Paul Farrel, writing for Moneywatch, has written an article about “Lazy Portfolios” that can help small investors choose mutual funds that will beat the averages and broadly diversify their portfolios.
My favorite was the “Second Grader’s” portfolio.
|Fund||Allocation||1-year return||3-year annualized return||5-year annualized return|
|Vanguard Total Stock Market Index||60%||-6.34%||8.20%||10.74%|
|Vanguard Total International Stock Index||30%||1.64||19.11||21.21|
|Vanguard Total Bond Market Index||10%||6.40||4.08||3.67|
This simple portfolio actually has better 5-year results than many of the more complex strategies outlined in the article, and the Vanguard funds have very low minimum investments and fees. It’s another great option for small investors, especially military investors, for their Roth IRAs or their taxable investment accounts.