Sound Mind Investing - America's Premier Christian Financial Newsletter
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Investing with SMI FAQ


I'M A BIT OVERWHELMED BY ALL THIS INFORMATION. WHERE DO I START?

If you're a new visitor to SMI, we recommend you begin in our Visitors Center, which will give you a broad overview of who we are, what we do, and how you can benefit. If you're interested in learning more about the specific strategies SMI offers our subscribers, you can follow these links to our SMI Investing Strategies page and our Performance History page. You might also be interested to see what ministry and financial experts have to say about SMI. And of course, you're welcome to browse recent issues of the Sound Mind Investing newsletter, where you'll find a number of unlocked articles.

If you're a new web member, we suggest going through our Getting Started section. These steps will help you identify where you fit within SMI's investing framework, and get you on track with your own personalized investment plan in no time.

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WHAT ARE THE FOUR LEVELS I KEEP SEEING REFERENCES TO?

SMI wants to help you set biblically appropriate priorities as you proceed through the seasons of life. The Four Levels are the way we approach that, and are at the heart of each issue's content. They will show you where to focus your efforts initially. Most people have a long-term goal of building a diversified investment portfolio and having financial security at retirement; however, you may need to establish short-term goals (such as getting debt-free and building a contingency fund) to provide you with the necessary foundation. The table below explains what to expect in each of the monthly Four Levels articles.

Overview of Levels 1 and 2
Level 1: Strengthening Your Foundation Level 2: Developing Your Investing Plan
The journey of wise money management requires a strong financial foundation. In this column, we cover topics such as how to manage cash flow, apply strategies for getting debt-free, make wise purchasing decisions, build savings, choose appropriate insurance protection, navigate marital financial issues, and more. Investing decisions are best made as part of a comprehensive personalized plan. In this column, we focus on topics that will help you implement an investment strategy that takes into account your personal goals, attitude toward risk-taking, and current season of life. We explain investing essentials, discuss SMI's core investing strategies, and help you decide which is best for your situation.
"By wisdom a house is built, and through understanding it is established."
Proverbs 24:3
"The plans of the diligent lead to profit as surely as haste leads to poverty."
Proverbs 21:5
Overview of Levels 3 and 4
Level 3: Broadening Your Portfolio Level 4: Looking Toward Retirement
This column goes beyond the investing essentials taught in Level 2, introducing you to a wider range of investment securities and markets. By further diversifying your holdings, you can create a more efficient, less volatile portfolio. We also comment quarterly on the performance of the various markets, and on how SMI's fund recommendations and strategies have fared. As you move through your 50s, 60s, and beyond, you face a new set of financial decisions related to reducing your investment risk and generating income from your portfolio. In this column, we address such topics, as well as those pertaining to Social Security, long-term health care, advanced giving strategies, estate planning, and other matters of importance to those nearing and in retirement.
"Divide your portion to seven, or even to eight, for you do not know what misfortune may occur on the earth."
Ecclesiastes 11:2
"There is precious treasure and oil in the dwelling of the wise."
Proverbs 21:20a

The SMI website contains a tremendous amount of content targeted to readers at each of these Four Levels, so regardless of where you fit in, there's plenty here to benefit you.

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HOW DO I PUT TOGETHER A PORTFOLIO OF FUNDS?

There are actually a couple of steps we recommend before picking funds to invest in. These steps are clearly explained in our Getting Started section. In a nutshell though, when you have met your Level 1 goals, you are ready to put together a portfolio.

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HOW DO I CHOOSE BETWEEN THE SMI INVESTING STRATEGIES?

The best way to choose is to ask yourself the simple question, "How often do I want to have to monitor my investments?" SMI's least labor-intensive strategy is called Just-the-Basics, requiring just an hour of your time once per year. On the other end of the spectrum, SMI's Upgrading strategy requires you to monitor your mutual fund holdings once per month. A hybrid approach called Enhanced Just-the-Basics (available to SMI Web Members) is also an option, requiring attention just once per quarter (four times per year total). The tradeoff is in expected return, where Upgrading seeks to beat the market, while Just-the-Basics merely attempts to replicate the market's return.

Just-the-Basics uses four index funds to track the returns of the entire market. Because you are settling for whatever the market returns each year, not much maintenance is required.

Upgrading uses actively-managed mutual funds in each of five risk categories to construct a diversified portfolio. Recommended funds in each risk category are re-evaluated every month, and each monthly issue of SMI tells you when a particular fund is to be sold and replaced with a new selection. While we typically don't replace a recommended fund very quickly, you do need to keep up with this strategy every month, as each issue may require you to sell one (or more) of your current holdings. The benefit of this extra work is that we seek to beat the market's rate of return, and over time have been successful in doing so (see our Performance History page for details).

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WHERE SHOULD I OPEN MY ACCOUNT?

That depends on which strategy you intend to use. For our Just-the-Basics strategy, go to the best company for indexing: Vanguard. For Upgrading, you may prefer a mutual fund supermarket with more options than Vanguard offers. We typically suggest TD Ameritrade, Firstrade, or Fidelity. See the following article for more information:

Investors with tax-sensitive accounts may be best served at Fidelity, typically considered the best online broker for tax purposes.

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CAN I USE SMI'S STRATEGIES IN MY 401(k), 403(b), OR OTHER EMPLOYER RETIREMENT ACCOUNT?

Yes, although the ease of doing so will depend in part on what fund options are available through your retirement plan. Those plans with self-directed brokerage options available are the best - they should allow access to a wide range of mutual funds, meaning you could probably use any of SMI's investment strategies within the account.

For those without a brokerage "window" or option in their plan, it's become quite common for plans to include index funds among their fund options, making Just-the-Basics an option. And depending on which actively-managed funds are available, you may be able to construct most (or all) of a diversified Upgrading portfolio by researching the available funds in SMI's "Fund Performance Rankings" (explained further in the next question).

For our web members, our Personal Portfolio Tracker tool makes it easy to apply our core investment strategy, Fund Upgrading, to your 401(k) or other workplace retirement plan. After entering the funds that are available to you through your workplace plan, the Tracker categorizes them by asset class, calculates their momentum score, shows you which funds to include in your portfolio, and helps you decide each month whether to make any changes.

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WHAT ARE THE FUND PERFORMANCE RANKINGS?

One of the most popular features of the SMI newsletter is the Fund Performance Rankings. In it, SMI ranks more than 1,400 funds according to their risk categories and SMI's "performance momentum" scores. While print subscribers receive this quarterly, it is updated and available on the SMI website every month for web members.

The Fund Performance Rankings have several uses. You can use them to evaluate any funds that you already own to see how they compare with others in their risk category, including SMI's recommended funds. The performance rankings are particularly valuable for evaluating the options in a 401(k) or other retirement plan where fund choices are limited.

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SOME OF YOUR RECOMMENDED FUNDS HAVE MINIMUM INVESTMENT AMOUNTS THAT ARE WAY TOO HIGH FOR ME. WHAT DO I DO?

Many funds have high minimum investment requirements when you open an account directly with the fund. However, when buying through Schwab or Fidelity, the minimum purchase is usually set at $2,500 (Scottrade and TD Ameritrade often offer even lower minimums). Before recommending a fund, SMI contacts our recommended brokerages to verify that the fund is open to new investors and that the minimum is acceptable. However, because fund minimums can change after we go to press, we recommend that you telephone your brokerage company and have a sales representative check them for you.

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HOW DO I SUBSCRIBE TO THE
SOUND MIND INVESTING NEWSLETTER?

You can either subscribe online or call us toll-free at 877-736-3764. Print subscriptions cost $79 for one year, or $139 for two years. Web memberships cost $9.95 per month for those without an active print subscription, or can be added to a current print subscription for only $4.95 per month.

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