Factor Investing

Kirk W · October 13, 2023

Factor investing can offer enhanced returns

What is factor investing?
To begin with, factor investing is also known as smart beta investing. Factor investing is an investment approach that involves designing a portfolio of stocks, based on a certain factor or set of factors. The factors here can be value, momentum, quality, price, alpha, low-volatility etc. For example, if an investor wishes to have an element of growth in his portfolio ..

Randyretired · October 14, 2023

I like investing in some specific categories of stocks with a small portion of our portfolio. Usually I can find a mutual fund that does that. I like to spread my investments in a number of stocks and avoid the research involved in individual stock picking. If there is an index fund for that category I usually check that out. My individual stock picking has had variable results.

Kirk W · October 14, 2023

I have my entire 401k in a managed fund and that is about 70% of our invested assets. So far we have only withdrawn the "required minimum distribution" or RMD on an annual basis, although we did take extra when we bought a house again after leaving fulltime. The other 30% is kept mostly in CD's, T-bills, and other shorter term investments which I manage. At our age(80+) the appeal of individual stocks has faded and I'm almost completely out of those. But I do still enjoy following things most of the time. Since Pam has never been into such things and we are at an age that one of us could pass on quite suddenly, I keep our son the financial analyst informed and minimize my direct activities. Our fund manager has a history of doing very well for us for over 20 years now.

Randyretired · October 14, 2023

I self direct our investments. I started some years ago and used small amounts to try some different things. I even tried options. My experience has been that index funds perform well over time and are simple. I spend very little time managing our investments and I invest long term. I don't chase short term investments. Unlike many our largest investments are not in tax deferred accounts (long story) so I try to manage our taxes. This of course has some limitations. If we were to move a large portion of some of our accounts the tax consequences would be significant. We also have some real-estate investments that are for our enjoyment and maybe some profit. We have durable power of attorney documents in place for when one and both pass or are no longer competent. I tried some advisors but self management worked best for us. Everyone's investment tolerance is different. These posts reminded me I should again discuss my investment preferences with the loved ones on those documents.

FULLTIMEWANABE · October 14, 2023

Self Directed having had no luck with managed accounts in many years previous. Used to buy into a "few" individual stocks swing trading them, when they seemed to have a trend moving (wave lines) ie; MSFT and similar, Dogs of the Dow, Dividend Aristocrats, banks, utilities etc.

Now as we have got older we want to simplify with being more hands off so prefer S&P500 index, a handful good dividend payers and using the 3 bucket system have some cash derivatives and GICs the latter which is not keeping up with inflation but paying currently around 5.10%.

We find the 3 bucket approach enables us to not feel forced to sell anything when the market is bearish, we can try to ride it out hopefully on a recovery as has been evidenced over the years. Of course history is not indicative of the future but what else can you go by?

Kirk W · October 14, 2023

4 hours ago, Randyretired said:

I self direct our investments.

Does that include a 401k and IRA? My 401k is by far out biggest investment amount. Prior to retirement I did manage it within the structure of my employer's plan, which had range of different types of funds but no individual stocks. I also had some money in bond funds, but no longer. When I retired I rolled the 401k into an IRA that I did manage for a time but several years ago I put it into a managed fund where it has performed very well. The fund manager recently changed firms and like most of his customers, we went with him.

Randyretired · October 17, 2023

I also rolled over to an IRA but it is quite modest. I walked away from a management position in a large company at the age of 36. Worked for my self after that. Most of our investments are not in retirement accounts. In any case the accounts are all self directed. I have apps that allow me to buy, sell and so on. Of course if I were to move my market investments, capitol gaines taxes would be due so that doesn't happen often. Because of that tax planning must be considered before any moves. The majority of our funds are in mutual funds and most are index funds with really low costs.