VIKING ASSET ALLOCATION
How to avoid working at Wal-Mart when you are old!

Asset allocation is the most important choice that an investor makes when building a portfolio. This article will teach you how to do it properly so that when you "retire" you are not forced to be a greeter at Wal-Mart. I will tell you this first; although I am a Viking madman, I do have a degree in Finance from a respected business school. I am not a blogger for a living as evidenced by the lack of advertisement on this site. I am a financial planner so this is what I do for a living. This advice is targeted at people in the 18-30 year old age bracket.

First thing is first, if you are investing without three months of income in a saving account you are an idiot. You must do this first. If you are not disciplined enough to do this simple task, you will never be financially successful. For those with children or a spouse, having proper life insurance coverage is also more important than investing, this usually will only cost you a couple of bucks per day and is essential so that if you die from some unmentionable calamity, your family/spouse will be financially safe. This is not an advertisement for some particular financial product, just some useful practical knowledge that I hope the readers of this site can appreciate and use to their advantage.

First, I should explain that you must invest to get ahead of the evil force known as inflation. That's right you back woods yokels, you cannot put your money between your mattresses, you have to invest where others who are smarter than you can make more money with it. This investment can take a number of forms, but only two are worth mentioning. The two primary avenues for investment are; Bonds (corporate, or government), and equities (stocks to the illiterate). You may say to yourself "How about CDs from my local bank?” These are a no go folks, most CDs have a rate of return that does not surpass typical inflation rates and secondly when you buy a CD, you lose control of your money for a pre-determined time period. These two facts make it an unacceptable device for investing. DO NOT BUY CDs!!

The first investment vehicle that I will explain here are bonds. Bonds are issued by an entity that needs money and you, the investor, give that money to that entity and they, in return, pay you a stated interest rate, typically in the form of a coupon payment. They are a fairly low risk investment with the exception of bonds that are issued by debt-laden companies or governments. These high-risk bonds, also known as junk bonds, can be useful in a portfolio but only if you are positioned correctly. As a young person, bonds should make up 10-20 percent of your total portfolio because the rates of return are not generally as high as stocks and when you are young, risks should be taken. As a young investor, time is on your side, and to fully take advantage of this time, a high rate of return must be your modus operandi when investing.

The second, and for you, most important asset are equities. A stock is actually part ownership of a firm, and as a stockholder you can gain dividends, paid quarterly, or captial appreciation (the stock price going up). Dividends are excess profits that the board of directors of the firm pay out to stockholders, these are valuable in assessing the profitability of a firm and also the stability of said firm. I would recommend that a significant portion of your total assets should be put into mutual funds that have a high number of dividend producing companies. In later articles, I will explain the significance of particular statistics and characteristics of these companies. This article is only meant to briefly outline a sound investment strategy.

One of the major mistakes most investors make is buying actual stocks on the open market,

DO NOT DO THIS!!!

I am sure that everyone has heard horror stories from your parents, uncles, etc but I will give you mine. I lost $15000 in three months in the blood bath that was the market in 2000. I was 21 years old, shit that tells you how old I am… to hell with it. This was due to the advice of an idiotic and greedy Edward Jones investment advisor. Do not go to one of these clowns, they only make money if you place orders and they will encourage you to make decisions that benefit them not you. Also, a significant portion of them do not have any educational background in the financial arena, they are strictly sales people. I did not lose faith in the market and I stayed in, and I have been rewarded handsomely for that patience. So to you readers out there, buy mutual funds, they are run by people like me that are smarter than you and people like me can do a hell of a lot better than you can in making money in stock market.

All funds have sales charges and they vary widely, but stick with broadly diversified funds that have a history of success over years, not months. Also stay away from fund companies that advertise a lot. Advertising typically means that the smart investor is not giving them money and they need your money, do not help them lose more by sending yours their way. Bottom line folks is this: when you are investing, don't make it stressful, send your money every month and do not check prices every month, just file the report and laugh at the idiots that are acting on that hot stock tip that they got from their mullet-wearing, child-molesting, Corvette-driving uncle who thinks he is rich. As a rule, 80 to 90 percent of your portfolio should be in equities in the form of well-run, established mutual funds. Make sure that you are saving 10 percent of your income every month, yes if that means you have to cut back on your Starbucks habit, do it. When you are old and not working at Wal-Mart you will thank me. Invest now and laugh at poor people when you are old!!!

If you have input (not corrections, you don't know what you are talking about), or questions please email me at arthur@arthurshall.com. I cannot tell you about specific investments but I can tell you if you are on the right track or tell you that are fucking up bad. Shoot me an email.

-arthur@arthurshall.com

Shatner says...

I feel like I have to add a little something here. Making jokes about Wal-Mart greeters is all well and good. Quite funny actually… but I should point out that an old able bodied man who greets at Wal-Mart is a far more respectable person than some guy who turns 65 and sits on his fat ass the rest of his life taking social security and sucking us all dry like we owe him something. He’d better have killed a few boatloads of Nazis back in the big one if he thinks we owe him that. Something tells me that the guys who killed the most Nazis aren’t the types to sit around on their duffs. So here’s to those creepy old Wal-Mart greeters with their stinky breath and free hard candies! God Bless America!