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There is a lot of weird science out there when it comes to investment management. But if we\\u2019re going to be successful in investing for retirement, we need sound science. Last time we talked about asset allocation for the flexible portion of your portfolio. Today we\\u2019re going to talk about the science behind the fixed portion. Index-based investing is currently the popular way to manage this side of your investments. But remember, you want to \\u201cknow what you own and know why you own it\\u201d (Peter Lynch). Listen to this episode and follow through with the 7-day goal to gain a better understanding of what you own and why!
Index-based investing is taking over the world. But what, exactly, is an index? It is not something you can invest in directly. It is a mathematical model that represents a broad swath of the US equity markets. Index-based investment products try to mimic the model. On this episode, we\\u2019ll use the S&P 500 index as an example and explain how it works. Listen in to learn more about what the index is and how it affects asset allocation in your portfolio.
Index-based investing has a few distinct advantages, one of them being lower cost. As I explain the science behind an index, using the S&P 500 as an example, I will describe the factors that reduce costs for index-based investments and make them more efficient. Listen in to learn how index-based asset allocation can benefit your portfolio.
When looking at index-based investments, there are nuances to consider that may be disadvantages. On today\\u2019s episode, I will explain how the S&P 500 index works, and why it can be great when huge companies are doing well, but concerning if they are not. I\\u2019ll also describe how the changes made annually to the index can result in inefficient trading and higher prices. Listen in to learn about index-based asset allocation so that you can know what you own and why you own it.
It is important to carefully consider your options when investing. While index-based products are the popular \\u201cgo-to\\u201d for the fixed portion of your portfolio, there are other options out there. On this episode, I\\u2019ll talk about these options, which for some people may be a smarter way of investing. Listen in to learn about index-based asset allocation, other options, and what you can do in the next seven days to get a better understanding of what you own.
The Five-Minute Retirement Makeover
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