Tags: Clements | funds | investment | portfolio

WSJ's Clements: How to Construct a Small Investment Portfolio

By    |   Monday, 10 November 2014 12:22 PM

Not everyone has millions of dollars to invest in various asset classes. So how can those of us with smaller kitties put together a strong investment portfolio?

Wall Street Journal columnist Jonathan Clements says you just need as little as $50 and "a few carefully chosen mutual funds."

Here's what you can do with mutual funds if you don't have much to invest:
  • Your employer's plan. "This is a no-brainer, and not just because of the tax advantages and possible matching employer contribution," he writes. Many plans include low-cost mutual funds. "On top of that, there's no required minimum investment."
  • Vanguard's target funds. These include a mixture of stocks and bonds and are targeted to reach maximum value and safety at your retirement date.
  • Schwab's index funds. Both stock and bond funds are available with only $100 minimums.
  • Exchange-traded funds (ETFs). These generally have lower fees than mutual funds do and can be bought and sold throughout the day like stocks. And some brokerage firms don't charge a commission to trade ETFs.
  • Actively managed funds. Some funds "will waive their regular minimums if you agree to invest $50 or $100 automatically every month," Clements notes.
But keep in mind that "in your initial years as an investor, the key driver of your account's growth won't be the investment returns you earn," he writes. "Rather, what matters is the dollars you sock away." So save as much as you can.

Meanwhile, financial writer Eric Rosenbaum offers several investment tips in an article for CNBC.
  • "Stop thinking there is such a thing as a top or bottom." Market-timing is generally a losing proposition.
  • "Don't keep your winners." Taking some profits now can save you from pain later.
  • "Don't think it's easy just because it has been easy." The five-year bull market could end anytime.
"Don't let a bull market lull you into a false sense of confidence," Rosenbaum writes.

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Not everyone has millions of dollars to invest in various asset classes. So how can those of us with smaller kitties put together a strong investment portfolio?
Clements, funds, investment, portfolio
318
2014-22-10
Monday, 10 November 2014 12:22 PM
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