Hello all some background.
I am 22 years old. Working as a trades apprentice, living in Canada. I have no debt and about 10,000 dollars invested at the moment.
I read Intelligent Investor by Benjamin Graham. I consider myself to be a newbie in the market, I don't like to put a lot of time and effort into my investments which is why I take a passive approach to investing, hence the index funds. I am investing for the long term as I hope to have enough money to have a comfortable retirement at 55. (33 years)
I currently dollar cost average, it is broken down as follows.
My entire portfolio is held within a Tax Free Savings Account (Go Canada!) and all dividends are reinvested into the funds
75 percent into index funds
-25 % a Canadian index fund that tracks the TSX index
-25 % a US index fund that tracks the S&P 500
-25 % an Intl index fund that tracks the MSCI EAFE Index
15 percent into a Canadian bond index
10 percent in cash.
It works out to about 200 dollars a month (50 into each index fund, 30 into the bond and 20 into cash)
Assuming no layoffs my income will double in 5 years once I complete my apprenticeship
My theory is to rebalance every 3-6 months to keep my asset allocation at the 75-15-10 percentages. There would be no fees to me to move money between funds within my investment account.
It seems to me and by my math (again I am defiantly not an experienced investor which is why I am asking this question) that rebalancing will allow my portfolio to perform at the highest level.
If the market is hot I would end up selling off stocks, and putting them in cash. When the market drops and stock prices go down I would have extra cash on hand to invest extra money into the cheaper stocks which would mean I could buy more units, which once the market goes back up I would sell off again locking in profits.
Does anyone see any flaws in this thinking?
I am also willing to learn any resources anyone can suggest to help me further enhance my knowledge would be amazing!
Submitted February 10, 2019 at 01:00PM by 519phones http://bit.ly/2WU5miX
