I do have plans to continue this effort. In fact, I think that there are a tremendous number of people in our country who have feelings very similar to yours.

The fact that you are going to do more research on your own is what I would hope to happen by my writing here.

Vanguard is a good site as they have a wide array of index funds which have those low fees I mentioned and plenty of resources for you to utilize.

I am glad that I could help.

Happy Holidays!

p.s. I have always been hesitant to consult a financial planner as 1.) I wasn’t so sure they didn’t have their commission as their first priority and 2.) my tolerance for financial pain is low.

Under the scenario that you outline,you would effectively be utilizing the dollar cost averaging technique via your “monthly” allocations. This approach in which you put in a fixed amount (let’s say the $1000) on a regular basis buys more shares (market exposure) as the market is lower and buys fewer shares as the market is higher. For example if you are buying the Vanguard Balanced Index Fund (which is actually 60% stocks and 40% bonds, your $1000 investment buys more shares when the price of the fund is lower and less shares when it is higher. If you decide that you want separate funds (say a Vanguard Total Stock Market and a Vanguard Total Bond Index)and a 50% exposure to stocks and a 50% exposure to bonds, then again put $500 into the stock fund every month and the same amout into the bond fund every month. After you have fully allocated your funds you will have effectively “averaged” your cost basis via your fixed dollar investments.

I hope this helps.

One last point, I do very much like the idea of index funds which mirror the entire market sector that you want exposure to and as a result minimize the expense of portfolio management. For example those index funds at Vanguard have a fee of only .19%. You do want to be very mindful of the fees as the power of “compounding” is strong and you want as much of your money working for you and not necessarily paying the high fees for what may be mediocre performance.

In #3 = Your answer “In regard to stocks, I would propose a “dollar cost averaging” technique vs the all or none approach. The way that that approach works is as follows:
if you have a $1000 to allocate to the equity market which brings you to a 50/50 split of bonds vs equity, then move 10% per month. Given the fixed dollar amount you will actually buy more stock exposure as the market moves down and less as the market trades up. Do you understand that point?”

Not sure. Let’s say I have $1000 per month put towards my 401K (includes employer contribution) and currently all of it is allocated to Intermediate-Term Bond Fund (no clue specifically where that is going). In order to follow through with the above approach, I would —fill in the blanks—–.

I am not referring to their credit rating, although that is also very important to know. I am just referring to their net income which reflect revenue minus expenses). Is that income growing or declining?

I would not necessarily rely on insider buying as that does not mean that you should be buying.

First and foremost, look at the industry group and decide if you want to be buying in that industry based on your thoughts about the economy. Then look at the income statement. I would encourage you to do some of this homework and come back to “central Station” and let me know how you’ve done.

That said, I will offer the following:

1. you seem to be making almost all the right moves…I commend you.

2. keeping your debt service to a minimum and not financing your debt is a GREAT move…that is also a great example for your kids. Well done.

3. In regard to savings and your 401K. I strongly encourage you to continue to fund the 401K if you can. Continue the disciplined approach that you have been displaying to this point. Saving is just as important if not moreso than investing!!

Not knowing what kind or type of bonds that you owned, many sectors of the bond market have also moved down considerably in this selloff. I think the fact that you moved it out of stocks when stocks were down 25% has likely saved you 10% +/-.

I would further add these comments.

What types of bonds do you own? The safest and most liquid that being a government bond fund is currently IMO exceedingly rich and over the long haul likely to underperform.

I am rambling here a little so let me get more specific as I formulate my response.

1. Diversify…being all in bonds for the long haul is not a winning strategy. Along wiht diversification of asset classes you also want diversification within asset classes (for example you would not allocate all your stocks to aggressive stocks or international or value stocks)

2. You do want some bond exposure as you had. In fact, I think there are sectors of the bond market currently that look very attractive, specifically the municipal market. Understand the type of municipal bond or fund before purchasing. If possible, buy pre-funded bonds or revenue bonds as these are safer than general obligation.

3. In regard to stocks, I would propose a “dollar cost averaging” technique vs the all or none approach. The way that that approach works is as follows:
if you have a $1000 to allocate to the equity market which brings you to a 50/50 split of bonds vs equity, then move 10% per month. Given the fixed dollar amount you will actually buy more stock exposure as the market moves down and less as the market trades up. Do you understand that point?

Within your stock purchases, though, I recommend a balanced approach. You can accomplish that by finding a mix of funds that you like or I may recommend merely buying an index fund that mirrors the market as a whole.

I hope this helps.

I hope that you know my response was not intended to cause yo or anybody else to worry. I do like the fact that it is causing you to think.

I do not think that you need to do extensive research for you to understand why and how a company stock is performing in the fashion that it is.

A site that I use personally is wsj.com but that requires a subscription. I am sure that you can use sites like msn.com to get a wealth of info. If not that site, many generic sites provide basic stock coverage. Look for a “money” link and find a box where you can input the name of the company and/or the stock ticker. The most basic question you want to answer is what “industry” group does this company occupy. What is happening in that industry. Does it underperform during a recession?Outperform during arecession like Wal-Mart? Does it generate excess cash-flow or does it require heavy borrowing? By looking at company details you should be able to learn a lot.

Let me know what you learn and write back.

Remember, also, that this is a process. You are not going to learn everything the first time out. In fact, you will learn some things but they will likely cause even more questions. That is good.

Start first and foremost, with the industry group and cash flow vs debt service. Let me know.