Re: Young poker players and their winnings?
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20% US Total Stock Market Index
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Something like this looks great. One question though, if my only concern is expected value and not risk couldn't I only invest in the ones that have a higher rate of return than the S&P?
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You could.
However, the biggest mistake that most investors make (over and over throughout their lifetimes) is selling out of things that have gone down recently, and buying into things that have done well lately - the hot funds, the 5-star ones that are on Money magazine.
I think if you only had small stocks and emerging markets stocks, you would have a higher expected return with a really high level of risk. So, the bad years would pretty bad. And most investors don't have the discipline to stick with the same allocation year after year.
If you want to be a little more aggressive than my previous recommendation, how about:
15% US Total Stock Market Index
15% US Large Cap Value Index
15% US Small Cap Index
15% US Small Cap Value Index
10% REIT Index
10% European Index
10% Asia/Pacific Index
10% Emerging Markets Index
-Tom
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