Expect the Worst -- And Get the Best
This is the time of year when personal-finance columnists offer up stock picks from hotshot money managers, tout five mutual funds to buy now and list predictions for the year ahead.
Forget that nonsense.
Instead, if you want to manage your money better in 2005, think about what could go wrong -- and then focus on stacking the odds in your favor. Like that idea? It pretty much sums up my approach to investing.
Expecting Less
Don't get me wrong: I am not predicting economic Armageddon and I am not suggesting you bail out of stocks. In fact, I have 75% of my portfolio in stocks and 25% in bonds, and I am happy with that mix.
At the same time, I am not expecting a whole lot from these investments. Over the past eight decades, stocks have clocked an impressive 10% a year while inflation ran at 3%. A big part of that 10% gain, however, came from both rich dividend yields and rising price-earnings multiples. Today, with dividend yields so low and P/E ratios so high, a repeat performance doesn't seem likely.
Instead, if annual inflation checks in at 3%, I reckon my stocks might score 6?% or 7%. Figure in 5% for bonds and knock off a little for investment costs, and that would leave my portfolio with a 6% pretax return.
That's the number I use when I noodle around with the 401(k) planner at
www.smartmoney.com, a Web site partly owned by Dow Jones & Co., publisher of The Wall Street Journal Sunday. To find this great little calculator, click on "personal finance" and then head to "retirement."
If I plug in 6% as my expected rate of return, the calculator suggests my portfolio's growth will be fairly sluggish, which means I need to save a truckload of money to compensate. Maybe the markets will pleasantly surprise me, and these extra savings will prove unnecessary. But as I see it, socking away more money today sure won't hurt my retirement and it could prove to be a financial lifesaver.
Cutting Costs
Banking on a 6% annual return might seem conservative. But in truth, that number is based on an aggressive assumption. What's that? I presume my investment costs will be extraordinarily small.
Almost all of my money is in no-load market-tracking index funds with rock-bottom annual expenses, which means I might lose 0.3% a year to costs. Like saving aggressively, I view minimizing costs as a way of stacking the odds in my favor.
But most folks don't index. Instead, they actively manage their portfolios, which might mean surrendering 2% or 3% a year to costs.
Let's say you also own a mix of 75% stocks and 25% bonds. But instead of purchasing low-cost index funds, you own actively managed stock funds that levy 1.5% a year and bond funds that charge 1%. The blended annual expenses on that mix would be almost 1.4% a year. On top of that 1.4%, your funds would incur trading costs. Those trading costs, which aren't included in published fund expense ratios, might swipe another 0.6%, pushing up your total tab to 2%.
What if you work with a broker or financial planner? If your adviser is any good, he or she will steer you toward lower-cost funds. If not, you could lose 2% a year to fund costs and another 1% to the adviser. Result: A 6?% pre-cost rate of return would become just 3?%. Sound bad? It will look even worse, once you factor in taxes.
Keeping Up
For me, indexing isn't just about holding down costs. I am also anxious to avoid market-lagging performance.
If you pick individual stocks or buy actively managed funds, there is a risk you will pick badly and end up with results that are far worse than the market average. Index funds, meanwhile, sidestep this problem, because they are focused solely on mimicking the market's performance.
Settling for the market averages strikes many investors as rather dull. These folks enjoy picking stocks and funds in an effort to overcome their investment costs and thereby beat the market. But my goal is a little different. I am not looking for the thrill of victory. Instead, I am trying to avoid the agony of defeat.
Hedging Bets
When investors think about indexing, they typically think about funds that track the big blue-chip companies in the Standard & Poor's 500-stock index. But to improve your chances of earning decent returns, you need to be much better diversified than that, spreading your money not only across stocks and bonds, but also into a broad array of large, small and foreign shares.
In fact, over the years, I have become something of an asset-class junkie. I keep looking for ways to diversify my family's portfolio even further. For instance, in addition to buying mainstream stocks and bonds, I have added funds that invest in emerging-market stocks, smaller companies in developed foreign markets, inflation-indexed Treasury bonds and high-yield junk bonds.
To be honest, I have no idea how these sectors will fare in the years ahead. That's one reason broad diversification is so wise. I am entirely confident that a few of my investments will turn in truly rotten results -- and I don't want too much money riding on these dogs.
Looking Down
My caution doesn't extend to holding a big emergency reserve. In my taxable account, I currently have bond and money-market holdings equal to just over two months of after-tax income, far less than the six months of emergency money that experts often advocate.
I compensate, however, by keeping my financial obligations small, so I can cope with big unexpected expenses with relative ease. For instance, I have no consumer debt and almost no mortgage debt.
No doubt some folks would dismiss my aversion to debt, my hefty savings rate and my disdain for market-beating strategies as signs of excessive caution.
But I like it that way. I might worry about what to say in my next column. But I sure don't worry about my finances.
做最坏的打算，得最好的回报
如果你想在2005年获得投资的成功，那就要竭尽全力保证不要出现失误。
每年到了这个时候，个人理财专栏作家们就开始纷纷撰文，或是介绍那些成功的基金经理们推荐的股票，或是极力吹捧某5只共同基金，让投资者立即购买，要不就是对未来的一年做出种种预测。
不要理会这些胡说八道的文章。
如果你真的想在2005年更好地管理自己的资金，你就应该仔细想想哪些方面容易出现纰漏，然后集中精力在这些方面做好准备，做到防患于未然。这个主意不错吧？它在很大程度上也概括我的投资理念。
降低期望值
不要误会我的意思，我不是在预测经济状况的好坏，也不是让你从股市抽身而退。实际上，我的投资组合中75%都是股票，25%为债券，而我对这一比例十分满意。
与此同时，我并不指望从这些投资中获得巨额的收益。在过去的80年里，股市每年的涨幅达到了10%，而同期的通货膨胀率不过3%。但是，10%的涨幅很大一部分来自于较高的股息收益率和不断上升的本益比。如今，股息收益率如此之低，加上居高不下的本益比，股市看来不会再有这么好的表现了。
如果年通货膨胀率按3%计算，我估计我股票的投资回报率可能会在6.5%或7%左右。将债券5%的投资回报率计算进来，再扣除一些投资成本，我的投资组合总的投资回报率可能有6%（税前）。
这是我在使用
www.smartmoney.com上的401(k)计算工具时使用的数据。这个小计算工具非常不错，你在上述网站内点击“个人理财”，然后进入到“退休”栏目中即可找到。道琼斯公司(Dow Jones & Co.)持有该网站部分股份。
如果我输入6%作为我预期的投资回报率，这个计算工具就提示我说，我的投资组合增值速度将相当缓慢，这意味著我还需要额外存不少钱。也许市场可能会给我带来惊喜，不过在我看来，今天多存些钱可能对我的退休生活没有坏处，它可能会成为我以后的救命钱。
削减成本
指望每年能有6%的投资回报可能略显保守。不过实际上我是基于一项大胆假设而得出这一回报水平的。究竟是什么呢？那就是我假设我的投资成本相当之低。
我几乎所有的投资都放在没有销售佣金、跟踪市场的指数基金上，它们每年的投资费用最低，这意味著我每年的投资成本可能只有0.3%。和积极储蓄一样，我认为将成本降至最低将会对我有利。
不过多数人并没有购买指数基金。他们经常调整自己的投资组合，这样一来每年的投资成本比例就会达到2%或3%。
假如你的投资组合中有75%为股票、25%为债券，但是你并没有买入低成本的指数基金，而是持有年费用为1.5%的积极管理型股票基金、以及年费用为1%的债券基金。这样的投资组合每年的费用比例将接近1.4%。除了这1.4%，你的基金还有可能产生交易成本，而这并不包括在明文列出的基金费率中，它将使你每年的费用再增加0.6%，这样你每年总的投资费用就会提高到2%。
如果你有经纪人或金融规划师为你出谋划策又会怎样呢？但凡这些投资顾问有点良知，他或她就会建议你购买低费用的基金。如果不是这样的话，你每年就要浪费2%在基金投资成本上，还有1%会进到顾问的腰包中。结果是：6.5%的税前投资回报率可能会降到只有3.5%。听起来很糟糕吗？如果你把要纳的税考虑进来，情况会更加糟糕。
紧随市场走势
对于我而言，购买指数基金不仅是为了降低投资成本，我还想藉此来避免出现自己的投资收益逊于大盘的情况。
如果你购买单只的股票或者购买积极管理型股票基金，你可能会遇到选股不利的情况，这时你的收益率将远远不及大盘的平均水平。但指数基金就不存在这样的问题，因为它们只会追随大盘的表现。
许多投资者并不满足于仅仅达到大盘平均水平，这些人热衷于不停挑选股票和基金，想以此抵消投资成本，从而跑赢大市。不过我的目标与此有些不同。我并不期望能沉醉在巨大的成功喜悦之中，我想要的就是尽量别尝到失败的痛苦。
对冲风险
当提到指数基金时，投资者通常会想到跟踪标准普尔500指数中那些大型蓝筹股的基金。不过为了提高你获得丰厚回报的几率，你应该把目光放得更宽泛一些，不仅要把投资分散在股票和债券，更要进一步把投资扩展到大型股、小型股及外国股票等领域。
实际上，经过这么多年，我已经逐渐对分散投资上了瘾。我总是时时处处寻找机会将我家的投资组合进一步多样化。比如，除了购买主流的股票和债券外，我还购买了专门在以下领域投资的基金，这些领域包括新兴市场股票、发达国家市场小型股、通货膨胀保值国债和高收益率垃圾债券。
坦率地讲，我并不知道这些领域在未来几年的表现会怎样，这也是扩大投资范围是明智之举的一个理由。我完全相信其中几项的投资回报将会十分糟糕，我可不想把大量的资金都投在它们身上。
谨慎理财
虽然我十分谨慎，但也不会储备大量资金应急。在我的应税帐户中，目前在债券和货币市场上的投资金额只比我两个月的税后收入略多一些，比起专家们通常建议的要留出相当于六个月生活费的应急资金，这一数额要少很多。
不过在另一方面，我的负债保持在较低水平，这让我可以轻松应对突然出现的大笔支出。比如，我没有消费贷款债务，也几乎没有抵押贷款债务。
毫无疑问，对于我不愿举债、大量存钱的行为，以及我对于跑赢大市策略的不屑态度，一些人可能无法接受。
不过这就是我中意的理财方式。我可能会发愁下一期专栏要写些什么内容，但我肯定不会为我的财务状况发愁。
