Comments on: Learn More About Money from an Investment Group

By: John Pilch

John Pilch — Fri, 23 Dec 2011 02:20:49 +0000

In the section “Keeping a level head” I thought that it was implied that those who keep their heads don’t invest in anything… exciting (i.e. something other than preferred stock and bonds). I think you can still have a good head on your shoulders while investing in slightly more risky stocks, just know exactly what you’re getting yourself in to before you do it!

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By: Brian

Brian — Wed, 21 Dec 2011 03:36:41 +0000

One way to get better than average returns on an index fund is to put more money in when it goes down. It seems funny that a huge fund like vanguard Wellington would drop so much with such stable stocks and 30 percent bonds, but it does. People sell when the market goes down and you can increase returns by taking advantage of that without having to research the best companies.

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By: Elaine

Elaine — Tue, 20 Dec 2011 00:35:48 +0000

The inherent problem with index funds is you will only ever get average returns. Hey, that’s fine to spread out the risk in a small portfolio, but true asset allocation would involve investing beyond funds.

Additionally, there is a modest price inflation simply because a company is held in all the major indexes regardless of underlying strength.

Anyway, JD! Can you write more about how to find investment groups?

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By: Carrie Hetu

Carrie Hetu — Mon, 19 Dec 2011 22:44:52 +0000

There is something to be said about learning in numbers. I have often thought of getting involved in an investment group. What do you think would be some of the con’s of an investment group?

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By: Kolton

Kolton — Mon, 19 Dec 2011 21:16:14 +0000

I have been putting a lot of my time and effort into learning from the ‘ink’ (books and blogs) but you truly make a good point. It is a better and smarter choice to invest your time with other like-minded investors. There are great advantages to both of these strategies, but nothing beats being able the ‘pick’ the brain of a likewise investor.

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By: the frugallery

the frugallery — Mon, 19 Dec 2011 19:24:42 +0000

I was a member of an investing group years ago. If I were to do it over again, I would seek one out on my own instead of getting invovled with friends. I ended up going along with decisions because I didn’t want to upset anyone. No one really knew what they were doing and most of the purchases were made based on brand-awareness rather than the company’s financial status/forecast.

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By: Ross

Ross — Mon, 19 Dec 2011 19:19:16 +0000

I agree that the allocation proposed in the permanent portfolio seems extremely conservative for anyone under 50. In my opinion, there is no point to having cash in your portfolio if you have a decent emergency fund. A couple other things that don’t make sense about that portfolio:

-25% in gold? I am not anywhere near that scared of inflation, but if I were I would prefer TIPS since they offer 99% of the security against default, are just as good against inflation, and are not subject to wild price swings. Gold can go down as well as up! Also, those who argue US default, if that happens any investment will be toast, including all those Gold ETF’s!

-25% in T-bills? Maybe if you are buying in 1980-82. This is a huge loser when inflation is factored in. Again, seems like TIPS provide the same security.

-25% in US stocks? This makes sense, but there are going to be some extreme drags on the economy for years to come and it seems odd this is the only equity diversity added in. Seems like some Emerging Markets diversification would be useful here. Also, remember equity markets are automatically hedged against inflation.

Investing to not lose money (Gold, T-bills, cash) is almost as bad as rushing into risky investments. Over time, lost opportunities will catch up to you.

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By: Bruce

Bruce — Mon, 19 Dec 2011 18:35:34 +0000

I agree with Mike. Bogleheads is the place to go to get a second (or even first) opinion on ones portfolio. The knowlegebase is great. The only downside I’ve seen is that it is a bit xenophobic at times favoring USA centric ideas and allocations.

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By: babysteps

babysteps — Mon, 19 Dec 2011 17:57:57 +0000

Also, love the links – the article about what portion of investment returns accrue to the financial firms vs. the investor was great!

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By: Alex

Alex — Mon, 19 Dec 2011 17:36:18 +0000

Wow, I’ve never heard of such investing clubs before. They sound really interesting and I am personally interested in learning more about preferred stocks myself. I think the asset allocation proposed in the Permanent Portfolio is quite conservative, but that may be just because I’m fairly young for this audience. Thanks for sharing!

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By: El Nerdo

El Nerdo — Mon, 19 Dec 2011 17:10:35 +0000

I love posts like these and I’m always surprised they don’t get more responses, but I suppose people have little to say here compared to subjects like “tell us what you do for _____,” which are always blockbusters (people love to talk about themselves).

Still, just chiming in to say please keep these posts coming… they are highly educational, even for those of us who are just getting out of debt, or struggling to amass a 6-month emergency fund. They offer a preview of attractions to come and the motivation to keep going.

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By: Nicole

Nicole — Mon, 19 Dec 2011 14:21:39 +0000

purchases, not purposes

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By: Mike Piper

Mike Piper — Mon, 19 Dec 2011 13:50:19 +0000

I can’t recommend the Bogleheads Forum highly enough. There’s really no better place to go for a second opinion on one’s portfolio.

I had the chance to attend the official Bogleheads reunion this year — what a great time. In addition to meeting Jack Bogle himself, I got to meet and chat with authors William Bernstein, Rick Ferri, Allan Roth, and Mel Lindauer.

The reunion is open to everyone, but the spots fill up quickly after it’s announced on the forum. This was the first year I moved fast enough to secure a spot.

Would love to meet some GRS readers there next year.

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By: Nicole

Nicole — Mon, 19 Dec 2011 12:48:01 +0000

I read an article somewhere that people who joined investment groups tended to make more risky stock purposes and trade more frequently than they should, thus dragging down real returns with fees. Investment groups encourage active rather than passive investing, on average, but passive investing is actually better.

If one were to join an investment group, the best option would probably be to make sure it was through the Bogleheads.

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By: SB @ One Cent At A Time

SB @ One Cent At A Time — Mon, 19 Dec 2011 12:35:53 +0000

Learning is always welcome to me. Whichever route it comes, through investment club or reading blogs. There’s a online investment club ‘iClub’ I want to pursue that one first, before joining local clubs.

Before I started blogging I had no clue about Tax Lien investing. We learn everyday and we should be open to it. Even if your investment is giving you excellent return, you might learn even a better investment in these clubs.

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By: BB

BB — Mon, 19 Dec 2011 12:17:38 +0000

I like index funds too. I invested in them for nearly 20 years, until spouse and I decided we needed professional help reaching our retirement goals.

Perhaps, J.D., you might consider write a post on picking and working with a professional financial consultant one day.

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By: Emily Hunter

Emily Hunter — Mon, 19 Dec 2011 11:45:52 +0000

I’d really thought that visits to investment clubs would be quite boring, with plenty of irritating old investors talking about subjects that would have interested me had I understood what they were talking about. You’ve shed some light on it – though now I just need to get something to invest!

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