Of course, as soon as I say how simple my investing is I go and try to complicate it. I spent this weekend reading my new copy of The Intelligent Asset Allocator as part of my upcoming portfolio recontruction. Man, it is some dense stuff. Let’s just say it’s no Harry Potter.
In addition, for my portfolio research I will also be referring back to my two favorite investing books so far – The Four Pillars of Investing (same author) and A Random Walk Down Wall Street.
Finally, although I had hoped to get one gratis from the publisher *cough* *cough*, I went ahead and also bought a copy of the new book The Bogleheads’ Guide to Investing, which is another book about creating a portfolio written by frequent contributors to the Vanguard Diehards forum. These guys know Vanguard funds like Homer Simpson knows donuts, so can’t leave them out.
Although the Diehards forum has some great information, it can be really difficult to navigate and find what you’re looking for. Which is why I’m glad the leaders of the board wrote this book – I even quoted one of the authors, Taylor Larimore, over a year ago when starting my quest for investing knowledge. JLP of AllThingsFinancial managed to get an interview with all the authors.
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If the Bogleheads publisher is reading this, I *cough* *cough* don’t have a copy either. 😉
Maybe I’m jumping the gun on this one, but will you be posting a review of The Intelligent Asset Allocator?
Also, which book would you reccomend reading first? The Intelligent Asset Allocator, or The Four Pillars of Investing?
I currently have a 401k through Fidelity and a Roth IRA through Vanguard. I’ve basically been flying by the seat of my pants and I’m really looking to start managing things better without having to pay for a financial advisor.
FMF – Talk to JLP, he seems to be buddies with these guys 😉
Joe – I would recommend Random Walk first as a primer, and then Four Pillars for more portfolio construction advise. Four Pillars came after IAA, and seems to be the less mathematical ‘user-friendly’ version.
Yes, I’ll be posting a review of IAA and Bogleheads, once I finish. I’ll probably be posting partial reviews as I form my portfolio too.
Hey there. I am a fellow saver/investor with high goals and inspirations as well. I love the site… lots of good info. You are doing so well, how old are you at this point in time if you don’t mind me asking?
Mark
Hi Mark, welcome! I’m 27, please check out the ‘About Me’ link on the right sidebar for more about my background.
Intelligent Asset Allocator has a lot of the same material as 4 pillars of investing though it goes into a lot more statistical detail. 4 pillars will set you up for good portfolio allocations while IAA will provide you with a much deeper understanding of why certain allocations work.
Hi, I looked at your portfolio but I didn’t see much in terms of investments… It seemed very cash heavy with all the 0% stuff and HSBC accounts.
I’ve got mostly mutual funds, except for MSFT which I bought. For the mutual funds I bought about 80% in index funds based on what they taught me in business school. I have a few bond funds mostly in my 401k, but the rest are in index funds for S&P 500 and international (or their nearest semblances, the one fund that Principal allows). I got my wife’s plans investing 100% in index fund (The PIMCO StocksPlus C).
You mean I can’t wave my wand and use the AssetAllocatarius! spell? darn.
That does look like an interesting reading list though…
Jonathan, don’t the target retirement funds that Vanguard boasts pretty much intelligently allocate your assets? Or do I need to plow through that book? I guess knowing the whys and hows never hurts.
To sum up what IAA and 4 pillars says proper diversification comes from allocating into assets that have a very weak correlation. The less correlation the better. A very simple allocation would be 20% domestic bonds, 30% domestic stocks, 30% foreign stocks, 20% foreign bonds.
Then if you read Random Walk you’ll see that the best way to divy up that allocation is through index funds (or ETFs if you are investing a lump sum as opposed to monthly investments). Vanguard has index funds that hit all 4 of the areas.