Making My Move

After many months of being too busy to feel comfortable placing my money in the market, I have finally made the purchases. Having never dealt in the amount of money I was placing into the market, it felt odd to see these large numbers on the screen.

After executing the trades, I looked around my brokerage account a bit and checked out what was going on in the market. I happened to check what were the most traded equities at the moment and found the one I invested in most heavily (SPY) at the top of the list. Now while I certainly was not responsible for the more than thirty-two million transactions that took place, it felt nice to see that some of those numbers were a result of my actions.

At this stage in my life, with this asset allocation (if interested see previous post that discusses my exact allocation), I feel that I can go on with my life without fretting about how my stock is doing. I know that even if we experience something as bad as the great depression, that if I simply don't pull out then I don't lose money. The key to long term investing is to not lock in your losses.

I never knew investing could be this simple. To me it seems like the only way to go in order to keep it from becoming a constant concern. Fretting over the rise or fall of small holdings daily seems like a pain with no significant payoff, which investing gurus such as Bill Schultheis, William Bernstein, and William P. Kemp (its true!) also find to be the case.

To the final guru on the list I express my most sincere thanks. For personally walking me through (and at points holding my hand) the confusing and contradictory world that is the stock market. Through your tutelage I have come to understand a place for myself in the market that I didn't know existed. Prior to this wonderful experience, I didn't see the market as something approachable or understand that it could be tamed through asset allocation. Again thanks so much. I can't help but feel that through this experience we have become closer. I will always cherish our long talks, whether stock related or otherwise. Next time we get together, the coffee is on me.

In For The Long Haul

Well my odyssey begins this week. I have my asset classes picked out and my money moved to a money market account. My investment horizon is 30-40 years and so things should turn out well. One of the most important aspects for me is the issue of taxes. To mitigate taxes I am investing in 6 ETFs that have historically paid out little in dividends. This is important as my funds are held a taxable account. The six asset classes I am investing in are:

Large Cap U.S. 40%
Mid Cap U.S. 14%
Small Cap U.S. 11%
EAFE 20%
Bonds 10%
REITs 5%

All of these are represented by low fee ETFs that track an appropriate index. This asset allocation may seem risky to some but with my investment horizon my risk will be significantly mitigated. Even in the case of a catastrophic event my long term investing outlook is quite good. Also contributing to my choice of ETFs is that I will be investing my assets in one lump sum and will likely not be adding for the next couple years.

Being in my early 20s and having this opportunity to invest heavily is really exciting. My main source of inspiration in this whole line of investing was the advice given to me by my father. He showed me the simple ideas of investing legends such as William Bernstein and Bill Schultheis. The idea that beating the market is irrational and that approximating it is the best we can do long term is born out in much of the literature on investing. Through approximating the market with index ETFs I am able to free myself of the burden of always chasing the illusive "hot" stock. I hope others who have the chance will pick up these same simple strategies for successful investing.

Remember people, the biggest loss you will face when if you don't invest is inflation. It eats away at your money over time and is a constant risk. Mitigating this through wise investing is the key to being able to live without fear of money troubles later on. Even if you don't have a large amount of money to put away right now, a small amount a month can begin an account that will grow significantly as you age.

Investing doesn't have to be an agonizing chore. Approximating the market is well within your grasp. As Schultheis often says "Get On With Your Life!"