How to Make Your Money Work for You

There are so many various investment vehicles available in the market, it can be head spinning. 

Fortunately, we can make this topic much easier to understand by not discussing specific investment vehicles right away, but by discussing investing methods first. 

The Motley Fool Method – 20 to 30 Individual Stocks

The foundation of TMF’s philosophy is that you can get the best investing returns by investing in 20-30 quality, well-researched individual stocks for the long term, as opposed to investing in the stock market as a whole via an S&P index fund.

The FI/RE method – 100% Stocks Via an Index ETF

FI/RE people (often) will tell you that you need to just invest your savings in the total US stock market. Yeah. All of it. No, you are not going to try and buy 3000 individual company stocks. You would invest all your money in a low cost “Index Fund ETF”

The Boglehead Method – A Mix of Stocks and Bond

Bogle didn’t think you should be fully invested in just the stock market, because it’s too risky. So he basically said that you should invest in a mix of the stock market AND bonds. And the percentage of bonds you should have should roughly equal your age.

This method is a little similar to the Motley Fool method, in that your portfolio may be made up of individual stocks. The difference is that these stocks would not be “growth stocks.” They would be very mature companies often referred to as “Blue Chip Stocks” (like Coca Cola and AT&T).

The Dividend Method – Cash Flow and (Hopeful) Appreciation Through Dividend Stock

The Permanent Portfolio Method – A Mix of Stocks, Bond, Gold and Cash

The “Permanent Portfolio” method is an investing philosophy invented by a fella named Harry Brown. He wrote a book called “Fail-Safe Investing,” in which he outlines the reasons he thinks you should invest all of your money in a simple asset allocation of 25% US Stocks, 25% Bonds, 25% Gold and 25% Cash. You would rebalance back to these percentages once per year.

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