The 4-Fund Portfolio: Allocation Guidelines – Episode #37

Ethan Bloch shares allocation guidelines to follow when assembling your 4-Fund Portfolio.

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Links mentioned in today’s episode:

The 4-Fund Portfolio
IRA’s In The House!

  • waway74

    Ethan,

    Great show. One question from me, how about buying high yielding preferrence shares and use its dividends to buy more preferrence shares, instead of buying bond fund. I just don't like paying >1% of annual management commission to the fund manager. Thanks.

  • Steve83

    Ethan,

    I was wondering whether you can do a video on average annual returns for mutual funds. Discussing, the differences between all the returns (e.g. AAR, Cummulative Returns) and using the returns to evaluate future performance.

  • Fred Kern

    The statement about the interest the second year in the tips discussion where there was 3% inflation was wrong at $13.00, it should have been $10.30. I suggest that you edit these videos for correctness..

  • axela

    i'm kind of scared to invest my money in index funds because of the up-and-down nature of the market. I know they make money in the long run... but you also lose a lot of money every time the bubble pops. is there any safeguard against this?

  • Hi Axels, that is totally understandable, the majority of people are allergic to volatility; we humans are extremely emotional when it comes to our money.

    However, I would like to point out that you don't actually lose money during a market downturn unless you actually sell your investments during the downturn. Having said that, it is important you are not buying broad based index funds at market heights either, and you can avoid that through a Dollar Cost Averaging program ( see here http://www.thewaytobuildwea....

    Spending a lot of time and energy worrying about 'paper losses' on broad based index funds is a waste. Furthermore downturns usually create real opportunity to buy additional slices of corporations at discount prices.

    I would like to share two solutions to your allergies toward 'volatility' .

    (1) Put your psychology in check and adjust your temperament to handle turbulence. Understand that by owning a broad based Index Fund you own everything, so unless you've given up on capitalism there is no reason to sell. Furthermore downturns create opportunity, carpe diem!

    or

    (2) Invest the majority of your money in investment grade corporate and municipal debt and government bonds. Which you can also do through bond index funds (see here http://www.thewaytobuildwea...

    Thanks for the great question and GOOD LUCK!

    Cheers.

    Ethan

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