Why Upgrade?

SMI subscribers with a Basic-level membership have access to two investing strategies. These strategies differ in philosophy and the amount of attention required.

Our preferred strategy is Fund Upgrading. It’s based on the idea that if you are willing to monitor your mutual-fund holdings regularly and replace laggards periodically, you can improve your returns. While Upgrading is relatively low-maintenance, it does require checking your holdings each month and replacing funds occasionally. (If you don’t wish to do this yourself, a professionally managed version of Upgrading is available.)

As an alternative to Upgrading, we offer Just-the-Basics (JtB), a strategy based on investing via index funds. JtB requires attention only once a year. The JtB strategy is helpful to SMI members whose workplace retirement plans lack a sufficient number of fund options to make successful Upgrading possible. Here are the funds and percentage allocations we recommend for our Just-the-Basics indexing strategy.

Past returns for both Upgrading and Just-the-Basics are shown on our main page at soundmindinvesting.com. Click the word "Performance" in the middle of the page.

SMI emphasizes the importance of having a long-term view when it comes to executing your investment strategy. We typically define that as having, at a minimum, a 10-year time frame in mind. Why 10 years? Because that’s long enough for the annual ups and downs in the market to settle out and allow the upward bias of the market (due to the strength of the U.S. economy) to assert itself.

(A five-year period is the minimum we would recommend for investing in the stock market at all. A 10-year period — or longer — is required, in our view, to consider oneself a long-term investor.)

To illustrate this for you, we’ve researched the results of a monthly dollar-cost-averaging (DCA) program over each of the 10-year periods starting with 1950-1959 and moving through the decades up through the end of last year. We’ll share those in a moment, but first a DCA primer for new readers.

Fund-research firm Morningstar has finalized the year-end performance numbers, so we've updated SMI's Personal Portfolio Tracker and monthly Fund Performance Rankings with performance data through Dec. 31, 2020.

• The Personal Portfolio Tracker: SMI's fund-performance database tracks the monthly returns of more than 25,000 traditional mutual funds and ETFs. The Tracker can filter that large amount of data and produce a concise report covering only the funds available in your plan(s), thus making it easier to apply our Fund Upgrading strategy to your 401(k), 403(b), or another retirement plan.

As you may be aware, SMI's Upgrading formula for domestic funds is now guiding Upgraders toward either growth or value funds as appropriate, rather than maintaining both growth and value allocations at all times. Accordingly, the SMI newsletter is using only two domestic categories: Large Company and Small Company. 

However, Tracker portfolios will continue to classify holdings according to four domestic stock-fund categories: Large/Growth and Large/Value along with Small/Growth and Small/Value.

This will help members who use alternatives to our "official" recommendations more easily see (based on the Tracker's percentile-ranking column) how their particular funds are performing relative to similar funds. Upgrading calls for selling a fund when it drops below the top quartile of its peers, so having a clear view of a fund's relative performance is important for maintaining that selling discipline.

Another difference between the Tracker and the newsletter is that Tracker portfolios will continue to show a separate Foreign category, even though Foreign is now a subset of the "Situational" category in the newsletter.

Any fund that doesn't fit within the five categories mentioned above (including, for example, the commodities fund currently recommended in the newsletter's "Situational" category) will be displayed in a Tracker portfolio in the category "Other Funds."

• Fund Performance Rankings (FPR): The FPR report is a 38-page downloadable PDF file containing performance data and SMI's momentum rankings for more than 1,600 no-load traditional funds and ETFs.

The funds included in the FPR are selected based on asset size, brand familiarity, and brokerage availability.

As with the Tracker, the FPR will continue to show the four risk categories mentioned above for domestic funds (Large/Growth, Large/Value, Small/Growth, Small/Value — both for traditional funds and ETFs), as well as the Foreign category. The FPR lists funds by many other categories as well, including Bond funds, Target-Date funds, and Sector funds. 

Check page 2 to learn how to use the FPR report. Page 3 includes an overview of the 70+ risk categories that will help you compare "apples to apples." Page 4 has explanations of the various data-column headings.

2020’s breathtaking market decline, fueled by coronavirus concerns, is long-since in the rearview mirror. From its bear-market low on March 23, the S&P 500 had gained more than 65% as of mid-December. Surely no one expected that during the dark days of February and March. Yes, the real economy still has a long way to go to recover from the devastation caused by events of the year gone by, but things are looking up — especially now that COVID-19 vaccines are available.

Unfortunately, once a storm is past, most people quickly forget how important it is to prepare for the next one. But not Warren and Pam Adams.

In 2005, Warren and Pam lost their beach house on the Gulf Coast in Gilchrist, Texas, due to Hurricane Rita. They decided to rebuild — but they resolved to make their new house able to withstand the strongest type of hurricane — a Category 5. Mindful of the painful lessons learned during Rita, they started with a more storm-resistant foundation. The columns that supported the new structure were built stronger and higher. The new house’s bottom floor was 22 feet above sea level.

Three years later, Hurricane Ike roared through the little beach community. By the time Ike was gone, so were the fire station, the post office, and most of the 200 or so homes in Gilchrist. But Warren and Pam’s house was still standing (see photo). How could that one house survive when none of the others on the Gulf Coast side of town did? It was engineered to withstand hurricane-force winds and storm surges.

Having lived through one of the most unusual years in market history in 2020, investors are wondering what 2021 holds: More record highs? A steep decline? Both?

You can find plenty of articles on financial websites purporting to tell you the “right” moves to make for the new year. But the reality is, because we can’t know the future with certainty, no investment portfolio can ever be perfectly positioned for unfolding events. A year from now, each of us will be able to look back and point to ways we could have made more money (or lost less money) than we did.

It is this human inability to make fully accurate predictions that makes it pointless to think of the “right” moves or the “right” investment portfolio solely in terms of making the highest possible profit. Instead, the “right” choices for you are ones that realistically face where you are right now, look years ahead to where you want to go, and have a high probability of getting you there.

We've updated SMI's Personal Portfolio Tracker and monthly Fund Performance Rankings with performance data through Nov. 30, 2020.

• The Portfolio Tracker: Using the online Tracker, you can personalize SMI's fund rankings, making it easier to apply our Fund Upgrading strategy to your 401(k), 403(b), or another retirement plan.

SMI's fund-performance database tracks the monthly returns of more than 25,000 traditional mutual funds and ETFs. The Tracker can filter that large amount of data and produce a concise report covering only the funds available in your plan(s).

If you're new to the Tracker, watch our introductory video.

• Fund Performance Rankings (FPR): The FPR report is a 38-page downloadable PDF file containing performance data and SMI's momentum rankings for more than 1,600 no-load traditional funds and ETFs.

The funds included in the FPR are selected based on asset size, brand familiarity, and brokerage availability.

Check page 2 to learn how to use the FPR report. Page 3 includes an overview of the 70+ risk categories that will help you compare "apples to apples." Page 4 has explanations of the various data-column headings.

In 1995, I began what has become an annual Christmas tradition: offering, as a gift to our active members, a book that has been meaningful to me in my Christian life. I do this for two reasons. First, because it’s appropriate for SMI to express appreciation for your support. And second, we want to encourage you in areas beyond the mechanics of stewardship. How we handle God’s money is important, but how we walk daily with Christ and share Him with others is life itself.

We've updated SMI's Personal Portfolio Tracker and monthly Fund Performance Rankings with performance data through Oct. 31, 2020.

• The Portfolio Tracker: Using the online Tracker, you can personalize SMI's fund rankings, making it easier to apply our Fund Upgrading strategy to your 401(k), 403(b), or another retirement plan.

SMI's fund-performance database tracks the monthly returns of more than 25,000 traditional mutual funds and ETFs. The Tracker can filter that large amount of data and produce a concise report covering only the funds available in your plan(s).

If you're new to the Tracker, watch our introductory video.

• Fund Performance Rankings (FPR): The FPR report is a 38-page downloadable PDF file containing performance data and SMI's momentum rankings for more than 1,600 no-load traditional funds and ETFs.

The funds included in the FPR are selected based on asset size, brand familiarity, and brokerage availability.

Check page 2 to learn how to use the FPR report. Page 3 includes an overview of the 70+ risk categories that will help you compare "apples to apples." Page 4 has explanations of the various data-column headings.

“David praised the LORD in the presence of the whole assembly, saying...

“‘Yours, O LORD, is the greatness and the power and the glory and the majesty and the splendor, for everything in heaven and earth is yours.... ‘Wealth and honor come from you; you are the ruler of all things. In your hands are strength and power to exalt and give strength to all. Now, our God, we give you thanks, and praise your glorious name.’”
– 1 Chronicles 29:10-13

This year has been a tough one. A global pandemic has taken nearly 1.2 million lives, leaving behind grieving family and loved ones. The financial costs are difficult to grasp fully, with multiplied millions out of work and countless businesses closed forever. Here in the U.S., the scale of the economic disruption has been unlike anything since the Great Depression.

Tough times can act as a mirror of sorts, showing us where our confidence lies. When conditions are difficult, who (or what) we turn to to make us feel better is revealing. I would argue that if we’re looking to anyone or anything other than the Lord as our hope, we’re bound to be disappointed.