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+1 for Index investing - also called passive investing, couch potato investing etc. It is so simple and elegant I can put it in code: // Decide asset alloc
by protomok 10y ago
+1 for Index investing - also called passive investing, couch potato investing etc. It is so simple and elegant I can put it in code:
// Decide asset allocation based on risk tolerance. E.g. 75% Stocks / 25% Fixed income
set_asset_allocation(risk_tolerance)
// Determine which index you want to track. E.g. 25% Canada (TSX)
// 25% US (S&P500), 25% Developed World (MCSI EAFE)
select_funds(list_of_funds)
// Set up automatic purchase plan so your account automatically purchases the funds bi-weekly or monthly.
enable_auto_purchase(name_of_financial_institution)
while (alive && working)
// Live and not worry about investments. Instead focus on coding, knitting, cow tipping, etc.
live(1 year)
// Buy/Sell more units of your funds to return to desired asset allocation
rebalance()
done
retire()
And if history repeats itself you will outperform the top money managers >50% of the time. Check this PDF for the active money managers VS index fund historical results: http://ca.spindices.com/documents/spiva/spiva-us-yearend-2015.pdf http://ca.spindices.com/documents/spiva/spiva-us-yearend-201...
- brianpgordon 10y agoAnd there are services now which automate this. For a management fee (generally 0.025%/year) you can set up automated recurring deposits, choose a risk tolerance, and let the algorithm continuously rebalance your portfolio automatically in a tax-efficient way. Just click some nice big friendly buttons and enter your information and forget about it, and watch your portfolio grow (or drop, with the market). I work at a startup (https://www.sigfig.com https://www.sigfig.com) that does this, and lets you view in-depth information about how your portfolio is performing through rich charts and tables on our site and mobile apps. Our competitors (https://www.wealthfront.com/ https://www.wealthfront.com/ and https://www.betterment.com/ https://www.betterment.com/ among others) offer a similar service with slightly different value props. There's really no excuse anymore for not signing up for something like this. It's insanely easy and ridiculously cheap. Like, maybe an hour to set up with zero paperwork to send in, and a tenth of the cost of an active fund.
- aforarnold 10y agoThe services you mentioned only for US, or anyone can access it. For example EU citizens can also open account and set periodic investment?
- brianpgordon 10y agoThere are some Quora questions about that: https://www.quora.com/Is-there-an-equivalent-company-to-Wealthfront-Betterment-or-Personal-Capital-based-in-Britain-or-the-EU https://www.quora.com/Is-there-an-equivalent-company-to-Weal... The answer from some brief poking seems to be that there's nothing in the greater EU right now.
- contingencies 10y agoAwesome... who wants to collaborate to build one?
- brianpgordon 10y agoCan't be done like that. You can't imagine the regulatory nightmares that would be involved.
- crazypyro 10y agoAre you sure about that management fee number? Your company's website differs.
- n13 10y agoThank you! I'll definitely want to look into this. Just wondering what's the average rate of return provided by these services.