Smart Saving and Investing

This is the final post for this blog. It’s been fun!!!

written by Bill Stevens

What would you like to see at this blog?

I’ve blogged about saving, investing, options, mutual funds, bonds, money stories, how to, money and marriage, etc.

Let me know?

Thanks,
Bill

written by Bill Stevens

I’ll be going to a 2-3 posts per week schedule for most of the month of September 2007 here at Smart Saving and Investing due to various endeavors I’ve taken on.

If you’re new here, don’t forget to sign up for my RSS feed. You can receive my posts by email using the subscribe box to the right or using your favorite RSS reader by clicking on the RSS button to the right.

Also, look around at the various articles here as well as the sitemap and let me know if there’s any topics you’d like me to write more about or new topics you’d like me to cover.

Review the three actions I “push” on people to get a feel for what this site is all about.

written by Bill Stevens

If you’re one of the many folks who invests in index funds or are thinking about investing in them, then here’s a portfolio for you to own or to compare your current portfolio to. We’ll keep the following allocation that we’ve been talking about in other posts:

Large Growth - 35% (1 fund)

Large Value - 20% (1 fund)

Small Growth - 20% (1 fund)

Small Value - 15% (1 fund)

International - 10% (1 fund)

The 2007 Index Portfolio

This is an allocation with suggested index funds you could use when signing up for your employer’s retirement plan. However, your employer’s retirement plan would have to offer the Vanguard family of funds. I would use this allocation for anyone under 50 before looking at adding Bond funds to this portfolio.

Index funds track the market performance and their category’s performance. In this case, categories would include our allocation types - Large Growth, Large Value, Small Growth, Small Value, and International.

Here’s a table of the returns on these funds. Returns are what you would make on your money when invested in these funds. So if you invested $10,000.00 over a long period of time, your money would “make money”.

Let’s say 10 years later you decided to cash out (sell) your funds and received $20,000.00 back after you sold them, then that’s the return on your money. You made $10,000.00 over that time period, 10 years.

The table below expresses those returns in percentages, which is the typical way most investments report their return.

So there you go. These are set and forget (almost) group of index funds that will perform excellently for you over a long period of time making investing in these funds automatically simple in your employer’s retirement plan if Vanguard funds are available or in your Roth IRA.

In a Roth IRA you would have to pay a required minimum deposit and anytime you want to deposit more money into these funds there would be a minimum as well, typically $100.00.

Note: This is a portfolio I would use for myself if I was under 50 years of age and consider myself an indexer. I would look at adding a bond fund for anyone 50 and over.

The great John Bogle claims a general rule of 20% in bonds if your 20 years old and 70% bonds if you’re 70 years old. He says, others call that very conservative and so he mentions maybe your age minus 10 to give for a bond allocation. So if you’re 20, that would be 10% of your portfolio in bonds.

Of course for indexers, you’d want to have that percentage or some percentage you feel comfortable with in the Vanguard Total Bond Market Index, symbol VBMFX. Bonds make us feel more secure because they’re less volatile than the stock funds that we’ve been talking about.

We’ll revisit bonds at a later date.

written by Bill Stevens

Yikes folks!!

We’ve given up another 200 points on Friday, 7/27/07. Jeepers Wally!!

The DOW is down over 500 points this past week. I’m going to jump…, well, I’m going to jump to my back porch and grill me a steak!!

What a week!!

Well, remember we’re in this for the long term so hang tough. This is what happens. Be emotionally strong. There will be plenty of headlines to scare you off.

This is not the time to make the mistake of selling a mutual fund that has been doing good for you over time.

Now, we’re in the last week (or part) of July 2007. So here are some of those monthly reminders:

Savings

• Squeeze out that extra $x (where x is $10, $25, $50, $100, etc.) that you can transfer to your online savings account as described in action one.

Retirement Plan

• DON’T check your retirement portfolios whether it’s your employer’s retirement plan or your Roth IRA. I know this might sound crazy but it could possibly keep you from making a bad decision of selling a good or great fund.

Roth IRA

• Squeeze out an extra $50 to send to Roth IRA at Excelsior Funds if you’ve done what was talked about in action three. If you have a Roth IRA already that might be at a brokerage firm, then try and send some extra $$ to it or up your monthly automatic payment to your Roth IRA by $5.00 or more.

Motivational Monday

“Have a project going all the time. Something you can work on in the evening after you get home from work.”

The above quote is from a working man who was married with two kids and who built his own airplane in his off time. After working all day, he’d come home and spend some time on the plane. After years of doing this, he successfully flew the plane.

Now, I don’t know about you but if someone has the sustained motivation to build a plane over many years to a successful conclusion then I’m sure I can find effective projects in my life that will enhance mine and maybe some other lives.

Not to mention that this could lead to a very practical action like shutting off your TV and maybe even canceling Cable TV. Which in the long run will save you money.

written by Bill Stevens