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Posted by on May 1, 2009, 5:13 am
The more I read about investing the more it seems that diversification
is the key. In other words don't put all your eggs in one basket. Have
a mix of stocks, bonds: mutual funds, CDs, real estate etc. The
problem is that the more you invest in so many investment products the
more time you have to spend managing all of them. So it becomes like a
full-time job just keeping track of everything. That seems to defeat
the whole purpose behind investing. you already worked hard to earn
the money and now you have to work hard to keep the money!
So is there some kind of super index fund that invests in pretty much
everything? I would think this index fund would try to match the GDP
growth of the whole world. So it kind of invests in everything
imaginable. This way you just buy one product instead of dozens and
get all the diversification that is possible. Does such a monster of
investment exist?
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Posted by Alvin on May 1, 2009, 6:13 am
> So is there some kind of super index fund that invests in pretty much
> everything? I would think this index fund would try to match the GDP
> growth of the whole world. So it kind of invests in everything
> imaginable. This way you just buy one product instead of dozens and
> get all the diversification that is possible. Does such a monster of
> investment exist?
There are some globally diverse funds:
Vanguard Total World Stock ETF (VT)
SPDR S&P World EX-US ETF (GWL)
Vanguard FTSE All-World ex-US ETF (VEU)
Vanguard FTSE All-World ex-US Small-Cap Index Fund ETF (VSS)
>From PowerShares:
PowerShares Autonomic Balanced Growth NFA Global Asset Portfolio (PAO)
PowerShares Autonomic Balanced NFA Global Asset Portfolio (PCA)
PowerShares Autonomic Growth NFA Global Asset Portfolio (PTO)
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Posted by dapperdobbs on May 1, 2009, 1:12 pm
On May 1, 5:13 am, nonse...@mynonsense.net wrote:
> The more I read about investing the more it seems that diversification
> is the key. In other words don't put all your eggs in one basket. Have
> a mix of stocks, bonds: mutual funds, CDs, real estate etc.
[snip]
Hoping to help a bit with the rage about asset (over)
diversification ... there've been a few threads on bonds recently.
Interesting, since interest rates are scraping bottom. A few months
ago there were questions about whether or not stocks were at a bottom.
They weren't. But last year a hypothetical portfolio popped up, and a
broad-based fund for comparison.
http://www.stockalicious.com/portfolio-holdings/4710
up 19%
http://www.stockalicious.com/portfolio-holdings/4745
up 6%
It hasn't even been six months yet, but now seems a propitious time to
provide an update:-) The idea was to try to show that one need not
work very hard, nor be very bright, to screen stocks whose earnings
are increasing, and companies that are honest. Granted, ten stocks is
maybe a bit of a hill, but putting some 5% money into one or two
companies that are the best of a screen, and that one has familiarized
oneself with, might be a better bet than a bond fund.
Please note this is not a recommendation of any specific stock nor
collection of stocks - just a suggestion that it is fun to do this
hypothetical portfolio thing :-) I once owned a mutual fund - it was
more work trying to keep track of their 60 some odd ever-changing
stocks, and their short and long term gains and reinvestments, than it
was to keep track of ten stocks' annual reports, and the fund went
essentially nowhere.
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Posted by Douglas Johnson on May 1, 2009, 1:12 pm
nonsense@mynonsense.net wrote:
>The more I read about investing the more it seems that diversification
>is the key. In other words don't put all your eggs in one basket. Have
>a mix of stocks, bonds: mutual funds, CDs, real estate etc. The
>problem is that the more you invest in so many investment products the
>more time you have to spend managing all of them.
You're right. Diversification is key. But you don't need to make it all that
complicated.
Mutual funds are just a way of buying stocks and bonds, so you don't need to
buy individual stocks and bonds unless you want to.
The Vanguard Balanced Index fund being discussed in another thread gives you
excellent diversification all by itself. If you own a home, you are probably
over exposed to real estate already, but you could buy a REIT fund if you'd like
a little more. Go to your bank and get CDs for whatever money you expect to
need in the next three to five years.
If you want to keep it simple, you're done. You might want to add an
international fund, but now we are getting fancy.
-- Doug
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Posted by Beliavsky on May 1, 2009, 1:15 pm
On May 1, 5:13 am, nonse...@mynonsense.net wrote:
> So is there some kind of super index fund that invests in pretty much
> everything?
I would not buy such a product in a taxable account, because it makes
it difficult to harvest tax losses.
For example, if the fund owns municipal bonds and stocks, it is
possible that the stocks go down and the muni bonds up, and I am
forced to realize gains on the bonds if I want to sell fund shares to
realize the stock losses.
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