Farm implement for planting seed. The discs at the rear move the soil over the seeds.
Several days* ago a friend wrote and asked about setting up a portfolio where $500 would be deposited every month. What advice would I pass on to such an investor? The first bit of advice is to read all the Beginning Investor and Critical Information posts. These can be found under Categories in the right-hand sidebar. My first portfolio would be a Robo Advisor portfolio such as the Schrodinger. Once that is established I would begin a Copernicus style portfolio. Schwab now requires a $5,000 minimum to open an Intelligent Portfolio where the Schrodinger is such a portfolio. If this is still the minimum requirement, then move to the second paragraph.
What to do with that first $500 investment? After opening up an account with a discount broker such as Schwab, I would purchase as many shares of VTI as the $500 will buy. This is the first move to populate the Large-Cap Blend asset class and gives one broad exposure to the U.S. Equities market. This first purchase is essentially starting your Copernicus portfolio. Continue adding to this initial portfolio until you have sufficient funds to move $5,000 into an Intelligent Portfolio with Schwab. Now you have two portfolio operational. Each month split the money and invest $250 in each account. Continue this strategy until you feel familiar with the Sector BPI model and might want to experiment with this third approach.
These few basic instructions will help a beginner launch a portfolio. If you decide to experiment with the Sector BPI, the Kipling spreadsheet is almost a requirement.
Follow the Schrodinger and Copernicus updates or reviews. Select one or two of the Sector BPI portfolios to follow to see if this is something you want to tackle. It does require a little more work whereas the Schrodinger and Copernicus are very easy to manage.
One last suggestion. Check out investment books on this site or search books. I highly recommend reading William J. Bernstein. It is important to get started on the right track and the Top Ten Investment Books is a great starting place.
- This blog post was revised in January of 2024.
Discover more from ITA Wealth Management
Subscribe to get the latest posts sent to your email.
Lowell,
I assumed the free ETFs happened automatically. What do I need to do to make sure I have that option. They’ve been charging me $9.99 for trades how do I lock in the $7 trades?
Bob W.
Bob W.,
There is a place on the TDA website where you can set up the commission free ETFs. I forget exactly where that is located, but your broker can inform you if you are unable to locate that setting.
As for the $7.00 trades, I heard someone else negotiated the $7.00 trades for the non-commission free ETFs or stocks, so I asked the broker at TDA to set it up for me. It is not uncommon.
Lowell
In conjunction with learning about portfolio construction, I’ve started to read the Feynman Study. It seems Part 1 skips to Part 3. Am I missing something or is this an oversight?
John K
John,
I’ll need to check on that. Part 2 should be there.
Lowell
John,
Here is the link to Part 2. It is there if you click on the Feynman Study under Categories, it shows up.
https://itawealth.com/2013/09/06/feynman-study-part-2/
Lowell
thanks Lowell!
Lowell, all,
Terrific article in weekend Barron’s on ETFs and crazy stuff now and to come.
http://online.barrons.com/article/SB50001424053111904628504579423162646381646.html?mod=BOL_hp_highlight_2#articleTabs_article%3D3
Importance of diversification and sure tools such the CWM spreadsheet. But main message is know what it is you are buying, why and keep expenses low. Diversify . . .but how far down do we drill before we are at UNG or NASH level? : >)
Robert
Robert,
It appears as if one needs to be a subscriber to see this article. Try this link.
http://online.barrons.com/article/SB50001424053111904628504579423162646381646.html#articleTabs_article%3D1
Lowell