Most Beneficial Investment

[rollin]

Hello everybody,

I am a bit puzzled to which investment vehicle is the right one for me. I understand diversity is the way to go, but I have no experience in stock and/or mutual funds.

I was wondering which investment vehicle you think is best - meaning has the most ROI and least headache.
- RE
- Stock
- Mutual Fund
- Index
- Bond
(Feel free to add if you have other suggestion)

As mentioned in my previous (only) post, my only investment has been several houses in Asia, all paid off. We are in the process of repairing some but as time goes by, I was wondering whether I made the right decision by putting all my money in RE - appraised value today has been double than what I've been puttin in, approximately 6 years ago.
Thanks.

 

[bUU]

There is an inverse relationship between "most ROI" and "least headache".

Regardless, your question bypasses the reality of the marketplace, wherein something that has the "most ROI" also typically holds the greatest risk of loss, and while equities seem to come back time and time again, (a) that may not always be the case and (b) you may not want/be able to wait until they do come back, before you need the money to live on (i.e., in retirement).

Beyond that, you've got a list there that mixes things up pretty seriously. Real Estate could either be an "investment vehicle" or a market sector, with the "investment vehicle" being one of the others you mentioned. Stocks, Mutual Funds and Bonds are different investment vehicles, as is direct ownership of a business or of Real Estate. "Index" is a kind of Mutual Fund, where the holdings of the fund are chosen in a passive manner.

Diversity is the means by which you can try to account for the fact that every means of investing have its up-sides and its down-sides. Generally, the broader the base of your investments, the more reliably you'll avoid nasty losses. However, by dampening losses it also dampens gains to some extent. There is no magic bullet. There is no way to know, right now, what will have been a good choice, in retrospect from some point in the future.

Finally, I wouldn't put too much stock in appraised value, especially in Asia. Don't count your chickens until they're hatched.

 

[Animorph]

Your best bet would be a target retirement date, balanced, moderate allocation, or conservative allocation mutual fund. Something like the Vanguard Target Retirement series. If you pick a fund with a near-term date it will be fairly conservative with more bonds and less stocks. A later date will have more stocks and less bonds, potentially better gains in the long term, but also more potential for short-term losses. The one you should chose will depend on when you expect to withdraw the money and how you feel about price fluctuations.

 

[TuborgP]

Read, read, ask questions and ask more questions here, there and elsewhere. When you reach the point that you comfortably understand what you are reading and the answers you are getting you will be ready to decide.

 

[FinanceDude]

Marrying the right person was my most beneficial investment........

 

[Which Roger]

Three-fund portfolio - Bogleheads

 

[travelover]

Your best bet would be a target retirement date, balanced, moderate allocation, or conservative allocation mutual fund. Something like the Vanguard Target Retirement series. If you pick a fund with a near-term date it will be fairly conservative with more bonds and less stocks. A later date will have more stocks and less bonds, potentially better gains in the long term, but also more potential for short-term losses. The one you should chose will depend on when you expect to withdraw the money and how you feel about price fluctuations.

Excellent advice. My biggest problem was inaction for years. Start investing in a Target Retirement Fund at Vanguard for the year you will turn 65. If you become more sophisticated in your financial knowledge, tweak it, if not, you are covered.

 

[samclem]

Your best bet would be a target retirement date, balanced, moderate allocation, or conservative allocation mutual fund. Something like the Vanguard Target Retirement series. If you pick a fund with a near-term date it will be fairly conservative with more bonds and less stocks. A later date will have more stocks and less bonds, potentially better gains in the long term, but also more potential for short-term losses. The one you should chose will depend on when you expect to withdraw the money and how you feel about price fluctuations.

Yes. Then, as travelover suggested, do some reading (see the FAQs here for some good suggestions) and see if you want to do a few things slightly differently. But if you decide to just leave things in the appropriate Target Retirement fund you'll have a diversified portfolio that can weather the ups and downs fairly well and which will outperform the results of the vast majority of investors. Your RE has done very well, but do you really want to keep all your money on this one horse as you count on these funds to provide for your retirement income? You are right to be concerned.

 

[clifp]

Most beneficial investment.
Time spent reading investing books like those recommended here.
Close second time spent reading forums on investing like this one.

Now time spent posting not such a good use of time.

 

[chrisaukcam]

yeah I like the advice that the others have posted. For someone without much experience go with a few mutual funds or index funds. I think it is Vanguard that has a Wellington fund with both stocks and bonds. So that is built in with some diversity. And the retirement date funds are OK too. Then as you get more experience and learn more you can spread out from there. I am probably too spread out, but I like to play around with stocks. So I have part of my funds in self directed accounts where I invest with individual stocks. But that is my mad money. The bulk of my retirement (about 60%) is with an investment advisor.

 

[bUU]

I think it is Vanguard that has a Wellington fund with both stocks and bonds.

Vanguard Wellington is the stocks-heavy balanced fund. Vanguard Wellesley is the stocks-light balanced fund. They also have the Vanguard STAR fund, which is also stocks-heavy - it differs from Wellington in that STAR is a fund of funds.