Free Investment Advice...

David Swenson manages Yale's $22B endowment, and I woke up to him this morning on NPR offering free investment advice. The really interesting thing with this free advice is that it is probably good advice. His strategy focuses on balancing your portfolio across a number of areas, for example real estate trusts, domestic and foreign equity, etc.

Swensen says fees are also the big reason you should buy index funds instead of classic mutual funds. Index funds, which track market segments like the S&P 500, are a lot cheaper.

Swensen says the vast majority of professional mutual fund managers fail to beat those indexes.

"When you look at the results on an after-fee, after-tax basis over reasonably long periods of time, there's almost no chance that you end up beating an index fund," he says. The odds, he says, are 100 to 1.

This is the true gem of the advice, to not pay unnecessary fees. Too many of today's mutual funds and equity instruments are charging a significant annual management fee (1% or so, often)and on top of this charge substantial transaction fees as well. For the small time investor, like myself and most of us, following the market indexes and reducing fees will often yield a real return than giving your peanuts to ALPHA-investor dude. Additionally, focusing on keeping the portfolio internally balanced with your long term investment policy will allow a simple approach to the old business concept of "buy for $1, sell for $2".