Step3 Prophet

IRA 2010 decisions

I've been giving a lot of though over the past two weeks to what I should invest my IRA money in this year. Last year I did pretty good investing in the Vanguard REIT fund, but this year the fund is up quite a bit, just like everything else. With pretty much all asset classes rising phenomenally in the past year, it's hard to find what is undervalued. Granted, bonds didn't rise as much as stocks, but they are not really expected to. I'm not that confident in my bond assessments yet anyway. Headlines like this could give anyone pause " Mamas & Papas To Streamline Recruitment Process With Applicant Tracking Software Bond Talent. " WTF mate? So I've decided to let my asset allocation strategy be my guide. Currently here is where I stand:

	Current	Goal
S&P total	28.28%	25.00%
Loans	8.73%	10.00%
Small Cap	5.85%	10.00%
International	19.58%	20.00%
REIT	11.89%	15.00%
Stocks	19.81%	10.00%
Bonds	5.85%	10.00%
SUM	100.00%	100.00%

As you can see, the allocation is grossly out of sorts. I'm not going to try and force the numbers to match my allocation exactly, because that usually incurs extra fees and taxes. I'm going to pour a little more of my investment money into certain areas, namely small cap, loans, and REIT, and sell a little bit of my individual stock holdings. I won't touch bonds for the moment because I only invest with them through TSP, and I don't want to change my allocations there just yet. For the small caps stocks, I'll look at adding a small cap fund to my vangaurd IRA, or maybe using their brokerage services and getting an ETF. An ETF would probably offer lower expense ratios, and because I'm making a big one time purchase the brokerage fee would not be as big a factor.

Since I think stock prices in all areas are still overpriced, I'm not in a rush to make changes right away. I predict we'll see a drop toward the end of January and into February. My goal is to have all my IRA money invested by the end of the first quarter, so I have a little time to research funds and to time when I put my money into them and my current REIT. Loans are good to invest in any time, but I'm not going to use them in my IRA just yet, although I probably should since they are high interest generators.

2010 Predictions and 2009 Review

Two-thousand nine was a pretty crazy year for finances. Thanks to a steady job and relatively little stock exposure( by which I mean almost all my investments are stock, but they are not worth that much yet) my day to day living hasn't really been affected by the markets ups and downs. I like the downs because it incentivises me to buy more stock.

  Looking back at this time last year, I remember thinking that the market was down and probably going to be on the rise in 2009 (I was right, but it still had 40% drop left in it!) and that I would do better investing all my IRA funds at the beginning of the year. Following that reasoning invested all my IRA contribution for the year in vangaurd's REIT index fund (VGSIX). The results look like they are in my favor, since I bought at 10.07 and now the price is 14.84(thats 47% gain), I'm curious to know, would I have done better with dollar cost averaging? Assuming I bought the same dollar amount on the last market day of each month I would have 44 shares less than I do now(which means $660 less). So it looks like I made a good gamble in that regard. 

  So what's ahead for 2010? Honestly, I have no farking idea. The only reasonable prediction is that in the long term, the market will rise. Yahoo! Finance has a nice article on the folly of predicting individual stocks for long term sucess. So I'm not going to be doing much prognosticating, but I'll record mine and a few other people predictions here to laugh at next year.

• CNNMoney Predicts that home prices will fall this year. Hurray for me since I may buy a home.

•  A CNN quck poll show's most people think stocks will rise, or at least stay flat. Only about 20% expect markets to go down. 
• I predict E-readers will make it mainstream this year, if you don't consider them main stream already. B&N is putting serious pressure on Amazon, and other readers are in the works.
• 1stMillionat33 is bullish on gold and bearish to the point of doom saying on the future of the US. He thinks our National debt will be at 13.5 Trillion by years end, right before we implode. As a side note, I don't follow any of his advice, but it is interesting to see a different investing perspective.