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Old 03-10-2008, 07:36 AM   #21
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vanguard sp500 index fund is just over 11% since it's inception in the 1970's
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Old 03-10-2008, 10:36 AM   #22
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Dollar cost average will take up a certain portion of my cash inflow. So far, I does not have dollar cost averaging in any single mutual fund because I fear that "What if the fund that I contribute monthly does not perform well in the long run?" It would be a huge cost involved. Moreover, every new purchase will incur service charge.

I will consider your suggestion on buying the index fund. Is ETF a more actively manage index fund?

Read investment articles are easy, understanding the investment theories are challenging, applying it effectively needs a lot of experiences.
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Old 03-10-2008, 10:54 AM   #23
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Do fund prices matters as compare to the return in terms of dividen?

Thanks in advances.
By fund price do you mean load costs and expense fees? If so they matter alot. If you read the recommended books a recurring theme will be to avoid load funds and high expense ratio funds. Those costs drag your portfolios return and over long periods of time result in a huge difference in your portfolio balance.

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Old 03-10-2008, 11:13 AM   #24
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Quote:
Originally Posted by shorthair View Post
Dollar cost average will take up a certain portion of my cash inflow. So far, I does not have dollar cost averaging in any single mutual fund because I fear that "What if the fund that I contribute monthly does not perform well in the long run?" It would be a huge cost involved. Moreover, every new purchase will incur service charge.

I will consider your suggestion on buying the index fund. Is ETF a more actively manage index fund?

Read investment articles are easy, understanding the investment theories are challenging, applying it effectively needs a lot of experiences.
And trying to explain these things to someone without a basic understanding is even more difficult. When you ask about actively managed index funds, you're showing that you have a long way to go. How much reading have you actually done? You need to start with books before to get the full picture before you try to understand specific topics covered in articles, in my opinion, and as one of the first posters suggested.
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Old 03-10-2008, 11:16 AM   #25
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Dollar cost average will take up a certain portion of my cash inflow. So far, I does not have dollar cost averaging in any single mutual fund because I fear that "What if the fund that I contribute monthly does not perform well in the long run?" It would be a huge cost involved. Moreover, every new purchase will incur service charge...Read investment articles are easy, understanding the investment theories are challenging, applying it effectively needs a lot of experiences.
You are making this much more complicated than you need to. Read Solin's book and Bogle's book. If you want simple you can do it with three funds (or even one balanced fund) and do as well or better than 90% of advisors do for their clients.

Sounds like your biggest source of concern is not understanding risk, volatility uncertainty, and the beneficial effects of holding an asset for a long time. Knowledge is reassuring in this discipline.
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As if you didn't know..If the above message contains medical content, it's NOT intended as advice, and may not be accurate, applicable or sufficient. Don't rely on it for any purpose. Consult your own doctor for all medical advice.
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Old 03-10-2008, 11:18 AM   #26
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Amazon.com: The Bogleheads' Guide to Investing: Taylor Larimore,Mel Lindauer,Michael LeBoeuf,John C. Bogle: Books

It's less than $17. Or, you can get it from a fine library near you. It's amazingly easy to get through and will answer many questions about active/passive funds, correlation, fund mixes, etc.
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Old 03-10-2008, 05:08 PM   #27
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Hi

Is it posible to achieve 10% return p.a. via an investment portfolio?

If yes, how many percentage should be in the stock market, real estate, mutual fund, or any alternative investments?

Is borrowing for investment worth it? How do you leverage other people money to obtain profit? What are the risk that we need to look at?

Thank you in advance.
YES- 10% is possible. So is 20% and so is 8%. 8% is more likely to happen than 10%, and 10% is more likely to happen than 20%.

Heck even 100% is possible (not probable, but possible). Of course -10% is also possible.

10% would require a few things, IMO.

100% equities for better part of a 20-30 year investment period. I think 30 years gives a better chance for 10% returns than 20 years, partly because the extra time will diminish the risks taken.

I think there is a reasonable probability a porfolio of 100% equities could return 10%- with the following asset classes included -domestic large cap, domestic small cap, international large cap and international small cap.

Maybe 40-20-30-10 allocation in above. Add mid caps and I think probability goes up some.

Another way to try and slice it is to consider what risks the above takes, and decide if you want to take more. If you have time, that will lower the risks taken (so 20 years has more risk than 30 years) because time is the single biggest factor in compounding.

Take same portfolio above, and put 10 or 20% into a leveraged position. So if market goes up 7%, the leveraged fund goes up 14%. Funds like ULPIX (ultrabull) do this.

So most of porfolio is shooting for the 7% return, but a small chunk is going for double that, and the overall average turns out to be 10%.

The issue is that the leveraged position will lose 2X as much. So if market tanks 10%, leveraged position loses 20%. This makes the hole to get out of deeper.

My own portfolio is set up so 1/3 of each position will be leveraged or concentrated, and 2/3 of each position is diversified (giving market returns). I use managed funds (most here index, not me).

So my portfolio will be (when fully implemented- I am waiting for a rollover to occur so I can make this happen)-

30% large cap
15% mid cap
15% small cap
15% international large cap
10% international small cap
15% diversified bonds

The 30% position will be 20% diversified and 10% in ULPIX (2X S&P 500)
The 15% mid cap will be 10% diversified and 5% concentrated CGMFX
The 15% small cap will be 10% diversified and 5% concentrated (micro cap of some sort-still looking)

My goal is to get higher returns through the concetrated/leveraged position, but understand the risks I am taking are quite higher than the market as a whole, and no guarantee this will work year in and year out.

I have the diversified positions created already. I need a 401k rollover to finalize (from former employer which was bought out) and I also want the diversified positions to be slightly larger before getting more aggressive.
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