Beginning to Advanced Investors: 4 December 2021

Forgotten home.

There are times when one needs to step out of the weeds of investing and take a fresh look at portfolio construction.  Most readers of ITA Wealth Management have been with us for a number of years, some going as far back to 2008 when this blog was first launched.  The basics of investing do not require a degree from the University of Chicago finance department.  Here are a few starting principles.

• Take seriously The Golden Rule of Investing.  Invest early in life and frequently.
• Check out Professor Pollack’s few rules of investing.
• Spend an evening reading Burton Malkiel and Charles Ellis, co-authors of “The Elements of Investing.”  Then go back and reread this book until you understand the fundamental ideas of investing.  The basic concepts are quite simple.
• Follow the ITA Wealth Management blog.

If you know little about investing, yet want to dip a toe in the U.S. stock market, pay attention to the Schrodinger.  This is a Robo Advisor or computer managed portfolio that is very efficient from both a cost and tax position.  Begin with a small amount of money and build from there.

If you have a Buy and Hold mentality, watch the Bohr portfolio.  Learn what is meant by Asset Allocation and Market Factors.  After watching the Schrodinger and Bohr portfolios you will soon be able to set up your own portfolio using the principles of Asset Allocation.

Once you feel you have your feet on the ground and wish to do a bit of experimenting, consider implementing the Dual Momentum model.  The Galileo is one such example.  There are other investing models you will learn about as you follow this blog.  There are a few other steps, but this blog post is primarily for beginning investors.  Once you have the basics down, then you might expand to other portfolio models as you will see with portfolios such as the Kepler, Millikan, and Einstein.

Be patient as stock markets are volatile and designed to disappoint investors.  Just keep saving if at all possible.