Young Research & Publishing Inc.

Investment Research Since 1978

Disclosure

Setting Your Course for 2014

By

What I’m about to share with you is something I’d like you to share with or teach to your spouse. In 2008 some of the smartest guys in the room sat and watched as their mutual funds lost close to 50%. Meanwhile boring old Vanguard GNMA made money. That’s all the proof I need to make sure my well balanced portfolio owns Vanguard GNMA. It would be nice to be able to buy just one balanced mutual fund and be done with it. But there are none out there today that fit the bill. Don’t get me wrong, I love the world class Vanguard Wellesley fund. There is no better low cost balanced fund. But without getting into too much detail I do have a couple of concerns.

One is its size. The fund is aircraft carrier big making it difficult to buy smaller stocks without overrunning the company. And two, the bond duration is longer than I’d like. I decided to run a back-of-an-envelope portfolio using Vanguard GNMA, Vanguard Short-Term Investment Grade, and Young Research’s Retirement Compounders stocks using Vanguard Wellesley’s 60/40 bond to stock mix. I was pleasantly surprised to find that this portfolio had a higher income/dividend rate. My two concerns were solved—a lower duration or risk on the bond side and the ability to own dividend paying stocks with Navy SEAL like anonymity. Teach this to your spouse because as the saying goes: to learn read, to know write, to master teach.

E.J. Smith works with new investors that have $2 million or more to invest. He can be reached at: ejsmith@youngresearch.com

The following two tabs change content below.

E.J. Smith

Editor-in-Chief
E.J. Smith is Founder of YourSurvivalGuy.com, Managing Director at Richard C. Young & Co., Ltd., a Managing Editor of Richardcyoung.com, and Editor-in-Chief of Youngresearch.com. E.J. graduated from Babson College in Wellesley, Massachusetts, with a B.S. in finance and investments. In 1995, E.J. began his investment career at Fidelity Investments in Boston before joining Richard C. Young & Co., Ltd. in 1998. E.J. has trained at Sig Sauer Academy in Epping, NH. His first drum set was a 5-piece Slingerland with Zilldjians. He grew-up worshiping Neil Peart of the band Rush, and loves the song Tom Sawyer—the name of his family’s boat, a Grady-White Canyon 306. He grew up in Mattapoisett, MA, an idyllic small town on the water near Cape Cod. He spends time in Newport, RI and Bartlett, NH—both as far away from Wall Street as one could mentally get. The Newport office is on a quiet, tree lined street not far from the harbor and the log cabin in Bartlett, NH, the “Live Free or Die” state, sits on the edge of the White Mountain National Forest. He enjoys spending time in Key West and Paris. Please get in touch with E.J. at ejsmith@youngresearch.com.