Minimalism can solve the problem of too many investment choices

Personal Finance

Proponents of the three-fund or lazy portfolio say you don’t.

Investing doesn’t have to be complicated, according to Taylor Larimore, author of several books on investing. Simpler really is better.

A three-fund portfolio uses basic asset classes via three “total market” index funds: usually bonds, domestic stocks and international stocks.

One caveat: As you start nearing retirement, you’ll want to make sure to have more than one investment account. A combination of taxable, tax-deferred and tax-free accounts is your best bet for maximum flexibility so you don’t get hit with a big tax bill when you make withdrawals in retirement.

The pros of streamlining your portfolio is the simplicity. You have less to worry about and less to keep track of, says Ryan Mumy, a certified financial planner and founder of Mumy Financial Advisors.

Newcomers to investing can especially benefit from a less-is-more approach, Mumy says. “People often over-diversify early on,” Mumy said.

The more funds you invest in, the more you’ll pay in fees. Over time, fees have the potential to cut into your earnings.

Source link

Products You May Like

Articles You May Like

US hedge fund reportedly dumps its entire stake in Barclays
JP Morgan economists now see the economy growing at just 1.5% pace this quarter
Baidu Ventures one of the most active corporate venture capital firms
Google is building a solar power project above fishing ponds in Taiwan
It’s important to have an uncomfortable ‘death’ talk with your advisor

Leave a Reply

Your email address will not be published. Required fields are marked *