Comments on: Index Funds Are Only Part of Your Investment Plan

By: Ria

Ria — Wed, 01 Apr 2009 02:33:49 +0000

Which of the 2 methods do you suggest? I’m trying to decide between putting 100% of my money set aside for my roth IRAs each year for either the 2045 fund alone, or splitting it between various funds by following one of the lazy portfolios.
Thanks!

By: Stephanie PTY

Stephanie PTY — Wed, 17 Sep 2008 04:31:12 +0000

Hmm… the 120-Rule means I should have 99% of my investments in stocks (well, 98% next week). Of course, I’m not going to worry about it until I’ve got the money built up to actually start buying some funds!

By: MultifolDream$

MultifolDream$ — Mon, 08 Sep 2008 23:30:07 +0000

For a lot of people Index Funds could be the best option. Especially for those that have some basic knowledge about investing. Index Funds are very large portion of my portfolio and all of them are 100% stocks as I’m growth oriented for next couple of decades.
The 2 solutions are not bad, but I would recommend the Couch potato strategy to be implemented with a mix of funds from Canada, US and International market (some of the list in Sol.1) as a start.
According to a article I read several months ago it was claimed as more important to do Industry based diversification than based on geography.

By: NickFro

NickFro — Mon, 08 Sep 2008 15:21:14 +0000

I’m a huge fan of the “Set It and Forget It” model offered by the various lifecycle/target date funds. My OCD/ADHD make me want to check my account balances far too often, and having most of my various retirement accounts in target date 2040 funds eliminates some of that desire. I have a few individual holdings, and an index fund, in one of my accounts, but the rest is a mix of Target Date funds and an annually rebalanced portfolio of various mutual funds (thanks TIAA-CREF). Future contributions are going 100% into target date funds. The trick there, I think, is to pay really close attention to the make-up of the MANAGERS of the fund (since they are a relatively new concept) — I’d rather be in a target date fund run by an experienced management team, than one run by this year’s crop of newly minted MBA i-bankers.

By: jim

jim — Mon, 08 Sep 2008 12:58:20 +0000

I always interpreted an “index fund” as one that matches the exact holdings of a particular index, such as the S&P 500 or the NASDAQ 100, and yes I did mean one specific fund.

I know that some consider index to simply mean passive, or a collection of other index funds (which is basically what a Lazy Portfolio is), but for this article I meant solely the ones that matched index compositions.

By: fivecentnickel.com

fivecentnickel.com — Mon, 08 Sep 2008 12:48:09 +0000

“The reality is that you can’t just open an account a online discount broker, buy only index funds or index ETFs, and then call it a day.”

I disagree, though it’s unclear if you really mean what you’re saying here. While I would agree that holding a single index fund is a bad idea, you argue above in the statement above that you can’t safely rely solely on index funds (plural). While owning just a single index fund is probably a bad idea, it’s actually quite possible to build a nicely diversified, low cost portfolio using index funds. In fact, the Target Retirement fund you referenced is 100% index funds (or index ETFs).

So… You argue that you can’t do exactly what you later say you should be doing. You’re wrong at first and right at the end.