For those getting started investing, either for a retirement account like a 401k or IRA or for non-tax-advantaged accounts, it’s often stressful to figure out what stocks to buy. One approach would say “you can’t beat the market” and therefore you should just buy index funds that match exactly what’s in the market. The problem with this approach is that you are buying the bad companies along with the good – and are totally exposed to the ups and downs of Wall Street.
A better approach is to research solid companies and hold them for the long term. In this way you can capture “alpha” – returns over and above the risk adjusted returns of the overall market. For retirement accounts, one more factor is income – so dividends are also important. Besides, history shows much of the stock market’s gains over the years is due to dividends, not stock price appreciation.
So: as a long-time investor myself, trained on Wall Street and working in finance, I thought I’d share with you what I’m investing in (with significant six figures $) for your learning. In this post I’ll share my 401k, in another post I’ll share my IRA holdings. Of course, when tracking investments it’s a good idea to have a handy mobile app like Stock TickerPicker on your iOS device to easily monitor their prices – I recommend downloading it today. And if you aren’t savvy on understanding market moves and want to learn about technical analysis, you can read about that here too.
Here’s my 401k. In it, I’m focused on ETFs of global dividends of various kinds, as well as solid companies that will grow as the global economy grows. I also invest in a bond fund to balance the portfolio.
So: what’s the comprehensive strategy here? Why did I pick this set?