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Make investment products such as mutual funds, ETFs, and annuities work together for you

Published: May 2014

To cite Warren Buffett, investing is a lot like dieting: simple, but not easy. There are thousands of investment products to choose from, many of which are expensive, laden with fees, and, perhaps worst of all, not integrated into a larger investment strategy. In addition to the overwhelming number of investment choices, there's the 24-hour financial news cycle, which can tempt investors to react to news events instead of sticking with a long-term investing plan. Combine the two perils, overwhelming choice and reacting instead of planning, and it's no wonder a famous study of individual investors concludes that trading is hazardous to your wealth.

Although we've organized the topics by asset type, the most important section isn't about a particular investment type at all, but about how to think of investing holistically. Asset allocation—the percentage of your investments devoted to stocks, bonds, cash, and other investments—is at least as important as the individual investments. Diversification, among assets and within an asset class (such as stocks), is still the only free lunch in investing.

   

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