So, I spent a little time in my last post harping on the advantages of buying index funds. Let’s say you’re convinced. That’s great, but what do you actually buy? What are the best index funds? There isn’t any one right answer, but I can help lead you to where you want to be. Read on, oh reader…

Let’s cut to the chase: if you’re short on time, and want a nice, simple option, do this:

Your Age In Years = % bonds you should be holding.

Buy this percentage in an total bond market fund.

Put the rest into a total stock market fund. You’re done. Just keep re-balancing this portfolio to keep your asset allocation on track.

If you want to get fancier, you’ll need to read up on asset allocation. I highly recommend this book:

It pretty much covers everything you ever wanted to know about creating a diverse portfolio. He shows you how a diverse portfolio can maximize your gains while minimizing your risk, which is a very cool thing (and you thought the speculators had all the fun). Check it out.

Once you’ve figure out which funds to buy, go ahead and pull the trigger! Waiting around will get you nowhere, so get started today.

When it comes to investing, many people have been lied to. Investing isn’t about getting rich. It’s about keeping your money safe, and growing it for the future. This may seem like a surprise, but if you have dreams of getting rich in the stock market, it is time to give those up and focus on a more sensible approach.

While we would all like to be one of these big shot stock picking guru’s who can turn outsize returns year after year, the simple fact is that this almost impossible. In fact, many experts believe that those who do make these kind of returns are simply getting lucky. Even if they are, they still have had years of training, and work full time (often amazing amounts of hours) to do what they do. You think you can beat them by spending a few hours here and there reading Yahoo finance? I don’t think so. Getting rich as a regular investor can only be accomplished by sensible planning, and a ruthless eye for cutting investments costs.

Investment costs: commissions, expense ratios, taxes, and more, all conspire to take away your hard won gains. By reducing these expenses as much as is humanly possible, you will greatly improve your chances at actually growing your wealth. Be on the lookout for these expenses, cut them down, and enjoy being free from the great investing lie.

Let’s face it, index funds have a bit of a reputation for being boring. After all, if everything goes absolutely perfectly, your portfolio performance for an index fund will be…precisely the same as the market return, less expenses. Not quite as exciting as playing the futures market now, is it?

While it’s true that you won’t enthrall your party guests with stories of fortunes won and lost by buying and holding index funds, that’s exactly what makes them sexy deep down. To put it into a crasser analogy, fancy investment vehicles are a lot like part girls at spring break: fun for a bit, but a terrible choice for the long term. Index funds are more like that quiet girl at your school library: not as exciting at first, but very rewarding to be with in the long run.

While everyone else is out chasing the sexy investments while you settle down with your index funds, you’ll probably find that a couple years down the road, you will be in a comfortable place while everyone else is wondering what in the world they just spent the last 20 years doing. Look into it, get started now, and your financial future will be a lot happier.

Penny stocks may seem like a good idea on paper. Buy a stock for five cents, watch it go up to twenty cents. Wow! You just quadrupled your investment. Very cool. Why not rush out there and sign up for a penny stock broker today?

The reason you shouldn’t do this is because penny stocks are a BAD INVESTMENT, plain and simple. While they seem great on paper, penny stocks suffer from something called a lack of liquidity. Most stocks have so many buyers and sellers that you can always find someone to buy from or sell too, but in the case of penny stocks, this often isn’t so. Poor liquidity means that you might not be able to get in and out of your investment like you would like to.

This poor liquidity also makes penny stocks prone to being manipulated. You know those spam e-mail you get everyday telling you how “this stock is going to explode in the next 27.5 hours! get in on the ground floor!!!!!”? Yeah, those are ways of manipulating the market. While it might seem ridiculous that anyone would be a stock from a random e-mail, apparently they do, or the spammers would have given up long ago. So, perhaps someone is getting rich off of penny stocks, but it probably won’t be you. Time to deal with it I think.

So, what can you do? If you ask me, set up an account with Vanguard, buy into one of their life cycle index funds, and be done with it. Sure, it may be boring, but at least you’ll actually be growing your money. And that, we can all agree, is a good thing.

Market craziness! Seriously people, save yourself the trouble and mental health effects, and don’t pay attention to the market media. You will come out a lot saner in the end, trust me.

People really get this wrong.

The stock market isn’t here to bring you fabulous riches and wealth. That’s what your job/business/trust fund is for. The stock market is simply there to help you preserve your wealth. That’s it. I’m sick and tired of people trying to pull all of these crazy get rich quick schemes with the stock market. How about spending your time actually doing something? With all that time you spend obsessing over real time stock stats, you could be start a side business that will prove far more rewarding and profitable in the future.

Sure, there have been some speculators that have made money. My opinion? They got lucky. That’s all. No, they didn’t have some killer genius system to help them beat the market. They made money the same way the guys down at your local horse track did: by getting lucky. Sure, luck is cool and all, but its not a way to build real wealth.

Warren Buffet got rich in the market. Sure, but he also practically ran the businesses he purchased. Buffet is a genius, and you’re not. Also, that is what he does for a living, and I highly doubt that you do. Let that dream of being a billionaire investor die. Really.

Instead, let the market be there to help you keep your hard earned money and grow it. Socking it away in a savings account will only let your money be eroded away by the forces of inflation. Good, sensible investors know to keep their money in safe investments that insure that their wealth will be around when they need it later on. Nothing more, nothing less. Rant over.