Are Portfolios of Index Funds Risky?

Are Portfolios of Index Funds Risky?

To find out, check out my latest article in the Globe and Mail:

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Andrew Hallam

I’m a financial columnist for Canada’s national paper, The Globe and Mail, as well as for AssetBuilder, a financial service firm based in Texas. I’m also the author of Millionaire Teacher: The Nine Rules of Wealth You Should Have Learned in School (2nd Ed. Wiley 2017) and The Global Expatriate’s Guide To Investing: From Millionaire Teacher to Millionaire Expat (Wiley 2015). My mission is to educate, motivate and inspire people on basic retirement planning and best practices for investing, using evidence-based strategies. I’m happy to comment on your questions. However, please read the Terms of Use, Privacy Policy and the Comments Policy.

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3 Responses

  1. Cameron says:

    Great article Andrew.
    I have one question in regards to gold (which, from your book, I know you are not a fan of). Would you think it best to sell any gold someone might have and immediately invest it into index funds? I know gold prices have dropped a lot in the last few years. Would you not suggest saving gold until you can sell high?
    Thanks for all your work. I always recommend you to friends.

    • Cameron,

      You could be waiting a very long time to sell gold on a high. In 1981, gold hit a peak. It didn’t hit the same price again until roughly 2009. That’s a 28 year holding period, with no dividends paid in the meantime. Much of this depends on your personality. For me, I have to rely on my investments being allocated as responsibly as possible, considering I won’t be earning social security or a government pension. As such, I would allocate the money responsibly. Having said that, if you want to hold some of the gold, consider allocating using the Permanent Portfolio strategy. I outline this in my latest book (out in November 2014). But if you check out the blogger at Crawlingroad.com, you will find more than enough to read on the subject.

      Cheers,
      Andrew

  2. Alex says:

    Fantastic article Andrew.

    I’m a huge fan of your work. I finished reading “Millionaire Teacher” in October 2013. The day after finishing your book I rushed to TD bank and opened up a TFSA and after receiving my back-pay from a recent promotion, I poured $10k into TD’s e-series index funds with a Canadian couch-potato recommended allocation of 20% Canadian (TDB900), 20% American (TDB902), 20% International (TDB911), and 20% Canadian Bonds (TDB909). Since my initial investment in October, my portfolio has grown to $15.1k because I have been contributing $450 monthly and each of the above indices have done fairly well. The problem I have is that 24.2% of my portfolio is cash I’ve been holding on to waiting for a better price to buy stocks at (I plan on lowering my bond allocation to take on more risk). I turn 23 in July and have zero student or credit card debt, and I took your buddy Russ Perry’s advice and own a used toyota corolla. I currently rent an apartment because the Victoria, BC housing market is pretty intimidating to a newbie like me. I’m an Officer in the Canadian Armed Forces and will make 63k in 2014, 67k in ’15, 79k in ’16, 82k in ’17, and 85k in ’18 when my contract runs out and will need to decide to stay “in” or get “out”. My question for you is if you were in my shoes what would your investment strategy be? Save for a house (I will probably be posted to Ottawa in 2016)? Pour more into the market despite high prices? Change from TD e-series to another form of indexing? I’m interested to hear your take on my current situation.

    Thanks,
    Alex

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