Thursday, April 29, 2010

Portfolio 2 (simple, moderately conservative): the fixed-income story

In this post we start digging into Portfolio 2 (from my post Some Real Portfolios). There are several interesting aspects to this portfolio, so I'll use more than one post to discuss the portfolio. In this post, we focus primarily on the fixed-income portion of the portfolio. This is likely to be of more interest to retired investors, or investors who are investing for shorter term goals (less than 10 years).

Wednesday, April 28, 2010

Portfolio 1: Simple, aggressive, global equity

In this post, we explore Portfolio 1 from my post, Some Real Portfolios. This portfolio is extremely simple, consisting of only two Vanguard index funds:
  • 50% Total Stock Market Index (US stocks)
  • 50% Total International Stock Index (non-US stocks)
We might call this as an aggressive, global equity (stock) portfolio because it is 100% invested in stocks (no bonds -- very aggressive), and has a relatively high allocation to international (non-US) stocks (hence, global).  First, let's consider the investor's willingness, ability and need to take risk, and see how this portfolio fits.

Tuesday, April 27, 2010

Risk Tolerance

Before I get into details of the portfolios presented in the previous post, it will be useful to discuss risk tolerance, since it's so fundamental to making investment decisions.

In his book, The Only Guide to a Winning Investment Strategy You'll Ever Need, Larry Swedroe breaks down risk tolerance into three components:

  1. The willingness to take risk
  2. The ability to take risk
  3. The need to take risk

Sunday, April 25, 2010

Some Real Portfolios

I thought it might be helpful to discuss some real portfolios that I've been involved in developing. I'll start with the simplest portfolios, and then move to the more complex. The idea is to expose you to a variety of asset allocations, each having been designed based on the willingness, ability and need of the investor to take risk, along with ability and willingness to handle portfolio complexity.

Wednesday, April 21, 2010

What Do You Want to Learn More About?

I'm often thinking about different investing topics I'd like to write about, but want to write something that is most likely to benefit someone (which of course means someone has to at least read it!).  Here are some topics I've been thinking about:

Sunday, April 4, 2010

Time, Inflation, and Uncertainty

This article discusses a little of the theory behind why investors expect to make money on investments, and why they expect to make more money on some investments than others.  This post is a bit more theoretical than most so far.