Apr 03
Beginning Investor Guidelines
David Swensen, at the very end of the introduction to his book, “Unconventional Success,” proposes a solution to the interested investor. “The investment management world includes a very small number of not-for-profit money management firms, allowing investors the opportunity to invest with organizations devoted exclusively to fulfilling fiduciary obligations. Moreover, the market contains a number of attractively structured, passively managed investment alternatives, affording investors the opportunity to create equity-oriented, broadly diversified portfolios. In spite of the massive failure of the mutual-fund industry, investors willing to take an unconventional approach to portfolio management enjoy the opportunity to achieve financial success.”
One of those organization “fulfilling fiduciary obligations” is Vanguard. This is why we are using the Vanguard ETFs to populate the AA-Mosaic Portfolio. If we were in a 401 (k) plan and saving $100 a month, we would be using Vanguard index funds. Since we invest sufficiently large sums with each purchase, we are using ETFs as the commissions are a small percentage of the purchase.
We are also taking a passive approach to investing. Trading is a negative to building wealth. The AA-Mosaic Portfolio is certainly equity oriented and it is broadly diversified. We are following all of Swensen’s recommendations, as stated above.
Photograph: Rim of Crater Lake, OR
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