Necessary Skills to Master Before Investing.

Since this is my first post to this blog I feel compelled to say that I don’t particularly enjoy writing and that I am doing this more or less to have a neat public place to document my investments, ramble about random thoughts on any topic, and perhaps answer any questions anyone may have.  I may not enjoy writing, but I do enjoy debate, poking fun at conventional wisdom (ignorance), and good conversation.  So please feel free to comment, disagree or whatever!

As a non-professional investor I have had many successes and many failures (I prefer to call them “Learning experiences” haha) and from what I have seen nobody is worth the huge fees that some of these so called “advisors” charge. Even if you are not inclined to do the work (6th grade math) I discuss below, you still don’t need an advisor.  There are numerous online services that allow you to systematically save for your retirement in a low risk low volatility way that I would be happy to recommend.  Most advisors are in the client count building and assets under management building business, not investing or stock market out performance business.  Thats why they constantly ask you for referrals.    Why send your money to an “advisor” that is just going to in turn send your money to the same funds you can invest in yourself.   Its like paying someone 2% of your pay check to take your check and deposit it in your bank account for you.  Its all a big scam they use to confuse and scare people into thinking they are too stupid or uninformed to invest their own money.  One last thought for now, what I am describing below isn’t predictive at all, its reactive to what “IS” happening, not what I think is going to happen or not what I think should happen.  Basically own funds when they are going up and when they stop, don’t own them.  Simple right?  Thats why I say a sixth grader can do it.

I believe that a 6th grader can produce investment returns just as well as most money managers.  They can do this just by applying a few techniques and rules any 10 or 11 year old can understand.  I am not talking about outperforming Hedge Fund gurus like Ray Dalio with risk capital, derivatives, and advanced option trading,  I am talking about long term, relatively low risk, low volatility investing and saving that most of us should be doing.  There are a few other websites that employ this type of strategy I just have added a few of my own rules to it.  Here are the skills needed to determine the investments I would make or stay in on January 1st.

1. Chart reading

2. Division and figuring out averages

3. Basic Microsoft Excel use

Keep in mind all 6 of these investment recommendations have not changed since October 2014 and have returned 5.66% thru 12/31/2014, but for the purposes of this blog we will start where December left off and start with a $100,000 portfolio.  We will also not factor in costs of the trades.  There are numerous discount brokerages out there that change a mere $6 per trade as opposed to broker assisted trades that can run $50-$100.  (Again, if you go online to a discount broker and make a trade you pay $6, if you call your broker and ask them to make the trade for you, they charge $50-$100, don’t do that! :))  We re-evaluate monthly so at the end of January we will revisit these recommendations.  This will also give me some time to discuss the 6th grade math necessary to come to these conclusions.  Here’s what should be invested in right now and I will use their 1/5/2015 closing prices to establish our starting point.  Buy the first six in equal amounts, so if you have 100k, its 16666.66 of each.

Symbol Description Rank Avg Returns Position Closing Price 1/5/2015 Amount Invested Monthly Return Value 1/31/2015
VNQ Vanguard REIT Index ETF 1 14.33% Invested 82.7 16666.66 0% 16666.66
MTUM iShares MSCI USA Momentum Factor 2 11.80% Invested 67.07 16666.66 0% 16666.66
VGLT Vanguard Long-Term Govt Bd Idx ETF 3 6.84% Invested 79.66 16666.66 0% 16666.66
VTV Vanguard Value ETF 4 5.95% Invested 82.96 16666.66 0% 16666.66
VBR Vanguard Small Cap Value ETF 5 5.58% Invested 103.68 16666.66 0% 16666.66
VBK Vanguard Small Cap Growth ETF 6 2.57% Invested 123.97 16666.66 0% 16666.66
VCIT Vanguard Interm-Tm Corp Bd Idx ETF 7 2.19% Not Invested  TOTAL $$ 99999.96 99999.96
VGIT Vanguard Interm-Tm Govt Bd Idx ETF 8 1.83% Not Invested
IGOV iShares International Treasury Bond 9 -3.20% Not Invested PORTFOLIO RETURN JANUARY 0.00%
IAU iShares Gold Trust 10 -3.53% Not Invested PORTFOLIO TOTAL RETURN SINCE INCEPTION 0.00%
VWO Vanguard FTSE Emerging Markets ETF 11 -3.55% Not Invested
VEA Vanguard FTSE Developed Markets ETF 12 -5.96% Not Invested
GSG iShares S&P GSCI Commodity-Indexed Trust 13 -27.54% Not Invested

A couple final thoughts.  Remember this account is set up with funds slated for systematic retirement and savings generation and accumulation.  I would be happy with 7%-8% annual returns with very low volatility in this portfolio.  In a perfect world one would have VERY minimal debt, zero credit card debt, be living BELOW their means, and have minimum 2 months expenses in cash which should also be about 7% of your annual income.  That means a person making $75,000 per year would have $10,500 in cash in the bank and be spending about $5250 per month total.  This should leave about 16% of your annual income for savings.  Do that for 5 years and you would have a $100,000 portfolio. Lastly, I actually “think” this portfolio is too heavy on stocks considering where the market has gone over the last five years, BUT the whole point of this technique is not to “think” or “predict”, just follow the 6th grade level rules.  There’s probably more but I think I’ve written enough for one day.  In my next post I will discuss how we applied that 6th grade math to arrive at our investment choices.



  1. Pingback: How did I pick those 6 investments for January 2015? | 6th Grade Investor
  2. pace bannon · March 14, 2015

    The best rating for retirement is by your age. Whatever your age is, that’s the amount you should have. At 40, a person should have $40K in cash, drive a $40K car, have at least $40K equity in their home, and have at least $40k in investments. This is the best way to know, you’re going up in value and can live the same lifestyle till one dies.


    • Brucejedz · March 16, 2015

      Are you kidding Pace! Driving a car worth as much as you have in cash…or equity in your house? No way! 9 out of 10 people drive “too much” car and spend way too much money on material crap they don’t need. I say save 20% of your income minimum and build you nest egg from there so regardless of how you do it…(with stocks like CMU, or a trend following systematic approach) you can live off of the 6-7% annual gains. I don’t know anyone that can live off of 6% of $40,000, or 6% of 50,000, or 6% of $60,000. Hec, if you expenses were 50k per year even if you can keep a small job for 25k a year and earn another 6% in the market, you would need $416k to throw off 25,000 a year. Regardless of the actual numbers, in general, people spend way too much and have way too much debt than they should.


  3. pace bannon · March 14, 2015

    Go to Las Vegas and bet $5 on 100 hands of Blackjack and never hit a 21. If 50 hands are won, you would be even. Also if you’re looking for 6% per year without any risk, try CMU it pays .023 every month and doesn’t lose. There’s other stocks out there with 6%+ per year returns, without the risk you’re taking with all those Funds.


  4. Pingback: March Portfolio Updates and April Allocations | 6th Grade Investor

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