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I am 44 years old and have a good retirement plan with the U.S. Postal Service. Part of my retirement is defined benefit the rest is a 401k (Thrift Savings Plan) invested 60% S&P Index 40% Wilshire 4500 Index. It has done quite well since I started it in 1988.
I also have a Roth IRA (this is the last year of the conversion yea!)
invested in 4 stocks, JNJ(25.76%), PAYX(22.15%), EBAY(28.27%), DNA(15.64%). After reading the latest Rulebreaker report by Brian Lund I think I need to deversify a bit more in my Roth IRA. I did have more then twice as much Ebay but sold some after it had almost doubled since I bought it last March and used the proceeds to buy my current holdings in JNJ a week before the split.
I was thinking to sell maybe half of the remaining Ebay and invest it in a more dividend producing stock like SO and a Reit like EOP and HPT.
This would cut my risk and still leave room for future growth.
Outside of my qualified accounts I'm setting up an account with Vanguard Total Market(70%) and Total Bond(30%)which I will add to monthly. But I was thinking why not divide the income portion between Total Bond and the Reit Index Fund? I am saving around half of my paycheck and have no debt outside my mortgage which I am also adding an extra $200. a month in payments toward principal so it will be paid off when I retire at 55.
The interest rate is already low at 6.89% so no refinance needed.
Would appreciate any thoughts on my plan.
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Am I the only one who thinks Sonnet needs to diversify his Roth more than "a bit"?

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Thanks!
Joe
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If Sonnet's entire retirment portfolio was his Roth IRA, I would agree.

However, since Sonnet also particpates in his employer's Thrift Savings Program that is pretty well diversified, Roth diversification might not be all that important (though I wouldn't necessarily want my Roth IRA to be 78% tech). Generally it is better to think of all accounts targeted for the same time horizon (such as for retirement) as part of the same portfolio, so it shouldn't be that much of a concern if one part of the portfolio is undiversified if another part of the portfolio compensates for it. (In my case, my 403(b) doesn't have small cap exposure because my 403(b) provider doesn't provide it, so my Roth IRA is overweighted in both small caps and aggressive, so overall I am not that far out of balance in my retirement portfolio.)

I know I am not a stock picker so I don't consider myself qualified to comment on the specific stock choices.
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Good advice, The TSP is diversified. So adding some outside stocks is not too much risk. I think I would personally add more stocks and a variety of industry types but his overall portfolio is OK, even the part about paying down the mortgage a bit early. There may be better ways to maxamize returns but as an optimal overall financial approach I find this reasonable and definitely not too risky.
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No - I agree with you also - however each person must answer this question for him/herself.

Further research can be found at:
http://www.efficientfrontier.com/
http://www.decisionpoint.com/DailyCharts/SPPE.html
http://www.financialengines.com/
http://www.stanford.edu/~wfsharpe/

Or do a search at www.google.com

Input

"investment diversification"
http://www.google.com/search?q=%22investment+diversification%22+&sa=Google+Search&cat=&hl=%28null%29
"modern portfolio theory"
http://www.google.com/search?q=%22modern+portfolio+theory%22&sa=Google+Search&cat=&hl=%28null%29
"asset allocation"
http://www.google.com/search?q=%22asset+allocation%22&sa=Google+Searc

Of course one can also hire a financial planner or money manager to hold his/her hand and hope the "pro" knows what he/she is doing.
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And beware, of course, of the financial planner who earns a commission on investments they recommend. Can you really expect a planner in this situation to recommend what is right for you, rather than what pays the highest commission?

The point about diversification being an individual decision is well taken. IMHO, "stock picking" is not a philosophy I particularly subscribe to, as I believe it leads investors to make investment decisions based on guesses (educated as they may be) on future movement. Fun perhaps, but I don't consider it to be a sound long-term investment strategy.

<<putting away soapbox, wink>>

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Thanks!
Joe

Of course one can also hire a financial planner or money manager to hold his/her hand and hope the "pro" knows what he/she is doing.

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"..."stock picking" is not a philosophy I particularly subscribe to, as I believe it leads investors to make investment decisions based on guesses (educated as they may be) on future movement. Fun perhaps, but I don't consider it to be a sound long-term investment strategy. Fun perhaps, but I don't consider it to be a sound long-term investment strategy."

If you read any of the following books you would see the error of your statement:

"The Intelligent Investor", by Benjamin Graham
"Investments: Analysis and Management", by Jack Clark Francis
"Graham and Dodd's Security Analysis", by Cottle, Murray, Block
"The Single Best Investment", by Lowell Miller
"What Wall Street Doesn't Want You To Know", by Larry E. Swedroe
"How To But Stocks Without A Broker", by Charles B. Carlson
"A Random Walk Down Wallstreet", by Burton G. Malkiel
"How To Make Money In Stocks", by William J. O'Neil
"Common Stocks and Uncommon Profits", by Philip A. Fisher
and last but not least -
"The Motley Fool Investment Guide", by David & Tom Gardner

Indeed - in addition to TMF - there are hundreds of useful sites on the Internet where one can also obtain information on how to invest in stocks.
Searched the web at www.google.com for "investing in stocks".

http://www.google.com/search?q=%22investing+in+stocks%22&sa=Google+Search&cat=&hl=%28null%29


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With all due respect, my statement is an opinion, just as yours is, not an "error". And it is an opinion I am not alone in, either.

http://www.armchairmillionaire.com/portfolio/allocation.shtml

I am entitled to my opinion, as are you. =)

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Thanks!
Joe

"..."stock picking" is not a philosophy I particularly subscribe to, as I believe it leads investors to make investment decisions based on guesses (educated as they may be) on future movement. Fun perhaps, but I don't consider it to be a sound long-term investment strategy. Fun perhaps, but I don't consider it to be a sound long-term investment strategy."

If you read any of the following books you would see the error of your statement:


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joebedford writes:

"With all due respect, my statement is an opinion, just as yours is, not an "error". And it is an opinion I am not alone in, either.

http://www.armchairmillionaire.com/portfolio/allocation.shtml

I am entitled to my opinion, as are you. =)"

Sorry Joe, I did not post my message as an attack. I agree with you - that is your opinion, but, in my humble opinion, it is in error. As another poster stated on another board: "You can be of the opinion that the World is flat and you could find others to back you, but you would be in error.

I have read the "Armchair Millionaire and am aware of the web site. I am aware of the merits of passive investing. If you notice one of the books I referenced was: "What Wall Street Doesn't Want You To Know", by Larry E. Swedroe. Mr. Swedroe also is a proponent of passive investing via index funds. More of his philosophy can be found at http://www.bamservices.com/profbuck.html

My point is why leave money on the table (via fees) when with little effort you can pick your own stocks. And by buying and holding, while monitoring your portfolio - you will accumulate more money in the long term than by investing via a mutual fund - everything else being equal.

I intertwine the "best of both worlds" in my life. I utilize index funds and exchange traded funds as my investment foundation. In addition I pick individual stocks and fixed income vehicles to enhance my position. After all if you only stay with the indexes you can hardly expect to exceed the "averages".

But if you use the indexes as a base and accept a greater risk by picking individual issues you have the opportunity for greater rewards as you go for a couple of doubles, triples or even a home run or two ala Peter Lynch.

As for me I'm very satisfied going for singles and an occasional double.
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