Ep. 2005: The Habanero Portfolio

About this episode

A little hot pepper can improve a meal. Eating the whole habanero is another experience entirely. Can the same be said for your portfolio? Don and Tom explore why small-company, value, and profitability tilts have historically rewarded investors—and why chasing those higher returns can demand more patience than most people have. A strategy that looks terrific over decades can feel unbearable while it trails the market for years. The question is how much you can actually stick with. Plus, a listener discovers that a value fund in his retirement plan is holding nearly half its assets in cash. Another asks whether converting a bond mutual fund to an ETF makes sense inside an IRA. And an offer from Schwab raises a tempting question: should you let your broker lend out your shares for extra income? Don and Tom examine the tradeoffs behind each decision, with an emphasis on keeping investing simple, diversified, and manageable. Questions? Comments? Click!