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April 14, 2014


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I also have been looking more at diversifying with real estate instead of bonds. Its hard to get used to because, as you point out in your search for properties, its the exact opposite of the approach of index investing in stocks. It IS all about Not being diversified and focuses precisely on market timing.

I also like small caps as, if you're willing to take the volatility and can have a long time horizon (with those funds at least) they do generally produce better returns in the long run.

I've taken an interesting experiment this year and given one of my IRAs with about 15% of my investments to a broker with the general 1% fee and told him to invest it with a highish risk tolerance in a vacuum (pretend thats my only retirement account) and if he can out perform me over time I'll of course give him more and more accounts. Its been interesting to watch all the maneuvering (and I frankly just consider it one more version of diversification if nothing else). Its only been a year but his investments have beaten mine by alomst 1%, but of course that extra is then lost in the fee, so that experiment continues...

Honestly, I'm a newbie about investing, I'm really thankful that I started reading about personal finance blogs. And now I'm taking a baby step, I just started building my own small online clothing business and hopefully someday it would have a good outcome.

I put $10K in just exactly those funds in 2008, when it was recommended, as an experiment. It's done quite well, with no messing around buying and selling - just collect the dividend reinvestments and watch it increase.

Simple is always better when it comes to just about anything. The key is finding something that works and sticking with it. As Jon says, no messing around.

I have the three fund portfolio with my 401k as described above. In my after tax investments, I have been focused on dividend paying stocks. In the past year, I have been putting a significant amount of my pay into a deferred compensation program with my employer in which I receive a base level matching and I use an investment option that is paying a fixed rate of 4.6%. On top of that, I have a nice pension plan from my employer that is targeted to cover a good portion of my retirement expenses. Should one piece not go as planned, I have the other pieces that will still cover me well in retirement.

I'll go you one better--I have only two funds for my retirement accounts, one of their target-date retirement funds and their REIT Index fund (to get slightly more real estate exposure).

FMF....I would like to hear how your real estate investing is going now that you no longer live in Michigan anymore. Have you found it to be a hassle? I know some people who invested in real estate where they lived...and then they had to move...and it turned out to be a disaster (although I think it would have been a disaster for him even if he'd stayed in state). And I know someone else for whom it's working out fine. Maybe you'll be posting on this in the future?

Mark -

Rest assured that I will be writing on that topic in the future. I will have a post in the next two weeks or so on my third property, then an update in a couple months after that.

The short summary is that there are issues, but it appears it's worth the effort.

Stay tuned.

I second Mark's request and I'm looking forward to your posts.

I owned a couple rental properties in the Chicago area but I ended up selling them a couple of years after moving to the East Coast. I didn't have a particularly good management partner in place and maybe that was the problem but it was starting to be enough of a hassle that I decided to liquidate. I'm still not 100% sure it was the right thing to do but in hindsight I did better than fine on the properties so I guess i can't complain.

If I had to do it again, something very similar to this is exactly what I'd ve done! (knowing now, what I never knew then)...the the total stock market index with a (significantly lessser amount) in the Total international Index, as well as a well diversified Real estate index and some commodities (indexed) also...a portion of emergency fund in an online money market and CD.

I'd have the "income producing index(es) as my IRA (as to limit taxation)..

even simplier are the age specific target funds, as an advisor I used them ofen for clients so the appropriate risk allocation would balance as needed as the client aged and (hopefully) assets grew...

Splendid indeed! :)

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