Imagine one day that you had a windfall of n stacks of $2,000. In this hypothetical situation, you have no debt, and thus do not need to worry about using the money to pay off loans. Since you received the money in a windfall and were not planning on having it, you are free to invest it to the best of your abilities. In order to achieve some diversification, you decide not to invest more than $2,000 in any given investment. What investments would you choose? The purpose of this blog is to help people determine which investments to make.
Many other sites speak in generalities about the glory of index funds, the importance of dollar cost averaging, etc. This blog discusses topics of that nature, but also seeks to provide more practical advice that people can use to implement the suggestions. Why $2,000? To me, it seems that $2000 is about the right amount of money to place in one investment. Two trades (a buy and a sell) on Scottrade costs about $14, which is .7% of $2,000. Thus, if you invest $2,000 in one thing, you won’t lose a lot of money due to transaction costs. Any less, and earnings will be substantially eaten-into by fees. Why not $20,000 or $200,000? I’m not looking for people to give vague responses like “diversify!” Many people do not have enough money to create diverse portfolios with these amounts in each asset. Thus, people can take the advice from this site and place it in a number of investments that matches their willingness to invest.