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Mix on many different funds vrs. Vanguard's (and many others) latest suggestion

cowboys30
edited February 2012 in Fund Discussions
I have always held a mixture of different funds and a few stocks. Lately there seems to be a large shift in sentiment towards a very simple portfolio. If you look at the revamped Vanguard site they also are suggesting 3 funds, world stock, international stock and bonds. I have been reading a few newly published books and it appears that is the overwelming direction of the current authors.

It sounds so simple, I wouldn't have to watch or research any more information. I realize you still need to figure out the ratio of how much money goes where but I really am interested in other individuals thoughts regarding this "new" approach to your total portfolio.

I know there are ways to tweak it, a little TIPS, REIT, etc., but then you get back to my original thoughts, many different funds or three?

I also don't believe you age matters except for the percentage of each class. Also, you still need to keep the cash cushion.

Thanks in advance for any thoughts you might have!

Comments

  • tgeno
    I have several stock funds (mostly Matthews Asia funds), a few individual stocks, a REIT fund, a sector ETF, a bond CEF, 2 bond mutual funds (one domestic, one emerging market), and a lot of cash. Obviously, I don't subscribe to the minimalist approach to investing. However, I do believe it's possible to own too many funds; that's happens when you have difficulty keeping track of what you own. If someone doesn't have time to pay attention to the markets and their portfolio, then they should go the minimalist route.
  • cowboys30
    tgeno, that is probably part of my problem, I do have the time so I spend a lot of time building/checking my portfolio. Have you ever gave it any thought at all to investing in 3 index funds instead? If you have, you decided not to go that route. Was it because you felt you could improve on the index funds preformance or because you feel it is less risky with your choices? I am so curious as to why we/I go one direction over the other.....thanks by the way!
  • tgeno
    Frankly, I find limiting my holdings to a handful of index funds would be absolutely boring. Nearly all the funds in my portfolio I've owned for years; they've done well and I have confidence in their managers. Individual stocks, CEFs and ETFs are subject to occasional trading. With the cash pile I'm sitting on, I'll mostly likely add to my Asian funds because I'm a big believer in the future of Asia and the Matthews fund managers are among the best in Asian investing. I'm selecting individual stocks and CEFs mainly to boost yield and total return.
  • scott
    edited February 2012
    Reply to @tgeno: I really agree - I think my issue (for better or worse) is that I have to really be interested in what I'm investing in, both in terms of individual companies and larger macro bets. Rather than investing in index funds, I can tailor my portfolio to my interests (down to specific etfs like SOIL, or individual Asian conglomerates) and desired risk level. I definitely do not have a compact/concentrated portfolio and prefer it that way.
  • tgeno
    Reply to @scott: What you said is key -- you have to be interested in what you're investing in; it's a little like the Peter Lynch approach. So many people aren't interested in investing at all and will pay dearly in the long run. Others are only interested in index funds, but that should be a conscious choice; either they don't have the time or interest to get more selective, or they believe that indexing is the way to go. Just as there are many routes to the top of a mountain, there are many paths to successful investing.
  • cowboys30
    Reply to @tgeno: I am going to go with your last line "there are many paths to successful investing" because I am interested in what I am investing in AND I am interested in index funds so there is probably a reason I can't make up my mind, either path will work.....
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