This is aFREE PDF!! Read it Now! If you want to learn the 2 step lazy man's way to invest with better returns than professional investors, this one is for you. It is only 16 pages long and only takes about 20 min annually to execute. The PDF will take you through the theory, the steps, the pitfalls, and how to overcome your obstacles.
Basically, it teaches you to invest like this: Set up 3 investment funds (US stocks, foreign stocks, bonds) and fund it with a certain percentage in each (typically 1/3rd in each). Every year rebalance the ratios between your funds so that they are back to what you intended (such as 1/3rd in each). You can choose different percentages based on your aggression/risk tolerance or even have it shift towards bonds as you age. The percentages are up to you, just leave it alone except for tweaking it annually and you will do fine.
Where I found it:
I came across the PDF while surfing the BogleHeads website.
What I learned:
I finally understand why balancing portfolios increases your returns. If something is going up, it is probably becoming more overvalued so you sell some off while it is high and put that money into something that still has growth ahead of it. If something goes down, it is probably becoming discounted, so sell some of your higher valued positions and put that money into scooping up the discounts. If you maintain a specific percentage of your portfolio in each category you decide to invest in (US stocks, precious metals, foreign stocks, bonds, etc.), you will naturally adjust more optimally. It just takes guts to stay the course. Don’t leave your money to grow longer in any category just because it is hot right now and don’t be afraid to “buy the dip” when things go down.
Anyone who is interested enough to have read this far is definitely interested enough to benefit. Seriously, just click the link. It’s short and it’s right here.
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