All You Need Is a Simple, Well-Diversified Portfolio – Part I

No time to do any research or read any financial reports?  Not a problem.  You are not along.  I am one of you.  Make your investment strategy as simple as you can.  Because the last thing we need to worry about is to time the markets, to worry about FED raising interest rates, or to figure out if we are in recession or not.

All you need is a simple, well-diversified portfolio.  Whether it’s in your 401K, IRA or ROTH, all you need is several well-balanced mutual funds, which are low-cost, no-load index funds that will create a long-term winner to weather through the markets’ ups and downs.  No market timing, no active trading and no commissions.

Most of us don’t need professional planners. Why?  We are all in the markets trying to be millionaires by the time we retire.  Why waste hundreds of dollars or thousands on financial advisers or planners?  All we need is a few simple financial products, a goal, and save as much as we can, or realistically, save like hell.

Here are some simple rules that will help you create the winning investment portfolio.

1. Diversify.  Don’t put all your eggs in one basket.

Don’t chase after one single stock.  Instead, begin your investment with one fund, and then expand it to two, and then three, and more.  For example, one diversified across the S&P 500 stock index, one across the bond market index and one across the international stock index, your investment will be spread across different classes of assets in these three funds.

2. Invest for the long term.  Ignore the short term bumps.

Buy quality index funds with proven long-term track records.  No need to worry about the bumps here the there.  No need to time the markets.  Just keep investing regularly whether it’s weekly or monthly.  30 years from now, you’ll enjoy the wealth that you have never imagined.

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