Carnival of Passive Investing # 3 – Random Probability Examples Edition – February 28th, 2011

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Welcome to the February 28th, 2011 (only the 3rd ever!) edition of Carnival of Passive Investing – a monthly collection of the best and most intelligent passive investing strategy articles around the internet! Some people foolishly want to beat the market (want being the key word), but we just want to invest with it.


As discussed in my introductory post for this carnival, the purpose of this carnival is two-fold:
  • To provide a forum to showcase articles and research in passive investing strategies (i.e. investing in ETFs, index mutual funds, etc. in such a way that one avoids employing active stock picking). By investing with the market, we are able to beat 70-80% of investment “professionals.”
  • To create a community of passive investment bloggers to connect and share expertise.

The theme for this month’s Carnival is probabilities of random events happening. Haven’t you ever wondered how you odds of getting struck by lightning compared to winning the lottery? Well, you can find out here today! 


Please enjoy and stop by my blog on my non-carnival days as well.

Listed below are this month’s top 3 editor’s picks! 

1. Craig/FFB presents Best Retirement Plans For The Self Employed or Small Business Owner posted at Free From Broke, saying, “The small business owner has a number of options for their retirement. See a rundown of each of them along with their benefits.”

If you thought you had numerous financial decisions to make as an employee, think again! This article will help you decide which retirement plan best suits your small-business needs. I think I’d pick the SEP IRA! Just remember that picking the right investment account is the first step (and a very important step at that) to getting started with your passive investing strategy!

2. Robert @ The College Investor presents The College Student’s Guide to Investing posted at The College Investor, saying, “A guide I wrote for college students and young adults who are just starting out investing!” 

This post gives a very straight-forward guide that young people can use to take their first steps in their investing career. And, with the advice in this article, they can get started on the right path using a passive investing strategy.

3. Kevin McKee presents Get Involved in Exchange Traded Funds (ETFs) posted at Thousandaire, saying, “Why pay high fees on mutual funds when you can pay much lower fees on ETFs? Here’s a simple explanation of ETFs, and our favorite emerging market ETF, NYSE:VWO.”

ETFs are a very popular investment instrument these days. They can be used quite effectively to implement a passive investing strategy. Just make sure to avoid trading fees/commissions by owning them in a Fidelity or Vanguard account.

Congrats to our 3 winners this month! Listed below are the rest of this month’s spectacular passive investing articles!

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Probability of being struck by lightning – 1 in 280,000
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Miscellaneous

Barb Friedberg presents WHY YOU MUST START SAVING NOW! posted at Barbara Friedberg Personal Finance, saying, “Meet smart Sam and Late Audrey and learn how starting to invest early and regularly leads to a rich financial future! Take their advice and prosper.”


Jon the Saver presents Rick Ferri and Passive Investing posted at FreeMoneyWisdom.com

Asset Allocation

Mike Piper presents Investing Life Insurance Proceeds posted at The Oblivious Investor, saying, “How would you invest a portfolio if you were expecting to need to withdraw from it for potentially 50 years or more?”

Rob Bennett presents Valuation-Informed Indexing #28: New Research Shows Valuation-Informed Indexing Beats Buy-and-Hold in 102 of 110 30-Year Periods | ValueWalk.com posted at ValueWalk.com.

Gyutae presents What Is Asset Allocation and Stock Investment Diversification? posted at Money Crashers.


Financial Planning

Mitch Archuleta presents Automate Your Finances to Win Big in Retirement posted at RothIRA.com’s Retirement Planning Blog.

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Probability of winning a single state lottery – 1 in 18 million (so less likely than getting struck by lightning)
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Index Funds

FMF presents Free Money Finance: Not All Index Funds Are the Same posted at Free Money Finance, saying, “One thing to remember when investing in index funds: not all of them are the same.”


Investing

BankMan presents Are Online Brokerages a Good Deal? posted at High Yield Savings Accounts, saying, “Are online brokerages a good deal for cheap mutual fund trades, or do they skimp on the features you need most to make informed investing decisions?”

Ryan @ CML presents Investing Lessons From Warren Buffett posted at Cash Money Life, saying, “Warren Buffett is one of the world’s greatest investors. Find out some of his best investing tips in this article.”

Note from Jacob – Even though doing what Buffett did (investing in individual stocks) is against the tenets of this carnival, we can learn some valuable lessons about employing a contrarian style of investing when we need to rebalance our portfolios to purchase more shares of equity index mutual funds when markets go down.


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Probability of having your identity stolen – 1 in 200 (So, pretty likely!)
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Jim Yih presents Understanding Index Linked GIC Products posted at Retire Happy Blog, saying, “There is a new breed of GIC (Canadian investment instrument) products that continue to guarantee your capital from losing money but provide some variability in terms of your investment return. These products are commonly known as index-linked GICs.”

Boomer presents How To Invest Your Money: Part Four – Building Your Portfolio posted at Boomer & Echo, saying, “The main focus of this series of articles is to discuss the psychology of investing, how to get started, finding your strategy, and building your portfolio.”

Michael presents Advantages of Buying a House With Cash posted at Consumerism Commentary, saying, “If you can afford it, there are some extreme advantages to buying a house with cash.”

Note from Jacob - Before deciding to buy a house completely with cash, it’s important to consider your overall asset allocation. This article gives some great insight in to this decision.

Michael Pruser presents Ally Bank’s 10-Day Rate Guarantee on CD’s posted at The Dough Roller, saying, “Boring ole CD’s may not give the greatest returns, but show me something else this guaranteed.”

Note from Jacob – CDs can be a valuable tool for housing the cash portion of your asset allocation in your overall passive investing strategy.


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Probability of being on a plane with a drunk pilot – 1 in 117 (Scary! I hope this one isn’t true!)
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Mutual Funds

Hemant Beniwal presents Bond Fund – Complete Guide posted at mutualfundlab.com.


Personal Finance

Carlos Sera presents A Tale of Might posted at Financial Tales.


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Probability of being considered “possessed by Satan” – 1 in 7000 (uh, OK…? haha)
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And, if you are a serious passive investing nerd like me, you might enjoy the following articles on Passive Investing that I came across on Get Rich Slowly and Free Money Finance while reading through this month’s submissions.

Improve Your Investment Returns with Vanguard’s Admiral Shares – Free Money Finance
The Beauty of Index Funds – Free Money Finance

Index Funds: The Investment Answer – Get Rich Slowly
Index Funds Win Again – Get Rich Slowly
Index Funds: Why Choose Anything Else? – Get Rich Slowly

Well – that concludes this month’s edition. Submit your blog article to the next edition (scheduled for March 31st) of Carnival of Passive Investing using our handy carnival submission form


The top editor’s pick of the March 31st, 2011 Carnival of Passive Investing will receive a $25 Wal-Mart gift card.


March’s Carnival will be our first “guest-hosted” edition of the Carnival of Passive Investing. Tom @ Canadian Finance Blog has been kind enough to volunteer to host! 


If you are interested in hosting an upcoming edition of the Carnival, take a quick look at the hosting requirements, and then contact me with your preferred open slot in the hosting schedule.

    ***Photo courtesy of http://www.mathworks.com/help/toolbox/stats/multivariate_studentst2.gif

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