The 5 Mistakes Every Investor Makes is a recent book I read by Peter Mallouk, the #1 Investment Advisor in America. (I’m not poking fun, that’s just what it says on the cover.) In general it is an easy-to-read book that offers quite reasonable advice, and you can get a free copy from their website.
The five mistakes are:
- Market Timing
- Active Trading
- Misunderstanding Performance and Financial Information
- Letting Yourself Get in the Way
- Working with the Wrong Advisor
I mostly agree with these 5 mistakes, to which I would add the #1 mistake of all is paying too much in fees. Their firm Creative Planning, which Tony Robbins just joined as Chief of Investor Psychology, charges 1.2% for first $500k, 1.0% up to $2mm, and still 0.70% on assets of $25,000,000. That is on top of ETF/mutual fund fees and transactions. So, high for a financial planner. But like I’ve always said, if a planner can keep you from making all the above mistakes, as well as offering other valued added services, they are worth their weight in gold. (A random aside, the domain thenumberonefirm.com also reroutes to their site…)
Anyways, none of this is the point of the post. Rather, we like to cover guru recommended allocations, and the below stats are similar to the allocations I wrote about in my GAA book, and similar to an old post we did on the Tony Robbins allocations. The author proposed a few allocations where I will show performance back to 1973. Here are the portfolios:
1. I Want to Beat the Market Portfolio
25% Emerging Market Stocks
25% International Stocks
25% US Large Cap Stocks
25% US Small Cap Stocks
2. I Need 7 Percent to Hit My Long Term Goal Portfolio
15% International Bonds
25% US Bonds
25% US Large Cap Stocks
15% US Small Cap Stocks
20% International Stocks
3. Get Me What I Need for the Rest of My Life with the Least Volatility Possible Portfolio
20% International Bonds
40% US Bonds
20% US Large Cap
10% US Small Cap
10% International Stocks
4. I Have More Money Than I Will Ever Need and I Want It to Grow with Minimal Volatility Portfolio
70% US Bonds
20% International Bonds
10% US Large Cap
Pretty basic lazy portfolios, and if you read the book you know my conclusions already…
Click to enlarge
