most of the advice here is good however first off i would recommend mutual funds over etfs. you should be dollar cost averaging and adding money to your account every month(or quarter). If you start young with 0 dollasrs and you put in even just 100 dollars a month in the s&p 500 you can literally have hundreds of thousands of dollars by the time you retire.
My recommended portfolio would be something like this(note this is meant for long term investors people far away from retirement and people who have high risk tolerance and im not just talking about people who can watch losing 50% of their money and not panicing i mean people who were buying stock during the tech crash and the most recent crash, if you sold then this advice is not for you)
for 99.99% of people including many “professional investors” you should be buying mostly mutual funds and not be investing in individual stocks.
I would structure my portgolio like this
1 80% stocks which have the best returns over long periods of time
2 10% bonds
3 10% reit
i would break down the stock structure into something like this
10% s&p
35& large cap value us
15% foreign large cap value
20% small cap value
10% foreign small cap value
10% emerging market( or even better if you can find it an emering market value fund)
I would put no money in growth funds since over time value has shown himself to far outperform growth. I would put a little money in the s&p for when growth has a crazy run like in the late 90s so you dont get frustrated and jump into growth stocks. small cap value have amazing long term returns and foreign small cap value have even better. thats why i would have them equal about 30% of my portfolio
2 bonds
i would mostly have long term bonds(however just a note right now with interest rates so low you will get killed when interest rates go up especially with long term treasuries yielding only around 4.6 %, so im not sure what % i would recommend for right now to invest in long term bonds) in general id put 65% in a long term bond fund, maybe you could also put afew percent in tips. Again however tips now have very low returns when tips were returning 3.5% plus cpi they were much more attractive.
20% foreign and emerging market bonds these provide some diversification in case intrest rates rise alot in us and us bonds go down alot in value
15% high yield bonds these historically have provided excellent returns(but are almost as volatile as stocks so be forewarned)
3 Reits have historic great returns and povide a good inflation hedge
i would not put money in gold historically it has basically returned nothing(inflation adjusted). Espcially after the huge run up in gold it is the worst time to buy( this in addition to being extremely volatile makes it a very unattractive investment)
if oyu want return from inflation REITs, tips and stocks(over long term) should provide more than enough protection
I would recommend putting as much money as possible in an IRA, dollar cost averaging, even if its only afew hundred dollars a year, and trying to invest even more when the market crashes.
I would recommend opening up a vanguard account or if oyu have alot of money i hear DFA is an excellent choice but i think the minimum is 250,000 to open an account. There is no reason you should pay high fees and especially for indexing it makes absolutely no sense. I owuld also recommend putting some of oyur money in active managed mutual funds only if oyu know what oyur doing. Even though dodge and cox is run by some of the best investors in the world it has so much money in assets it will be very hard for them to outperform the market. I would recommend sequia fund and royce funds for small cap funds. they have many many small cap funds and basically every single one of them has beaten their index the russell 2000 and russell 2000 value by a large margin for several decades. Note: i would look at their funds with not so much net assets. there are many other good funds out there i will tell anyone if they are interested.
one of the most important things about investing is read up a little if oyu read up about past crashes and how much the market went up afterwords, or how a huge bull run in the late 90s was bound to be followed by a huge crash you will have more confidence in your investments.
some good books i would recommend for starters(or even more experienced investors is )
10 contrarian investment strategies the next generation- dreman
john bogle on mutual funds- john bogle
the millionare next door Thomas J. Stanley and William D. Danko the book gewts very repatative the main thing is to get the general idea
the only investment guid youll ever need- andrew tobias
four pillars of investing william bernstein
intelligent investor benjamin graham(warren buffetts rebbe)
if i had to pick one and oyu are a new investor i would recommend four pillars of investing by william j bernstein
for more advanced investors i have more recommendations id be glad to tell you if oyu email me
the most important points for investing are stay patient and dont lose your nerve, figure out your risk tolerance, start investing young the younger you start the easier (far far easier) it is to retire comfortably this is the magic of compounding, put as much money as possible in your ira, and dollar cost average and invest additional amounts as much as possible even if it is just $50 at a time
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