael. <br /><br />I have to agree (and like what) Mark W. said...investing is not meant to be exciting.<br /><br />In fact, the more boring my investments can be, the better I will do in the long-run.<br /><br />As for getting started with ETFs, I think anytime is a good time, so long as you're not going crazy with purchases and getting hit with lots of transaction fees. The sooner I can get my money working for me, the better.My Own Advisorhttp://www.myownadvisor.canoreply@blogger.comtag:blogger.com,1999:blog-5465015914589377788.post-12407345787825585942011-11-15T20:19:06.118-05:002011-11-15T20:19:06.118-05:00@Paul: It sounds like you've used an approach...@Paul: It sounds like you've used an approach similar to our fictitious Amy. I'm glad to hear that you didn't panic through the downturn.Michael Jameshttps://www.blogger.com/profile/10362529610470788243noreply@blogger.comtag:blogger.com,1999:blog-5465015914589377788.post-1935297769407634562011-11-15T19:29:04.151-05:002011-11-15T19:29:04.151-05:00Speaking as a 34 year old who started investing in...Speaking as a 34 year old who started investing in September 2009, I think it's best to take the "ETF plunge" from the start and to build up various asset classes... while it might not be optimal from a numbers point of view, it gets you used to the market, to the broker's web interface, to bid-ask spreads, etc. Having an unbalanced portfolio at first isn't as much of an issue, and as the account grows you can add diversity (ie, at a certain point, add REITs, whereas for a small account they're no needed).<br /><br />It also makes you learn about your own reactions, before the money involved is too massive for mistakes to be as severe. <br /><br />For example, I got to learn that I won't sell, or even be tempted to sell, when the market falls, but I'm also unable to talk myself into rebalancing. I'd rather know how I react when 5K$ are involved than when I reach 50K$ and ETFs become advantageous.<br /><br />-Paul G.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5465015914589377788.post-7078186988343398672011-11-15T11:39:45.893-05:002011-11-15T11:39:45.893-05:00@Mark: There's a fine line here. Getting sta...@Mark: There's a fine line here. Getting started requires some enthusiasm, but too much can lead to problems, as you say. Rather than "dull, boring, plodding, gradual and successful" I would paint a more positive picture by saying that it is "undemanding, gradual, and successful".Michael Jameshttps://www.blogger.com/profile/10362529610470788243noreply@blogger.comtag:blogger.com,1999:blog-5465015914589377788.post-11668636011643923262011-11-15T11:35:39.119-05:002011-11-15T11:35:39.119-05:00No one should ever 'get excited' about ind...No one should ever 'get excited' about index investing., In fact, 'getting excited' is exactly the wrong mindset for investors.<br /><br />Think dull, boring, plodding, gradual and successful. But never exciting.<br /><br />It may be difficult to begin without a sense of enthusiasm, but that should be geared to the idea that the approach being adopted has a good chance of providing a better return than almost anything else that she is (currently) capable of doing for herself.<br /><br />Thanks for sharing.Mark Wolfingerhttp://www.mdwoptions.com/Premium/home-page/noreply@blogger.comtag:blogger.com,1999:blog-5465015914589377788.post-20415846271862358562011-11-15T08:24:32.187-05:002011-11-15T08:24:32.187-05:00@Chris B: Your approach has advantages and disadv...@Chris B: Your approach has advantages and disadvantages compared to the one I described. Some disadvantages are a restricted set of ETF choices leading to higher MERs and a need to sell them and buy something else later. The main advantages are no commissions allowing Amy to match her asset allocation right away. But this advantage is only important if she has an emotional need to match her asset allocation right away. If she does, then your plan is a winner. But matching her allocation right from the beginning really isn't important to her long-term capital growth.Michael Jameshttps://www.blogger.com/profile/10362529610470788243noreply@blogger.comtag:blogger.com,1999:blog-5465015914589377788.post-72324793602460514812011-11-15T00:14:43.701-05:002011-11-15T00:14:43.701-05:00if you're starting out with a small portfolio,...if you're starting out with a small portfolio, wouldn't it make more sense to take advantage of the commission-free etfs offered by various brokers (eg. itrade)? I know the MERs are a little higher than the preferred etfs (like XIC), but this will allow Amy to buy all 4 assets without paying any commissions and get that satisfaction of hitting your mix immediately. Once you build up your savings, you can switch to the cheaper etfs to save on MERs.Chris Bnoreply@blogger.com