“The Investment Answer” is broken down into five main principles:
1. Hire a fee-only, independent financial advisor, not a broker who is compensated for selling you company products. This is an issue both Goldie and Murray felt strongly about. “[Murray] didn’t care for the retail side of Wall Street; he felt that was the side of Wall Street that was really hurting people,” Goldie says. “This book was his attempt to try to educate people and help level the playing field.”
2. Diversify among stocks and bonds, buying both large and small caps and value and growth.
3. Divide foreign and domestic investments.
4. Decide if you want to own passive or actively managed mutual funds. Goldie and Murray both encourage passive investing. “Over time a passive strategy on average will outperform an active strategy,” says Goldie. This concept was hard, even for Goldie, to understand at first. “I was brought up under the idea that if you worked harder and you were smarter and better, you would perform better. But it doesn’t hold with investing.”
5. Rebalance your portfolio.