What about forex investing? Oil? The middle east?

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I get these emails all the time and they drive me nuts.

Victor writes:

I read your blog often, and I’ve been looking into trading currency on FOREX. I know there is lots of risk to it, as there is to any type of investing. What is your advice and idea on it?

My response:

Have you set up a proper asset allocation already, with automatic investing and at least 10% of your money being invested each month?

I never heard from Victor again.

Sometimes we get too fancy with all the choices available to us, forgetting the most important part. Remember, 90%+ of your investment returns are due to your asset allocation. See some sample asset allocations here (or just invest in a target-date fund).

* * *

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  1. Sometimes there are easier ways to invest rather than the super risky and hard to understand investments.
    Simply setting a budget and investing your excess is a form of investing we can all do. It may be a little work, but it will definately pay off in the long run.
    One of the greatest investments you can make (I believe) is in yourself. There is no greater return on investment than investing in your own skills and knowledge. Then you can seek to EARN more money, not just sacrifice more money

  2. When you say 10% of money being invested each month, are you referring to money from your net paycheck amount? Today I’m investing 20% of my paycheck into my 401(k).

    I’m wondering whether you are referring to disposable income…

  3. Ramit – I was wondering what your take is on using options (as a supplement not replacement to index funds). With my “play” money, I have small positions with long term calls and found the return is generally pretty good, given the risk involved…

  4. GP — My take is the same as my above advice!

  5. Oh yes, I fully agree. Though, I don’t get those kinds of question directly (because I don’t have a direct web presence), I do see that kind of question often. And usually, it involves the latest hot “investment”. For example, ultrashort funds are getting a lot of traffic as of late.

    I can only shake my head.

  6. I have 2 buckets of money —-long term growth and savings and risk capital

    I usually do 10% also for individuals or any other risk taking investments, the rest is for security

  7. Hi ramit, i’m also agree with you…investment sure is risky, but the reward is absolutely huge..thanks for the info..:)