How to Keep It Simple Stupid

I'm talking about the principle of keeping it simple stupid as it pertains to investing. I just read a blog post from Ryan Lewenza over at Turner Finacial on his definition of KISS and this is my counter argument on the points he has made on the subject.

First of all the whole argument can be summed up in whether you believe in modern portfoio theory (MPT) or you don't. I don't and don't really give a fuck about it. I don't buy bonds, preferred shares, mutual funds or their ugly step sister ETFs. It's just me.

If you are a professional money manager and you are charging fees to hold a client's hand then you need talking points to justify why you do the things you do. Song in there I think. Anyways. This is where you follow MPT, buy ETFs and always mutter on about KISS.

It's like that's the only strategy out there. NO it's not but highly effective keeping the herd in line when they start to want to stray. I've been straying and following different paths before I settled on my path.

I DIY my own portfolios, I don't pay fees and I just buy common dividend paying equities. Does it get any more KISS than that? The hard part and it really is hard is holding on and letting it work it's magic.

Of course you can pay someone to do this for you. They call it 

'The Balanced Portfoio'

Here is my take on the points presented.

Balance

You need bonds in your portfolio on those days when your stocks are going down. Why would anyone with a small semblance of brain cells invest in 10 year government bonds paying 1.5% interest? Those seeking balance and poor returns is who?

It's just razzle dazzle in my opinion. I don't invest in them or any bond proxy funds and ETFs for simplicity and or convenience. You are left paying fees to the fund manger and fees to hold the fund or ETFs. Balance at Turner Financial usually means 40% allocated to a mix of bonds/preferred shares giving you a 3.5% yield on your fixed income side.

I don't want at anytime my income to be fixed. I want a growing income that I believe is better gained through a portfolio of dividend growth stocks. Better in retirement and better to combat the ravages of inflation as you age and shit get more expensive and we all get more unstable. 

Balance is all part of the twaddle referred to as MPT. It's just not necessary for you to hold bonds or pref shares and pay ongoing fees that slowly eat away at your money.

Don't know how to manage your money. Go fucken learn. Libraries are full of people seeking knowledge. Yes, you can do this and it's fun keeping more of what you earn and save.

Why pay someone to lose your money for you. You will ask yourself that when the next recession hits. Just sit tight and enjoy the stocks you bought and do nothing. That's all your money manager will do when you go asking questions.

Diversification

This is the idea that you need to hold 40% of your money split between preferred shares and bonds of all types including, federal, provincial, real return etc. etc.

I don't hold any of those types of products. It also preaches to spread your money out throughout the world to reduce risk.

Of course I don't do this and also you have to believe in Modern Portfolio theory which I don't.

Asset Allocation

Hold different asset classes depending on your age, income and how many years you are away from retirement. I only hold Canadian DG stocks.

I'm doing just fine. I will live on the juice those dividends provide. To me, it doesn't matter what age you are just BUY STOCKS!

Hold them forever and only sell unless you have made a mistake.

In Sum

Just be careful who you take advice from and how they get paid.

In this case you pay an ongoing management fee + ETF fees. They will eat into your returns over time.

Some love this model of letting others do this for them. I am not a fan and would rather be a DIY investor and if I lose money then I'm not paying others to do it for me.

You can do this on your own. If you don't know how, then go to the library, pick up a book and learn. Now that's how you KISS!

How do you keep investing simple?
How do you define