I’ve been investing in stocks (occasionally) and mutual funds (consistently) for about thirty years, and I endorse Vaniver’s advice heartily. I think overall, I’m up on stocks, due to doing most of my stock investing in cyclical stocks that I can buy and sell repeatedly over the course of many years. This has worked for me with both SGI and Cypress, which I repeatedly bought at low prices and sold at high prices. If you try this and find that you’re not buying low and selling high, then you should stick to mutual funds and a buy-and-hold strategy. I’ve dabbled in other stocks where I thought I knew something and could time it, but few of those have turned out well. Happily, I knew I was dabbling, and kept the amounts low, so I got a valuable less for a relatively low price.
Mostly, I invest in mutual funds. I have subscribed to a newsletter that specializes in rating No Load funds (there are a couple). This gives me a monthly opportunity to review the performance of the funds I’m invested in, so I can tell when they stop being in the top performers and roll my money over to a different investment.
I record the monthly performance of each of my investments in a spreadsheet (used to be a paper notebook). The newsletter tells me which quintile the performance is in compared to the fund’s peers. I highlight 1st and 2nd quintile in green, and 5th quintile in red. When the number of reds gets to be high compared to the greens, I look for a different fund with better recent performance. The commercials always say “past performance is no guarantee of future returns”, but it’s the only indication you can use. Most of the time performance is consistent over periods of a few years, so you have to look back a year or so when evaluating, and monitor continuing performance in a consistent way.
This whole process takes far more attention than most people are willing to put into it (a few hours a month on an on-going basis, and several hours every six months or so when choosing new investents), and few investors do even as well as the rate of growth of the broad market. That’s why investing in the S&P 500 or an even broader market index is a good idea. If you put your money in a broad index and let it sit, you’ll do better than 3⁄4 of investors.
Vanguard is only one decent brokerage. I personally use Schwab, but there are several others with reasonable prices.
I’ve been investing in stocks (occasionally) and mutual funds (consistently) for about thirty years, and I endorse Vaniver’s advice heartily. I think overall, I’m up on stocks, due to doing most of my stock investing in cyclical stocks that I can buy and sell repeatedly over the course of many years. This has worked for me with both SGI and Cypress, which I repeatedly bought at low prices and sold at high prices. If you try this and find that you’re not buying low and selling high, then you should stick to mutual funds and a buy-and-hold strategy. I’ve dabbled in other stocks where I thought I knew something and could time it, but few of those have turned out well. Happily, I knew I was dabbling, and kept the amounts low, so I got a valuable less for a relatively low price.
Mostly, I invest in mutual funds. I have subscribed to a newsletter that specializes in rating No Load funds (there are a couple). This gives me a monthly opportunity to review the performance of the funds I’m invested in, so I can tell when they stop being in the top performers and roll my money over to a different investment.
I record the monthly performance of each of my investments in a spreadsheet (used to be a paper notebook). The newsletter tells me which quintile the performance is in compared to the fund’s peers. I highlight 1st and 2nd quintile in green, and 5th quintile in red. When the number of reds gets to be high compared to the greens, I look for a different fund with better recent performance. The commercials always say “past performance is no guarantee of future returns”, but it’s the only indication you can use. Most of the time performance is consistent over periods of a few years, so you have to look back a year or so when evaluating, and monitor continuing performance in a consistent way.
This whole process takes far more attention than most people are willing to put into it (a few hours a month on an on-going basis, and several hours every six months or so when choosing new investents), and few investors do even as well as the rate of growth of the broad market. That’s why investing in the S&P 500 or an even broader market index is a good idea. If you put your money in a broad index and let it sit, you’ll do better than 3⁄4 of investors.
Vanguard is only one decent brokerage. I personally use Schwab, but there are several others with reasonable prices.