Ive finally rejigged my portfolio to indexing

thanks for the links dkmc, some good reading in there, eg I just read
Active vs. Passive Management

Fascinating.

I'm not trying to be negative dkmc (I'm a fan of the DFA funds as well, and I love your work ), but your point above is not something that I would consider when choosing funds. I'm sure you're aware of LTCM.

John.

DKMC
Personally I have found this one of the best threads in recent times. Thank you for the information and your personal experiences. I am working my way through the IFA book now, and will look to get a couple of those books off amazon. Thanks very much, it is appreciated.

Yeh, I wouldn't be worried about index funds per se based on this, but the nobel has to be the most over-rated award in the history of humanity.

It's basically got this huge chunk of politics behind it, often seen as being a way of nudging people or countries in the 'right direction'.

I mean great to have but the perception I think people have that it's a stamp of reliability or something is just flat wrong.

Oh.. And I agree this is an excellent thread, top stuff.

Its not just that but more the fact that its based on academic research, lead by directors who are academics. It means that the funds continually apply different methods to extract higher returns
see
Research



I like the pages below too- explaining a simple concept that gets
overlooked when you keep trying to pick stocks
Try and pick the overall asset allocation - reduce volatility and increase returns.
Diversification
Structure

Id suggest most should do some reading on the topic even if you think indexes are too boring
Its well worth it
And if you still think you can beat the market - how about a core portfolio like this with a satelite of say 10-15% of stock picking
Though Id still rather completely passive portfolio
Its really refreshing
and a fantastic exercise to construct your own allocation and risk profile

Can you access the DFA funds with smaller amounts through wrap accounts?
Is there a particular minimum doing this?

Those books from amazon
Ive havent even had time to give them a proper read
Just a few of the relavant chapters

I found nearly the best source to be ifa.com - the audio or video podcasts
Its basically the book they sell but in an easy to listen to form

Im not sure if there is a minimum in a wrap
Ive only got a few thousand in one DFA fund

so Im sure the minimum is something like 2000

See this old thread for where I was

Who's beaten the market - how has your portfolio done

And now

Much more robust now I think
Though less income - as I dont need it - Im aiming for growth

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Check out this link

Investment Guide

Read the chapter on rebalancing

"the most important reason to rebalance your portfolio is to maintain your desired risk level. As assets grow, your stock allocation will become higher than you originally intended. There may be a temptation to let it ride, but this increases your risk, which you have carefully evaluated in your asset allocation model. So, reason number one for rebalancing is to maintain your risk profile."

This strategy can provide a small return bonus and keep volatility in check over time. This is the second reason for rebalancing.

“Rebalancing imposes a discipline that results in an investor buying low and selling high which is the name of the game after all. Rebalancing ensures that investors periodically sell winners and buy losers. In this way, the standard deviation of the portfolio over the long term is reduced without sacrificing performance.”

I had an interesting chat with a financial planner yesterday.
He seemed to take a fairly negative view on future growth - he said that expecting 14% over the long term was overly optimistic, he suggested 10% was more appropriate (referring to an indexed portfolio.
Also tried to throw water on the idea of early exit from the workforce. He basically suggested that super was the best way to go, plough everything into superannuation until your super is big enough to have a comfortable retirement at 60, then worry about building a nest to tide you over from whenever you want to "retire" until age 60.
He is not particularly fond of leveraging, or direct residential real estate investment.
It was actually a little depressing talking to him, as I have always had a more optimistic view. He did say something that rang true with me, that you should ensure that if the worst crash we have ever seen hit the share market you wouldnt be wiped out. He made the point that if you are geared to 50%, and the market drops 50%, its all she wrote for you.
Definitely has made me have a think about whether my expectations are too high, or leveraging over 50% is too aggressive to be sustainable...
Anyone have any thoughts on this?