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Comment by tempestn | Hacker News Reader

How, and why, to invest in a simple portfolio of index funds. Split between equity and fixed income based on your risk tolerance, and diversify equities globally. This will give you a low-cost, set-and-forget investment portfolio that you can add to over time without ever having to worry about what you should buy or what the market might do. Just add to it regularly over time, and end up with solid retirement savings. The market and your portfolio will certainly fluctuate, but there is no need to react to these fluctuations—simply rebalance based on your investment plan (say, annually).

Here's a good primer from the Bogleheads forum: https://www.bogleheads.org/wiki/Bogleheads%C2%AE_investing_s...

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I would be very careful with financial advice in general and "set and forget" strategies are definitely among them. There is some controversy with ETF based allocation strategies (see Michael Burry's recent claims) that may or may not be valid, but in general I don't think there is any shortcut for financial education such as "just buy diversified ETFs" (and this applies to many other fields as well).

I don't know, for people who neither have the time, skill or will to invest individual companies' performance a low-cost, very broad ETF is pretty universally excepted as your best bet.

This doesn't mean there is no risk.

That doesn't change anything. 12 years ago I knew nothing about programming. Does that mean I shouldn't start with some easy language that might turn out not be sufficient as I get more experienced? No. Starting is the hardest part, gaining experience is something that happens during the journey.

I agree; one should educate oneself. That's why my advice was to "learn how and why" rather than to simply do it. The danger with the financial sector is that there is a ton of biased, bad advice out there. So you need to take some care and critically evaluate what you're learning. Having done that myself, I'm a strong believer in low-cost, diversified investing. (Which usually means passive indexes, but the important things are low cost and diversification; occasionally that's not incompatible with active funds.) For most people who don't want personal finance as a hobby, an hour should be enough time to learn why a simple portfolio of low-cost index funds is a solid choice, and then they can confidently stay the course, rather than trying to time the market or pick winners and ending up worse off for it, as many do.

Reddit FIRE is also worth reading: https://www.reddit.com/r/financialindependence/

Also JL Collins' book "The Simple Path to Wealth" is well worth a read, on the same topic. If you don't want to get it, this talk covers the basics: https://youtu.be/T71ibcZAX3I

Switzerland makes it very interesting to follow your advice: you can deposit into a 'third pillar bank-account' which your local bank helps you invest in predetermined portfolios, and the investment will be tax-deductible.

I don’t invest in pillar 3 because the banks charge a medieval 1-2% management fee.

Damn, that's basically all the interest

VIAC is a great alternative. It's cheaper than traditional banks and allows a higher share of investment in equities: https://viac.ch/en/

For those from Canada - that's a Swiss version of RRSP basically.

This, and the earlier you start the better.

Jack Bogle did not advocate for adding international equities to a portfolio as a means of diversification. [1]

[1] https://www.morningstar.com/articles/885739/why-jack-bogle-d...

The fact that the Bogleheads forum is a useful source of information doesn't imply that Jack Bogle was right about everything.

... or that the Bogleheads forum is right about everything.

Naturally. Like any forum there are a range of opinions there. I think if most reasonable people take an hour to familiarize themselves with an investment plan based on diversification and cost minimization though, they'll see its merits.

The reasons in the link are fairly ridiculous

Please explain. I found the arguments quite reasonable and presented in a non-dogmatic way.

It's just nationalism

The argument that US businesses are already exposed to international issues anyway is a good. By investing in a US index you are unintentionally diversified

I think the market needs better, easier portfolio tools for the lay person. Tools that can help coach the user as well

That counts as financial advice; or gets close enough to it that it will probably run afoul of the same problems. Financial advice is all fun and gains until there is a down year and someone loses 10% of their savings. Or worse.

The hard challenge in the field is how to attract customers that are not quite savvy enough to figure out how to open their own brokerage account but not people so clueless as they'll go into old age with a 100% allocation to stocks. The more accessible the higher earning (ie, riskier) options are to unsophisticated the more catastrophic the backlash will be when the bad years arrive.

In a sense the regulatory system evolves to make the cheap-management options harder to find and tailored financial advice easier, because the people who aren't already in the market are going to get eaten alive making rookie allocation errors.

Does it get much easier than target date retirement funds? Vanguard’s TDF basically have no fee at sub 0.1% expense ratios.

If there's a Robinhood for index fund investing, I am in. I think a lot of retail investors (myself included) lack a mainstream resource that pushes for stock diversification investments, having to resort to manual research.

I know Robinhood and <insert any other brokerage> supports this, but a centralized platform dedicated to index and mutual funds that focuses on them out of the box might make sense.

Betterment does this, with auto-rebalancing when things get out of balance. There are other services that do this as well (wealthfront is one).

If you're just interested in index funds themselves, then take a look at vanguard.

I would simplify this to: understand the principle of portfolios. And the benefits of them.

Too many people buy just one investment, not understanding they can reduce their financial risks buying several unrelated things. For example, only owning a house. And refusing to buy stocks because of risks.

any advice on how to invest in ETFs while in Europe ? Vanguard is not available and local banks charge high management fees.

there are Vanguard ETFs in some European stock exchanges. https://global.vanguard.com/portal/site/home

But Vanguard aside there are loads of low fee ETFs from ishares, amundi lyxor, etc eg https://www.xetra.com/xetra-en/instruments/etf-exchange-trad...

There are many ETFs which can be invested in in Europe. See the screener https://www.justetf.com/de-en/find-etf.html

I don't think you can trade through that site. But apparently Robinhood is launching in UK soon

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