For a good time, put 5% of your assets in non-index "fun funds," says Vanguard Group founder and investor advocate, Jack Bogle.
But, "Not one penny more," he warns, true his prudent investing philosophy.
And be sure to steer clear of individual stocks, he continued in a recent interview with The Associated Press.
"Why would anyone buy a stock? I just don't know," he said. "I guess the only real answer is that people like to have fun. I'm all for having fun, but not at the cost of your retirement, your next home, or your children's college educations."
Investors who go into the market for the thrill of the ride probably consider Bogle a bore. After all, for decades he has championed index investing, which may be less exciting, but is also far less risky. But when Bogle speaks, investors and industry experts alike listen.
"Stock investors need the ability to withstand big losses and bear markets," said Mark Sellers, a portfolio manager and former chief equity analyst and strategist at Chicago-based fund tracker Morningstar. "Very few people have it."
Bogle, who has remained a very active commentator on the industry since retiring from Vanguard, recommends that fun-seekers put 5% towards funds that offer stock-like thrills, such as a promise to outperform the market, or a pledge to win big on a bet in one specific sector or another. The rest, he said, should be divided equally between stock and bond index funds. Those will deliver more predictable, although not necessarily better, results.
"I won't tell you it is the best strategy ever devised; I will tell you the number of strategies that are worse is infinite," he said.
Most recently, the outspoken, 70-something Bogle blasted funds for swollen executive pay packages and for not disclosing their own manager's perks clearly to fund shareholders. He asked the Securities and Exchange Commission to require all mutual fund investment companies to disclose their pay, bonus and prerequisites to shareholders.
Such measures, it would seems, might all more investors to choose the "fun funds."
And a well-run, fun fund could pay off, he said. Then again, the indexer added, so could playing the lottery.
"In the lottery, the odds are stacked against you hugely," he said. "On Wall Street, they are too."