For all those that have young families with regular jobs and don't have time for day-trading or climbing the steep learning curve for investing in individual stocks, bonds, etc .... I offer the following advice in order of importance:

Rule #1: Have a yardstick, keep it simple, re-evaluate monthly, and have an exit strategy.
Rule #2: Have a yardstick, keep it simple, re-evaluate monthly, and have an exit strategy.
Rule #3: Have a yardstick, keep it simple, re-evaluate monthly, and have an exit strategy.

Have a yardstick: I use the S&P 500 index as my yardstick. Less than 1 in 3 professional fund managers consistently beat this index. It's a tough yardstick to beat year in and year out.

Keep it simple: I use ETF's but mutual funds will do if company matching-fund programs are all that's offered. To keep it really simple, you really only need to buy/hold/sell SPY (the S&P index ETF). If you're a little more savvy, over-weight 50% of your portfolio with sector and/or industry ETF's that are currently out-performing the S&P. There's no need to hold more than 10 ETF's and holding only SPY is just fine.

Re-evaluate monthly: I set my calendar for the first trading day of each month and revaluate ... buy, hold, sell, or rotate.

Have and exit strategy: My exit strategy is simple: I get out of all of my equity (stock) positions when the S&P 20-day and 50-day moving averages fall below the 200-day moving average ... actually, I tweak this rule a bit and exit at 2.5% above the 200-day moving average. Using this rule prevents large drawdowns. Over extended periods (say 10 years) ... expect to be in equities about 2/3's of the time and be prepared to exit the market a couple of times/yr if needed. Knowing when to get out and stay out is more important than knowing when to get in.

My current core holdings are (I'm aggressive this month): Index/Sectors (50%) IYF, IYE, IYM, IJH, IJR and Industries (50%) AIRR, IAI, IAT, XME, SOXX. Next evaluation date is the first trading day in January (Jan 2) and I'll re-evaluate and rotate accordingly.

Lastly, I pay about $250/yr for on-line access to http://www.etfscreen.com/ and http://www.stockcharts.com/ .... for selecting out-performing sector/industry ETF's, back testing, and monthly monitoring my market exit strategy.

Hope this helps someone. If you have a different strategy, I'm sure a lot of young Ags just getting started would like to hear from you.

Peter Lynch's book, "One up on Wall Street" really helped me as a new investor.

With your exit strategy do you do better than your yard stick most years?

I do minimal hands on, but I don't have much of a strategy at all, other than buy and hold. I'm not looking to make quick money. Anything I put in my fidelity account I assume I won't see back until retirement.

I've never known or read about a day or swing trader that has lost money. So that's probably the best bet.

bmks270 said:

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With your exit strategy do you do better than your yard stick most years?

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Yes, outperformed 8 of the last 10 years. During this period there have been 5 market exits signaled when both the 20 and 50 day moving averages fell below the 2.5% upper 200 day envelope. Market re-entry would have been signaled by similar moving avg crossing signals.

The 2007 sell signals would have kept you out the market during the 2008 meltdown. Sell signal dates as follows:

27-Aug-07
15-Nov-07
24-Jun-10
4-Aug-11
24-Jul-15

El Chupacabra said:

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I've never known or read about a day or swing trader that has lost money. So that's probably the best bet.

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Maybe cause they don't do it anymore!