Strategies

I don’t know, I don’t care

Vanguard diehard hbarnard made this post about the U.S. markets, Is it “Half full or half empty?” Taylor’s reply was I think a classic article by Jason Zweig, “I don’t know, I don’t care“:

Will value stocks do better than growth stocks? I don’t know, and I don’t care — my index fund owns both. Will health care stocks be the best bet for the next 20 years? I don’t know, and I don’t care — my index fund owns them. What’s the next Microsoft? I don’t know, and I don’t care — as soon as it’s big enough to own, my index fund will have it, and I’ll go along for the ride.

With an index fund, you’re on permanent auto-pilot: you will always get what the market is willing to give, no more and no less. By enabling me to say “I don’t know, and I don’t care,” my index fund has liberated me from the feeling that I need to forecast what the market is about to do.

I agree. The fact is, if you have a low-cost, tax-efficient and well diversified investment plan set up, you really “will have more time and mental energy for the important things in life, like playing with my kids and working in my garden”. You really wouldn’t be constantly fretting over the latest stock pick or hunting for the next hot stock to buy.

Making an investment plan

Before beginning on any long journey, it is important to make a good plan to maximize the chances of success. It is the same with investing – it is prudent to make an appropriate investment plan so that it can guide the investor though the investing journey. This article attempts to address the basic steps to making an investment plan and constructing an appropriate asset allocation.

The above is taken from an article which I wrote in August 2005 about how to make an investment plan in the Singapore context. It had already been posted online elsewhere but to read it there required a registration. Now, you can get the PDF from the link below, no registration required! 🙂

Making an investment plan (PDF, 107kB)

Easy allocator

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Easy Allocator is an interesting tool created by Diehard Nick (yobria) for performing asset allocation planning. It includes the following asset classes: commodities, foreign bonds, REIT, overweight value/small, micro-cap stock, equal weight Europe/Pacific/Emerging markets, equal weight Pacific rim and foreign small-cap. The popular portfolios like the Coffeehouse, Bernstein-4 and the Couch Potato are included as well. It even includes a forecast of portfolio performance. Try it!