Parting Words of Wisdom from Financial Commentator Greg Heberlein | KNKX

Parting Words of Wisdom from Financial Commentator Greg Heberlein

Jan 14, 2014

When Money Matters first aired on KPLU some 7 years ago, we were speculating about whether the housing bubble was going to burst, and wondering if we were heading into a recession. It's certainly been a wild ride since then.

All good things must come to an end, and it's time to bid farewell to financial commentator Greg Heberlein. For our final show, we leave you with some advice to keep in mind going forward.

Invest in broad categories.  

The Standard & Poor’s 500 index is a good one. Stock-picking funds and stocks pushed by brokerage houses almost never match or outdo broad index funds. Also, index funds almost always charge lower fees than managed funds do. Fees really add up and seriously hamper your returns over time.   

Don’t do a lot of trading. Buy and hold for the long term.  

Only invest money that you don’t need for at least five years. Individuals trading stocks often fall into the trap of trading on emotion, buying at the highs and selling at the lows. Doing the opposite yields much greater success.

Psychology is often more important than strategy.

Stock-trading strategies come and go. Few work over long periods of time. Learn about the mental aspect through such books as Extraordinary Popular Delusions and the Madness of Crowds, Where are the Customers’ Yachts and Reminiscences of a Stock Operator.   

Save at least 10% of your income.  

That reflects all savings, both in and out of retirement plans. Fortify that concept by reading The Richest Man in Babylon.   

Educate yourself.  

Learn the meanings of market terms from books or online services. Don’t invest unless you fully understand what you’re investing in.   

Cash instruments such as CDs and bonds should be part of your investment plan. How much of your portfolio should be invested in these conservative instruments depends on how much risk you’re willing to take.

Commodity investing can be hazardous to your wealth. Usually, only market professionals come out ahead in the commodities game.

Sure, there are riskier strategies that have made some people very wealthy. But, as MarketWatch and others point out, the vast majority of evidence shows very few money managers are able to consistently beat the market. The S&P 500 had a total return of 31.9% in 2013, and very few people who hold funds based on that index are complaining.

This advice may be simple and boring, but it works and we've put it to good use. Greg is enjoying a comfortable retirement and Dave, although younger, could theoretically afford to retire today (we argue about this a lot).

Thanks for listening all these years. We hope it's been as fun for you as it was for us.