Weil's model portfolio uses low-cost index funds whenever possible to invest an allocation of 30 percent U.S. stocks, 30 percent foreign stocks, 10 percent U.S. bonds, 5 percent foreign bonds, 5 percent natural resources, 10 percent REITs and 10 percent cash.
"If you need the money within the next three years, stick it in a money market fund or certificate of deposit," Weil said. "Successful investing is a game of patience and long-term thinking."
Once you're able to invest more extensively, set an allocation and review your holdings every six months by percentage, he said. If one group has gone up significantly, sell enough to bring it back to your original allocation and use the resulting cash to buy more of any group that has gone down. Such rebalancing forces you to sell when things are high and buy when things are cheaper, he said.
"This is actually a great time for people to be starting out, as counterintuitive as that might seem," said Christine Benz, director of personal finance for Morningstar Inc. in Chicago. "The first step is to get an asset allocation that makes sense, given the person's age, years to retirement and risk tolerance."
For new investors, Benz offers these funds with good prospects:
* The $39 billion Dodge & Cox International Stock Fund. Top holdings include Novartis AG, Royal Bank of Scotland Group and Schlumberger Ltd. Requires a $2,500 minimum initial investment; $1,000 for individual retirement accounts.
* The $3 billion Sequoia Fund, which recently was reopened to new investors. Largest holdings are Berkshire Hathaway Inc. Class A, Mohawk Industries Inc. and Martin Marietta Materials. Requires $5,000 minimum; $1,000 for IRAs.
* The $19 billion T. Rowe Price Equity Income Fund. Largest holdings include GE, Chevron Corp. and JPMorgan Chase & Co. Requires $2,500 minimum; $1,000 for IRAs.
E-mail Andrew Leckey at yourmoney@tribune.com.
