There is a lot of talking head quasi-professional-technical advice being given on how the average investor should manage his or her savings. The difference between success and failure it seems is in the minutia. From talk radio to cable television here are some of the things being said on how to manage our money: Buy and hold is dead. Exchange Traded Funds are better than mutual funds. Watch bonds for signals to where the economy is headed. The Transport Index is a leading indicator of the future. Tech is always the bellwether indicator. Bio's surge when the market falters. The list goes on.
Most successful investors keep things simple, understand what they own and don't drive themselves nuts by checking their accounts every day. Warren Buffet once said that he doesn't look at his personal investments but a few times a year. He said you don't check the value of your home more than that then why do it with your stocks and mutual funds?
One of my pet peeves is running into someone who's asset allocated their $25,000 401(k) portfolio into about eight slices, and wants each piece to be a consistent winner, each and every day. When I explain they would do just as well with one good world fund that pays a dividend they look at me as if I just escaped a padded room.
The truth is most average investors can do just as well be settling on a portfolio of domestic, foreign and bonds funds. If you want to simplify it more create a design using a world fund that pays a dividend and add an intermediate bond fund. If you're 50-years of age a basic 50-50 allocation into those two funds will do just as well as anything complicated some money management firm cranks out and charges a huge annual fee.
No matter what anyone tells you, dear reader, there is no such thing as a perfect investment plan. Keep it simple, adjust it as time goes on and understand what you own.
Investing, in some ways is like romance. There are those that spend their entire lives looking for their soul mate and there are others who simply find someone they can be comfortable with. Those that spend their lives looking for their soul mate are consistently disappointed while those that settle never are.
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