View Single Post
Old 01-31-2007, 04:24 PM   #9
jay santos
Senior Member
 
Join Date: Jan 2006
Posts: 6,177
jay santos is on a distinguished road
Default

Quote:
Originally Posted by Jeff Lebowski View Post
Actually, the biggest mistake I have made is being too aggressive with my investments. Oh, the money I have lost....
I should qualify my statement.

Biggest mistake meaning too much money in fixed income (T-bills, bonds, etc.).

With age expectancy into the 80's and probably into the 90's for people of my age, even at retirement age, people are still on a long horizon.

The typical advice of a guy like me in my 30's putting 30% into fixed income is totally nuts, IMHO. Or someone in their 50's moving to 50%+ in fixed income--too conservative.

But once you determine your portfolio allocation, i.e. x% in fixed income, x% in stocks, x% in real estate, whatever, then you diversify to fullest extent to lower risk within your asset class and crosswise across other asset classes.

So when I say be aggressive, I mean put more money into stocks than bonds.

Buying one stock is order of magnitude more risky than buying an index fund (which I would call high risk). Leveraging a real estate purchase is order of magnitude more risky than buying one stock. And giving money to your brother-in-law as his financial partner for his business idea is order of magnitude more risky than the real estate purchase. This kind of aggressiveness is not what I'm talking about.
jay santos is offline   Reply With Quote