Every once in awhile, I like to highlight great articles that other personal finance bloggers write.
So today I’m hosting a “carnival,” a term that refers to a round-up of great blog posts covering a specific topic. (I have no idea why it’s called a “carnival.” It just is.)
Today’s carnival focuses on blog posts that discuss passive investing. It’s called, appropriately, the Carnival of Passive Investing.
Passive Investing is an investing strategy that involves putting your money into diversified, low-maintenance funds and letting it sit there for a long time. It’s also known as a “buy-and-hold” investing strategy or as a “lazy” or “couch potato” strategy.
Here are some articles that cover that topic. Enjoy!
Top Three Editor’s Picks
Today’s guest judge, Mark Hebner, ranked the top three editor’s picks.
Mark T. Hebner is the founder and president of Index Funds Advisors, Inc., the author of Index Funds: The 12-Step Recovery Program for Active Investors, and runs the website ifa.com. Mark is a leading speaker, author and internet provider of investing education.
Mark is especially knowledgeable about the superiority of index mutual funds, as well as the research indexes designed by financial economists. Mark’s new, condensed book can be ordered at Amazon.com.
Thanks for ranking the top three articles, Mark. Here are the Editor’s Picks:
#1: What Boxing Taught Me About Personal Finance, by the blog My University Money. “Every ‘tough guy’ out there thinks they can fight, and every guy at the water cooler who has read the business section thinks he’s Warren Buffett – so they both have stupid male egos in common,” the author says.
#2: Saving, Investing and Gambling from the blog Arbor Asset Allocation Model Portfolio. This article discusses — you guessed it! — the difference between “investing” and “gambling.”
#3: What Are Dividends? Why Should You Care? The blog Simply Investing asks a simple question – “What’s a dividend?” – and explains it in commonsense, easy-to-understand language. This post explains why dividends are a great way for the truly lazy – er, I mean, passive — to kick back and earn some nice returns.
What About Asset Allocation? …
Forbes compared two model portfolios of $10,000, split as 60% stocks/40% bonds over a 25 year period. One portfolio rebalanced annually, while the other did not.
What happened? The rebalanced portfolio grew to $97,000 while the portfolio that doesn’t rebalance grew to $87,000. Notice the difference – $10,000 – is what you started with.
The Novel Investor shares this story – and tells us a few rules of thumb – to remind us why it’s important to rebalance yearly.
Meanwhile, Barb Friedberg chats about how index funds and ETFs can help you maintain a strong stock/bond asset allocation.
How Much Can I Withdraw?
Podcaster Rob Bennet argues that there’s no hard “rule-of-thumb” governing how much you can safely withdraw when you retire. Conventional wisdom says 4 percent, but Rob argues that you can withdraw between 2 to 9 percent, depending on the valuation of your portfolio. Read his argument, which he wrote as a guest post at My Personal Finance Journey.
How Much Should I Invest?
The College Investor helps you calculate how much you should invest from each paycheck. It’s a matter of simple division, he says.
ETFs
Interest rates in the U.S. will be pretty darn close to zero. So Dan shares his favorite international bond ETFs. These passive funds present an easy way to diversify away from U.S. bonds and stocks.
Interested in More?
If you want to learn more about passive investing, check out the archives at the Carnival of Passive Investing website. You can also submit an article to next month’s carnival here.
Thanks to Images of Money for today’s photos.
Thank you for the honor of being an editorial pick, and for hosting!
Wow the coveted #1 spot eh?! Thanks!
Thanks for hosting and putting this together!
Wow,I am honored! Thanks for the mention, I really appreciate it!
good stuff and I especially liked the boxing analogy. One of my pet peeves is people who think (and tell others) they can read a few books and get Buffet like results. ego pure and simple. Here’s my take:
http://jlcollinsnh.wordpress.com/2012/01/06/index-funds/
These is very cool, Its nice to know about it. thanks a lot.