William Bernstein is an investment manager to multimillionaires and the author of “The Investor’s Manifesto.” He also is among the minority of advisers who believe that creating a long-term investment plan is simple. “Simple, but not easy,” he says.
In his new book, “If You Can: How Millennials Can Get Rich Slowly,” he details a straightforward investment strategy for people who are in their 20s. They should save 15 percent of their salary and put equal amounts into a U.S. total stock-market index fund, an international total stock-market index fund and a U.S. total bond-market index fund.
He’s giving the book away, at efficientfrontier.com, in part out of guilt, he tells us. “I’m someone who has become successful in the financial field, and we service exclusively really wealthy clients. I wanted to do something for people who don’t have as much money.”
One reason that investing isn’t easy for young people is their inexperience, Bernstein says. In other words, it’s difficult to stick with an investment plan during a financial crisis.
“From time to time, you will lose large amounts of money in the stock market, but these are usually short-term events,” Bernstein writes. However, if investors continue to invest regularly, then they likely will regain what they lost. The biggest risk, he says, is a failure to maintain a long-term discipline in saving and investing.
Bernstein’s portfolio is 40 percent stocks and 60 percent bonds.