Five Money Ideas That Really Add Up
Take five.
When it comes to investment ideas, veteran investors often play favorites. You will hear them sing the praises of supposedly surefire notions like "free cash flow," "200-day moving averages," "growth at a reasonable price" and "intrinsic value." But this stuff strikes me as unnecessarily clever -- and way too likely to get people in trouble.
Instead, I hang my hat on a much simpler set of ideas. What follows are, I believe, the five most important concepts in investing. If you aren't using them in your portfolio, I think you are making a big mistake.
1 Saving
Tout the virtues of saving money and folks tend to look a little weary and grumble "well, duh." But the fact is, saving money is the surest way to make your portfolio grow -- and there isn't enough of it going on.
Many retirees, if they bothered to run the numbers, would probably find that more than half of their nest egg is represented not by the investment gains they earned during their working years, but by the raw dollars they socked away. And yet, despite the obvious need to save a heap of money, most people don't.
Over the past five years, the annual savings rate has run at between 1.8% and 2.4% of disposable income, well below the 8% to 10% that was common in the 1960s, 1970s and 1980s.
Meanwhile, families have gone deeper into hock, with mortgage debt jumping 70% during the past five calendar years and consumer debt climbing 38%.
2 Time
If you are just out of school, you may not have much money. But you do have time, which can be just as valuable.
Want to amass impressive wealth? All it takes is a modest savings rate, modest investment returns and a heap of time.
Suppose you sock away $300 every month and those savings clock 5% a year. After 40 years, you will have accumulated almost $460,000.
3 Diversification
Diversification is sometimes described as Wall Street's only free lunch, because it allows investors to slash their portfolio risk without hurting long-run returns.
How does it work? Different parts of the global market fare well at different times. By combining a fistful of market sectors in a single portfolio, you will smooth out performance, as losses in one part of your portfolio are offset by gains elsewhere. For most folks, mutual funds are the only practical way to get this broad diversification.
Unfortunately, however, diversification is anathema to many. Overconfident investors shun the idea of spreading their bets widely, preferring instead to focus their dollars on the market's biggest winners.
Yet picking winners is a lot tougher than it seems -- and those who try typically incur hefty investment expenses and run the risk of picking wrong. And if you pick wrong too often, you could end up spending your golden years with miserably little to spend.
4 Rebalancing
Diversification is great for reducing risk. But to bring some rigor to the strategy, while simultaneously profiting from the market's turmoil, you need to combine diversification with rebalancing.
The idea is to set target portfolio percentages for key market sectors, such as large U.S. stocks, small U.S. shares, real-estate investment trusts, developed-foreign-market stocks, emerging-market stocks, high-quality bonds, high-yield "junk" bonds, foreign bonds and money-market instruments.
Once you establish these portfolio targets, you should tweak your investment mix every year or so to bring your holdings back into line with your target percentages. For instance, if you have earmarked 5% for junk bonds and the sector has a rotten year, you would add to your holdings to get back to your 5% target.
This rebalancing is best done in your retirement account, where you can trade without worrying about the tax consequences. What if you are rebalancing taxable-account investments? Try to get back to your targets by directing dividends, interest and any new savings to your portfolio's underweighted sectors.
Rebalancing keeps your portfolio's risk level in check, by ensuring you don't end up with too much money in any one sector. There's also a potential bonus. Rebalancing could boost your portfolio's performance, by forcing you to buy into depressed sectors that are ripe for a rebound while cutting back on highflying markets that could be set to crash.
5 Indexing
When one of your portfolio's funds gets hit hard, it can be nerve-racking to add more money. While you are buying, everybody else will seem to be selling, scathingly dismissing the sector as "dead money" that will "never come back." To make matters worse, there is always the worry that even if the sector returns to favor, your fund won't go along for the ride.
That's one of the reasons I am such a fan of index funds, which simply buy the stocks or bonds that constitute a market index in an effort to match the index's results. With an index fund, you can be confident of capturing the results of the underlying market.
Moreover, if you index, you are guaranteed to outperform most active investors who dabble in the same sector. It is a matter of simple logic.
Before investment costs, investors collectively match the market's results, because together we are the market. After costs, we are destined to lag behind. In fact, as a group, we will lag behind the market by an amount equal to the investment costs we incur.
That is where index funds get their edge. By seeking to match the market while incurring minimal expenses, index funds ensure that they outpace most competing investors, who are burdened by far higher costs.
But it gets even better. If indexing looks good before taxes, the strategy's results are almost unbeatable once you figure in Uncle Sam's cut. Indexing is highly tax-efficient, because the funds don't actively trade their portfolios and thus they are slow to reap capital gains.
Looking to buy investments for your taxable account? If you want decent gains without big tax bills, you won't do much better than stock-index funds.
真正实用的五大投资理念
谈到投资理念的时候，经验丰富的投资者经常喜好卖弄。你会听到他们对“自由现金流”、“200日移动均线”、“合理本益比”和“内在价值”等一些据信肯定不会有错的概念大加吹捧。但在我看来，这些都是不必要的卖弄──太有可能让人陷入麻烦了。
相反，我遵从一套简单得多的投资理念。下面就是我的五大投资理念。如果你不用这套理念规划自己的投资组合，那可就大错特错了。
一、储蓄
向大家宣扬储蓄的种种好处，往往会招致他们的厌倦，还有嗤之以鼻的嘟囔。但事实是，存钱是使投资组合实现增长的最有保障的方法──再怎么存都不为过。
对于许多退休的人来说，如果他们愿意算算的话，可能就会发现手里的钱有一半以上都是工作期间的积蓄，而不是投资赚取的收益。然而，尽管攒钱是显而易见的必要之举，大多数却不这么做。
过去5年来，美国的的年储蓄率一直在可支配收入的1.8%-2.4%之间，远远低于60、70和80年代普遍的8%-10%。
此外，美国家庭的负债不断增加，过去5个日历年度的抵押贷款激增了70%，消费信贷攀升了38%。
二、时间
如果你刚刚毕业，可能没有很多钱。但是你有的是时间，而时间也价值不菲。
想积累大量的财富吗？只需适度储蓄、适度的投资回报，以及大量时间。
假设你每个月存上300美元，年息为5%。40年后，你将拥有近46万美元财富。
三、多样化
多样化有时候被称为华尔街唯一的免费午餐，因为投资者可以借此在不影响长期回报的情况下降低投资组合风险。
它是如何运作的呢？在不同的时期，全球不同的市场的表现也各不相同。将不同的市场领域综合在一个投资组合当中，就可以抹平投资收益的起伏，因为某个部分的损失将被其他部分的收益所抵消。对许多人而言，共同基金是实现如此广泛的多样化投资的唯一可行途径。
但不幸的是，许多人对多样化不屑一顾。过度自信的投资者不愿积极拓宽投资渠道，反而将大笔资金押在市场表现最好的证券上。
但是，选对一种证券远比表面看起来难得多──亲手尝试过的投资者通常会面对不菲的投资费用，还面临著选错股的风险。如果你经常选错，那么在退休后的金色晚年里，可能只有少得可怜的可支配收入。
四、重新调整投资组合
多样化对降低风险很有用。但要在执行严格投资策略的同时，于市场动荡期间仍有斩获，你必须将多样化与重新调整投资组合两种策略结合运用。
这种投资之道就是针对核心市场领域制定投资组合的目标百分比，比如说划分成：美国大型股、美国小型股、房地产信托投资基金、外国发达市场股票、新兴市场股票、高质量债券、高收益“垃圾”债券、外国债券和货币市场工具等领域。
一旦确立了这些投资组合目标，就应当大约每年调整一次，使你的投资与目标的百分比保持一致。比如说，如果你将5%的资金投入垃圾债券，而这部分市场的过去一年的表现非常糟糕，那么你就要增加投资，把垃圾债券的百分比恢复至5%的目标。
重新调整投资组合最好在你的退休帐户中完成，因为退休帐户交易无需担心税项影响。如果需要重新调整课税帐户的投资，那该怎么办？试试把股息、利息和任何新的储蓄投入投资组合中比例下滑的领域，以便重新达到目标。
重新调整投资组合可以控制风险水平，其原理就是确保你不会将过多资金放在任何一个领域。还有一个潜在的好处就是，它迫使你买进反弹时机已经成熟的表现低迷的证券，同时削减在可能即将崩盘的高涨市场上的投资，从而改善投资组合的表现。
五、指数追踪
当投资组合中的一只基金遭到重创的时候，再追加投资真是件伤脑筋的事情。在你买进的时候，其他人似乎都在卖出，无情地将这里视为“永远无法收回”的“死钱”之地。雪上加霜的是，人们总是担心，即便这个领域重新受到青睐，你那只基金也不会随著上涨。
这也是我如此追捧指数基金的缘由之一。只要买进构成一只市场基金的那些股票或债券，就能收取等同于指数的回报。通过指数基金，你可以对获取潜在市场的回报充满信心。
此外，如果你追踪指数，就得到了超越大多数涉足同一领域的主动型投资者的保证。这是一个浅显的逻辑。
扣除投资成本之前，众人的投资总和会与市场表现相符，因为我们合在一起就构成了市场。剔除成本后，我们的表现肯定要落后于市场。实际上，作为一个群体，我们得到的回报将等于市场表现扣除我们付出的成本之后的金额。
这就是指数基金的优势所在。它旨在实现等同于市场表现的回报，同时将费用最小化，由此确保超越大多数为高得多的成本所拖累的竞争性投资者的收益。
但指数基金的优势不止于此。如果追踪指数策略的税前回报已经相当高，那么一旦纳入减税影响的考虑，这种策略几乎是无法获取高超业绩的。追踪指数是一项非常具有税项优势的投资策略，因为此类基金并不频繁交易，因而获取资本利得的速度相当慢。
想对你的课税帐户进行投资吗？如果你希望获取不错的回报，同时又不想负担大额税款，那么没有比股票指数基金再合适的选择了。
