Friday, June 25, 2010

Equity Index Fund Basics

In this post I’ll cover a number of concepts related to mutual funds, using the Vanguard Total Stock Market Index fund to illustrate. I use this fund because it’s an excellent fund that everyone should consider including in their portfolio. You can learn a lot about this fund at the Vanguard web site. In the remainder of this post, I’ll refer to the Vanguard Total Stock Market Index fund by its ticker symbol, VTSMX.

Friday, June 18, 2010

High Returns, Low Risk! (or Financial Porn?)

On the cover of a recent issue of a major national financial magazine, written in big block letters was: HIGH RETURNS – LOW RISK. This is a blatant example of what many financial authors refer to as financial pornography. I already discussed my disdain for most financial news in my February 2010 post Financial News: Worse than Useless!, but this headline was so appallingly ridiculous that I couldn’t resist commenting on it.

Tuesday, June 15, 2010

Stock Basics

In this post, I’ll cover some of the basics of stocks, illustrating some of the concepts by using real examples for a specific company: Google. I chose Google because it’s well known and is a relatively new company. I’ll discuss shares, stock, IPOs, market capitalization, growth/value, etc.

Thursday, June 10, 2010

Portfolio 6 Update

In my May 8 post, Implementing Portfolio 5: A Current Example, I discussed a plan for a particular investor to migrate from a simple portfolio to a more complex portfolio (more asset classes). This is an update on the execution of that plan (you may want to scan the May 8 post before reading this post). Since the allocation is slightly different than Portfolio 5, I’m renaming this portfolio Portfolio 6. If you need a refresher on stock asset classes (e.g., large-cap, small-cap, growth, blend, value, international, etc.), please read my January 2010 post, Asset Allocation: Part 2.

Keep in mind that this is a fairly complex portfolio, and that the investor is taking a very active approach to building the portfolio. This approach probably is not suitable for most investors, but is being presented for those who might be interested in dealing with the additional complexity. The most important point is that the investor has made decisions on how to proceed, and is taking action to execute her plan.