There is a lot of weird science out there when it comes to investment management. But if we’re going to be successful in investing for retirement, we need sound science. Last time we talked about asset allocation for the flexible portion of your portfolio. Today we’re going to talk about the science behind the fixed portion. Index-based investing is currently the popular way to manage this side of your investments. But remember, you want to “know what you own and know why you own it” (Peter Lynch). Listen to this episode and follow through with the 7-day goal to gain a better understanding of what you own and why! What is an investment index? 

Index-based investing is taking over the world. But what, exactly, is an index? It is not something you can invest in directly. It is a mathematical model that represents a broad swath of the US equity markets. Index-based investment products try to mimic the model. On this episode, we’ll use the S&P 500 index as an example and explain how it works. Listen in to learn more about what the index is and how it affects asset allocation in your portfolio. Following an index when allocating assets might boost your retirement 

Index-based investing has a few distinct advantages, one of them being lower cost. As I explain the science behind an index, using the S&P 500 as an example, I will describe the factors that reduce costs for index-based investments and make them more efficient. Listen in to learn how index-based asset allocation can benefit your portfolio. Your retirement might suffer if you follow the S&P 500 

When looking at index-based investments, there are nuances to consider that may be disadvantages. On today’s episode, I will explain how the S&P 500 index works, and why it can be great when huge companies are doing well, but concerning if they are not. I’ll also describe how the changes made annually to the index can result in inefficient trading and higher prices. Listen in to learn about index-based asset allocation so that you can know what you own and why you own it. Are there options other than an index-based product for the fixed portion of your portfolio? 

It is important to carefully consider your options when investing. While index-based products are the popular “go-to” for the fixed portion of your portfolio, there are other options out there. On this episode, I’ll talk about these options, which for some people may be a smarter way of investing. Listen in to learn about index-based asset allocation, other options, and what you can do in the next seven days to get a better understanding of what you own. OUTLINE OF THIS EPISODE OF THE RETIREMENT ANSWER MAN 

HOT TOPIC SEGMENT 

PRACTICAL PLANNING SEGMENT 

TODAY’S SMART SPRINT SEGMENT 

THE HAPPY LAB SEGMENT 

RESOURCES MENTIONED IN THIS EPISODE
The Five-Minute Retirement Makeover
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