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I think reading any one of these books would be a better investment of your time than chasing all over the web for research and advice, which you have no way of guaging how reliable the research or advice is.

This echoes a point I made, but I realized later that I overlooked one big advantage of online information: TIMELINESS. For example, Morningstar's news page reports the comings and goings of fund managers, the introduction of new products like ETFs, the closings or openings of funds, changes in expense ratios, and other things that no book can do.

And an online source like Morningstar, although not 100% perfect, is overall surely as reliable as any single book by a single author. The analyst opinions on that service range from mediocre to superb, but at least the company goes to some trouble to discuss different fund styles, asset classes, and other categorizations.

The original poster asked about how to allocate her investments, and I tend to agree that it would not hurt to get into a fairly passive fund just to get started and meet the 401K deadline. But she needs to know just how vast the differences can be in the potential choices she faces.

This chart illustrates three different ways one could have "beat the market" over the past year. It compares the S&P500 index -- which is technically a domestic stock, diversified multicap blend fund -- with a Healthcare Sector Fund, a Natural Resources sector fund, and an Emerging Markets stock fund:,ICHCX,%5EGSPC

No, not everybody wants to go to the trouble of finding these alternative investments. But I managed to do so, without an advisor, without slaving over it, just by putting in a bit of research and time. I also disregarded a lot of advice by other people telling me that I could not beat the index. The point is that one does not get returns like those shown on the chart without putting in some effort.

Back to online sources: the numeric data at M* and other sources is very useful, but BUT DANGEROUS if one does not know how to interpret it. So the point of one's initial education should be to learn what all the buzzwords mean, and why they may, or may not, be important. That is where the general advice of books may be most useful.

I also think it's crucial to get multiple viewpoints. All too often I see people describing screens in which their criteria -- culled from "how-to" books -- knock them out of many great mutual funds that do not fit the paint-by-numbers criteria.

Much of how you handle your investing portfolio now and in the future is determined by how much education you're willing to get, how much time and energy you're willing to devote, and how much you think you'll get rewarded for doing so. In the end, it's up to you.

That is all very true. But we are addressing somebody who has gotten as far as signing up for the Motley Fool and paying for a subscription. One might assume that this person has a bit of motivation. And in any case, I would urge anybody who puts a single dime into an investment, to have a clue WHY they are doing that.

I mean, if the Enron disaster taught us anything, it is that a whole lot of people made really awful decisions with their money, the most memorable being Congressional testimony by former employees who invested ALL their money into a single stock -- breaking a cardinal rule of investing, i.e. overconcentration.

We've discussed the Vanguard target funds before and I do not recall the particulars of every single one. However, I do recall one thread in which one "fund of funds," of the many Vanguard offers, grouped a couple of good funds with a couple of dogs, thus hiding some bad performing products by averaging them out with better ones in a package.

NO, I'm not saying that's the case with the Target fund mentioned earlier. I'm saying that if an investor does not "look under the hood" of an investment, he/she will not know if such a thing is happening.

Right now, people who own "target" retirement funds with maturities in 2005 or 2006 are probably watching the portfolios SHRINK, because most such funds go heavily into bonds at the tail end -- and right now bonds are down, and going further down. An awful lot of slow growth over many years can be hammered by a drop of just a few percent in the final year(s). It's something that an investor should care about, and just trusting fate is not a very good plan. As Jim Cramer says, "HOPE is not part of the equation!"

But keep in mind that there are many 'lazy' investors who do quite well simply by knowing the basics of portfolio allocation. Spending too much time and energy researching every investment option is, IMHO, often not the way one wants to spend their leisure life.

Well, first off -- since when is investing a "leisure" activity? My goodness. Perhaps it's just a hobby for some folks, but for me it is quite serious, and I consider it to be an obligation to myself. The upside of the effort is that there are intellectual and emotional rewards for succeeding at it.

Furthermore, there is a BIG spread between "researching every investment option" as you put it, and doing no research at all. In my view, "lazy" investors will indeed get "lazy" returns compared to those who put out some effort. The original poster specifically said that she wishes to be "aggressive" in her choices. I think she has pretty much said she is looking for more than just "average."

I just can't sit back and endorse the idea that we should encourage any reader of this board to be lazy. I know you didn't mean it quite that way, but that's what it boils down to. If a person does not give a hoot about his/her financial future, then they can just mail me a check every month and I'll send them a thank you note. <g> After all, that is EXACTLY what some really bad mutual funds do, in effect.

Luckily, I don't think there are any funds on that list quite so bad as that! But I have been through that wringer once, and learned a whole lot of things *not* to do. That's what got me started on a learning curve that continues even now. It made me very skeptical, and desirous of knowing how to handle my own money, rather than relying too much on advice whose quality I could not evaluate.

This is an old discussion, really, and I think we all pretty much agree with your conclusion that every investor has to find his/her own comfort level, and degree of motivation. I just happen to feel that extra work usually IS rewarded, and that independent thinking and learning should be encouraged at every opportunity.
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