I have been lax in my investing lately. I am paying my monthly fee for my Buy & Hold account which entitles me to 2 free trades. I am going to try to start using those even if I only invest a small amount. I bought $100 of ISHARES s&P SMALLCAP 600 VALUE INDEX FUND (IJS) and also $100 of ISHARES MSCI EMERGING MARKETS INDEX (EEM). I own a bunch of individual stocks in my regular brokerage account, and they up, down, and even. I have done much better with the ETFs in my Roth IRA than I have with individual stocks. So I decided a while ago that any more purchases would be funds. Thoughts of selling some of the individual stocks, and converting the money to funds has crossed my mind. But the thoughts of having to do the tax work of figuring out the cost basis has put me off. I still need to sit down and do the cost basis for a few stocks I sold last year. Also, I want to make sure I hold these stocks for at least year so I pay only long term capital gains taxes, and not short term. Anyway, they are all pretty stable companies, so I am not too worried.
Last week at my work, we had a seminar on asset allocation. A guy came in from Fidelity, the company that manages our 401k’s and talked for an hour and a half.
The Fidelity guy started off talking about the things his company offers.
Then he showed us a chart showing the spectrum of annual return versus volitilty.
There was another chart showing the historical chance of loss 1955-2004
Stocks: 1 year 25%, 5 years 6%, 10 year 0%
Bonds: 1 year 9%, 5 years 0%, 10 year 0%
Short Term: 1 year 0%, 5 years 0%, 10 year 0%
Then he went over market timing and how it can be bad. He showed how just missing a small number of the best months could severely damage your return.
He went over Dollar-Cost Averaging. Then he showed us a chart called Callan Periodic Table Of Investment Returns. I want to do more research on this chart. It looked interesting.
He talked about the three asset classes. Then he went into the different market capitalizations of stocks (large caps, mid & small caps, foreign stocks). Next came investment styles growth versus value.
He discussed the different types of bonds: US Treasury Bonds, Corporate Bonds, and Municipal Bonds. He discussed how interest rates affect the bond market.
Next came risk versus time horizon. The longer you have, the more risk can be tolerated.
He talked about rebalancing your portfolio periodically.
He mentioned Fidelity Freedom Funds which have dates, and how the funds change over time, becoming more conservative as retirement approaches.
He talked about how Fidelity could help us via a Fidelity rep, or by the website, etc.
Overall, it was like an hour and a half sales pitch. I really didn’t learn anything new.