Index funds are low fee and match the market, and that can be good or bad depending on where the market stands. The advantage of the stock market is that one can buy shares in companies of value whose stock price is below value and that have a track record of success and a future that is amenable to success. Index funds can be gamed, too, and one of mine has been a good one, the other poor (both from the same financial institution whose goal is to make money off my investments, not necessarily guarantee me any return).

It takes interest, attention, and some self education–but who has more life energy invested in your investment money than you do?

I’m working my way through Phil Town’s “Rule #1″ and “Payback” and am going to evaluate all of my investment based on value, not price, and will also invest the time to cover about five stocks. Of course, I’ll leave all of those index funds and basic mutual funds in place until I have recouped all of my investment dollars.

As with any approach, I’m taking from it what I feel works for me, but now with the internet, we can learn a lot more about companies than possible before.

How often books come to you probably depends on your reading tastes, but I tend towards the less popular.

I get “new” books so frequently that I never feel deprived.

If they do put a portion of their retirement savings back into the market, then they should consider rebalancing annually. At the end of 2008, I held my nose and forced myself to move money from my bond funds back into my stock funds to rebalance my account (I’m near retirement and want to maintain 50-50 or so). As a result of the rebalancing and the market’s performance, my balance is back to where it was prior to the economic collapse (I’ve since moved money back into bonds to rebalance again). The goal of rebalancing is to keep your investments in line with your risk tolerance. Sometimes it results in positive returns as well.

Back to Jenny: if they decide to put money back in the market, I’d do it gradually, a kind of dollar cost averaging. If they have, say $24,000 (to make the math easy) to put in the market, I’d put $2000 a month in the market. If the market moves upward significantly in the next 12 months, they would miss some of that. On the other hand, if the market moves down signficantly, they would be buying at lower prices. It’s just a way of reducing the risk a little.

Something that helps me, and might help you, is the Borders Rewards program. They send you email coupons every week for a discount (usually 30% these days) off any one item. For me, these coupons are a huge incentive to limit my Borders purchases to one book at a time – if there’s more than one that I want, I can wait until the next week, when I’ll have another coupon. If you think that buying just one book (rather than ten) would be enough to get the “urge to splurge” out of your system, it might be worth considering.

I am financially responsible. And I am a reader. I use the library on a regular basis, but yes, sometimes I still buy books. Some things aren’t available at the library or sometimes I want something for reference.

I don’t think this problem really involves some deep-seated problem. Just a lack of responsible and honest budgeting.