This blog discusses more on active management strategies. However, aside from honing and building the skill to manage an active portfolio, identifying individual stocks, when to sell and buy, a simple strategy for the average folk is what I hope to uncover.
And in some situations, a passive investing strategy may be more applicable than stock picking an active portfolio.
Andrew Hallam, of Millionaire Teacher fame, shared with us in this article on his fight with bone cancer at age 38 years old. Of particular interest is one of the main reasons he shifted to using a passive investing strategy:
When I was diagnosed with cancer, my wife and I had a relatively complex investing portfolio shaped by my investing enthusiasm. But she wasn’t interested in the stock market. If I did have a magic formula for investing (something I seriously doubt) she wasn’t keen on learning it.
Recognizing that she might outlive me, I sold $700,000 worth of individual stocks and added the proceeds to the exchange-traded index funds I already owned. Then I taught her how to rebalance the portfolio in a few minutes once a year. If I die before my wife, I’ll rest better knowing that she won’t be paying somebody to underperform the market.
[The globe and mail | How I triumphed over bone cancer and reshaped my investing strategy |read here]
It’s a good article to read for those that are around his age (me included) and its amazing to know he can still run like hell and 33 pull ups (I struggled with just 22).
This has seldom cross my mind. The active management right now needs me in order for it to work. The best person to manage should something happen to me would be my brother (who has good acumen and understand investing much better than me). But it would be much easier if its more mechanical and simpler.
It also makes it easier for average folks holding a 9 to 5 job to save during the capital appreciation stage of their life.
For the folks who are interested in this subject, there are resources at Vanguard’s site that educates investor on this. Else I have some articles written that deals with passive investing strategy:
- The permanent portfolio – the holy grail of investing
- Ray Dalio’s All Weather Portfolio – How Investor’s should set up their portfolio
- Investors favor Vanguard’s low cost index and etf funds
- Keep Investing Simple and Portfolio Rebalancing