A professional allocation timing service

TSP Smart Investor& Vanguard Smart Investor


principles for investing


Understand your Goals

·         Your investment goals should be nested with your life’s goals

·         Life’s goals are a process not an end-state

o   Be prepared for life’s changes

·         Ask the right questions

o   Don’t ask how much will I need to maintain my lifestyle in retirement

o   Ask what do I really want out of life

o   Ask yourself how can I lower my present and retirements basic expenses

·         Increasing your retirement income in excess of your basic expenses should be your goal

o   Do not take on unnecessary risk to meet your goal



·         Your primary retirement funds should be diversified to decrease most risk and limit your market risk as you get closer to retirement

·         Alternative investments for most investors should be in something you will use

o   Buy your retirement home and rent or vacation in it

o   Invest in lower cost, more efficient living

o   Invest in yourself to meet your life’s goals

·         Your investment funds should have a mix of stocks and bonds but…

o   Cash is the best investment in bear markets, not diversification

o   Reduce exposure to stocks and high yield bonds as you near retirement

o   Reduce exposure to stocks when valuations approach historic extremes

§  Most investors do the opposite which is what drives the extremes





·         Understand the rule of 2 %

o   2% is the amount many managed funds cost over the lowest funds

o   Since 1988, the S&P 500 earned 10.5% including dividends

o   From 2000 to 2012, the S&P 500 earned less than 2 % including dividends

o   Your fees could be 20% to over 100% of your returns

·         Putting the 2% rule into dollars

o   Two percent of $100,000 is $2000 a year

o   In 35 years, for each 10K invested, it…

§  gains $320,000 at 10.5%

§  gains $164,000 at 8.5%

§  In 35 years, an extra 2% annually doubles your nest egg

§  The cost of 2% becomes  $156,000 or half of your nest egg

·         Know your investment costs

o   What fees are your funds charging

o   What commissions and other charges are your broker charging

o   What are your trading costs (trading spreads)

·         Lower your investment cost

o   The Gov’t TSP and Vanguard offer the lowest cost options available

o   Managed funds rarely beat the indexes nor are they fully diversified

o   Indexed funds offer the lowest expense fees and are well-diversified



·         The retail investor is used as a contrary indicator

o   Retail investors have the highest equity exposure at market tops

o   Retail investors have the lowest equity exposure at market bottoms

o   JP Morgan’s market guide estimates the retail investors on average earned 2.3% from 1994-2012 compared to 8.2% for the S&P500, 6.3% for bonds, 2.5% for inflation

·         Investment newsletters can be used as a contrary indicator

o   Yes, even the professionals get caught up in the noise

o   Avoid the noise in the news media, the news is most bullish at the tops

·         Focus on what you can control…spending and saving

o   Don’t focus on the economy, the markets, or individual investments

·         Follow a disciplined saving plan and investment strategy

o   Achieve a high savings rate as early as possible

o   Don’t chase past market returns, this leads to buy high and sell low panics

o   Be conservative with your primary retirement funds

o   Don’t increase risk to chase higher short-term returns

o   Don’t let emotions and the news media drive your decisions

·         Start applying these principles today


Our  Levels of Service

Powered by Wild Apricot Membership Software