Expert: Paul Henneman - 9/9/2006

Question
I have a 180,000 and woul dlike to invest it and forget it...I am 38..so investing it for 20 yeasr is my goal..but i dont want the fees of a money manager..and was thinking about diversifiying with ETF's or Spyders...can u give me a model etf or spyder portfolio that is diversified..I just want to stay with the benchmarks or beat them..but with low fees
I was thinking 50%  in s and p   25% dow  10 mid cap  10 small cap and 5 foregin equities?


Thanks

Answer
Anthony,
   Thank you for your question! Yes, I think you are on the right track. Every investor is different regarding the amount of risk they are willing to have in their portfolio. With such a long time horizon for your investments to grow, it is very possible to take on some additional risk and gain more positive returns, since any short term losses would have plenty of time to recover.
If you want to stay with the benchmarks, I would suggest simply buying an index mutual fund. Vanguard has a very well reputable fund that tracks the S&P500, the ticker is VFINX. The fees are much lower for an index fund such as this, and you can purchase it yourself through just about any online trading organization. www.FOLIOfn.com has particularly low fees. www.scottrade.com is another good one.
   The weightings are up to you, but again I think you are on the right track. Perhaps weighting the foreign equities a bit more might be advisable. This is actually difficult to do correctly. You could simply buy ADR's, foreign companies that trade on US markets. It is not perfect as these companies tend to exhibit some of the same trading patterns as US companies and is not a perfect way to diversify across markets. But it is fairly simple to implement.
  You also may want to consider reducing the percentage in the S&P 500 index fund and add perhaps 10% in CD's. This is a perfectly safe investment, and the proper CD such as on www.NetBank.com can provide 5% annually in returns. This can help mitigate losses in times of poorer performance, and assures that you have a nest egg that is perfectly protected against just about anything.
   I usually don't do this, but you may also want to take a look at one of my company's websites, www.ValuEngineView.com  This is a monthly newsletter that tracks a 15 stock portfolio, it is adjusted once per month. This sort of strategy is more agressive and can doule to triple average S&P500 performance. So while I recommend that you have 10% of your investments in something perfectly save like CD's, I also recommend that you have 10% more actively managed in a portfolio strategy like the ValuEngine View, there are other services and newsletters that you could use as well. $18,000 in an agressive strategy like this can grow very quickly over the years.

I hope this helps. Please do not hesitate to follow up with me if I can be of any further assistance.

Sincerely,
Paul Henneman
ValuEngine, Inc.
www.ValuEngine.com