Sasquatch:

I completely understand where you are coming from. There is a delicate balance between risk and reward. The more risk you take on, the more reward you should expect to receive.

“Don’t try to beat the market(like I tried so many years to do), as even if you do for one, two years, eventually you’ll get clobbered and all those gains will get erased.”

This is correct in that market timing, theoretically, will result in a loss over the long-term almost every time. There is a good chance that if you are trying to time a buy and sell, there are other professional investors that have already seen the information and beaten you to it.

I like your “new” investment plan of dumping a steady stream of money for the next 20 years instead trying to beat the market all the time. However, I don’t believe that this takes the greatest advantage of the assets you have to work with. Just because you are in indexed funds does not mean that necessarily reducing your risk significantly. Look at 2001 (S&P -11.94%) and 2002 (S&P -21.55%).

I believe that diversification is the key.

While the S&P 500 includes more than three fourths of the market’s capitalization, it leaves out most mid and almost all small-cap equities. While these should be used sparsely, they do have a place in your portfolio. I believe that your account should have a minimum of 8 funds in it. This can provide for the proper allocation and risk management.

The one other cautionary area is the fact that the two investments you are looking at are very similar. They have an extremely high correlation with one another. The top ten holdings are all the same and since IVV has an expense ratio of .09 and VFINX has one of .18, it seems that you should just use one and not both. I am not sure what trading platform you are using but I would most certainly think that the less trading you do, the less expensive it would be. Thus the suggestion would be to consolidate these two funds and then find 5 to 7 other funds to broaden your risk.

We specialize in portfolio management and use Morningstar Advisor Workstation software for our research needs. After flying all over the country in our Malibu Meridian to meet with clients, we found that the pilots we met along the way needed our services as well. Today, we specialize in the management of Delta and UPS 401(k), MPP, and pension plans but have pilot clients all over the country involved with many different companies.

Your summation of “1. invest conservatively, 2. invest often, and 3. invest as much as I can possibly afford to.”, is right on the money.

Hope this info helps.