Starting a simple portfolio

Ben Stein (did you know he was an economist?) often writes relatively simply but good articles about investing like this one. He likes simple strategies, and he likes variable annuities.

His idea is this. Your main investment should be a broad based index like the S&P 500 or the Vanguard Total Market index (see the indexes page) or the Russell 1000 (see the sectors page) or the Russell 3000, which is a very broad index, though not quite a total market index.

That index should be the majority of your portolio - never less than half. Then, you simply add small pieces of more specific or more risky index - say, 5% or 10%. Stein suggests 10% in 1) EFA, the Europe, Far East, and Australia developed market index to catch international market performance, 2) EEM, the emerging market index, to catch hot undeveloped countries like China, Russia, Brazil, and India, and 3) a Russell 2000 value fund to as to capture small cap stocks.

This makes a lot of sense. Here's a table showing how this would have performed over the last few years. It's smart enough that I may add it to the portfolios page.

Note: Personally, I might drop EEM to 5% and up EFA to 15% or even 20%. 25% might be my max to have invested in international stocks.

Ticker	Name__________	2001	2002	2003	2004	2005	2006
SPY	70% S&P 500 Spyder	-11.81	-21.54	28.17	10.7	4.83	15.85
EFA	10% Ishares MCSI EFA		-15.41	39.8	18.96	13.33	25.81
EEM	10% Ishares Emerging Markets				24.63	32.62	31.44
IWN	10% Russell 2000 Value	13.62	-11.92	45.96	22.11	4.36	23.48
	Total Return				14.06	8.41	19.17