Lazy Portfolios for the Time-Challenged Investor
Often, attendees at my workshops complain that their portfolios suffer from a lack of time and attention. Most are under the impression that a successful investing strategy requires an inordinate amount of time "invested" in learning about investing, as well as in managing their investments.
That's just not true. With the proliferation of mutual funds and exchange-traded funds (ETFs), even the most time-challenged investor can begin and sustain a fine investing program. Once the initial set-up - choosing your funds and ETFs is done - your portfolio can be maintained with just a little effort. And a fund/ETF portfolio is perfectly suited for long-term investing (which I strongly advocate). As well, it's a simple approach, and simple is almost always better than complicated (especially for the individual investor).
But that first step in determining your portfolio allocation is very time-consuming, and that's why I have been paying close attention to the recent media coverage about "lazy portfolios." I know that most of the investors I talk with would really like some help in choosing a complete portfolio, not just a fund and ETF, here or there. And the lazy portfolio seems to be an ideal solution.
A lazy portfolio is simply a diversified group of various mutual funds and ETFs that practice tax-efficiency and have low costs.
And they can be comprised of just about any type of portfolio strategy to meet your needs. You might select a portfolio featuring an array of sectors; a range of dividend-paying, growth and value plays - or any one of these strategies; broad market indexes; various small-, mid- and large-cap positions; a mix of fixed and equity investments; or specific international and domestic indexes. You name your strategy - and you can easily design (or copy someone else's!) a lazy portfolio that will work for you.
All you have to do to find one is to type "lazy portfolio" into your favorite Internet search engine. When I did that, I got 1.02 million selections! However, if you would like to take a shortcut, here are a few that we have found that look pretty interesting:
WisdomTree Lazy Portfolio - Focusing on global investing, dividends, and return-enhancing investments:
20% DEFA Index (DWM)
15% Total Dividend Index (DTD)
15% Earnings Index (EXT)
10% High-Yield Equity Index (DHS)
10% DEFA High-Yield Equity Index (DTH)
10% International Energy Sector (DKA)
10% International Consumer Non-Cyclical Index (DPN)
10% Low P/E Index (EZY)
For more information: www.wisdomtree.com
Scott Burn's Lazy Portfolios - A financial writer, Scott Burns has come up with a series of lazy portfolios to target almost any investor. Here are just a couple of them:
Margarita Portfolio - For domestic, international exposure and interest rate protection
33.3% Vanguard Total Stock Market Index Fund (VTSMX)
33.3% Vanguard Inflation-Protected Securities Fund (VIPSX)
33.3% Vanguard Total International Stock Index Fund (VGTSX)
Six Ways from Sunday Portfolio - For domestic, international, real estate, bond, and energy exposure and interest rate protection; designed to provide equity appreciation and income:
16.65% Vanguard Total Stock Market Index Fund (VTSMX)
16.65% Vanguard Inflation-Protected Securities Fund (VIPSX)
16.65% Vanguard Total International Stock Index Fund (VGTS
16.65% Vanguard REIT Index (VGSIX)
16.65% American Century International Bond Fund (BEGBX)
16.65% Vanguard Energy (VGENX)
For more information: http://www.dallasnews.com/sharedcontent/dws/bus/scottburns/columns/2007/vitindex.html
Ben Stein's Long-Term Portfolio - Exposure to the broad markets, emerging markets, real estate, small stocks and cash; designed for appreciation and income:
30% Fidelity Spartan Total Market Index (FSTMX) or Total Stock Market ETF (VTI)
15%-20% iShares MSCI EAFE Index (EFA)
10% iShares MSCI Emerging Markets Index (EEM) or Emerging Markets 50 ADR (ADRE)
10% iShares Cohen & Steers Realty Majors (ICF)
10% iShares Russell 2000 Value Index (IWN)
15% Cash
You may also want to check out his 2-ETF retirement portfolio.
For more information: http://finance.yahoo.com/expert/archive/yourlife/ben-stein/1
Bill Schultheis' Coffeehouse Portfolios - International, domestic equity and income exposure:
33.3% Vanguard Total Stock Market (VTI)
33.3% iShares International MSCI EAFE Value Index (EFV)
33.3% iShares Lehman Aggregate Bond (AGG)
Bill also has designed several additional lazy portfolios, with a variety of ETFs and funds with more narrow focuses.
For more information: http://coffeehouseinvestor.com/Advisor.htm
If you need a jump-start to your investing life - or just want to carve out part of your portfolio for a nice, easy investment strategy - becoming "lazy" may just be the thing for you!
This concludes this week's issue of Financially Fit. We encourage you to visit our website to review past issues of Financially Fit:
http://www.brokeradviser.com/newsletter.cfm
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About the Author
Nancy Zambell, Contributing Editor to BrokerAdviser.com's Financially Fit, has enjoyed a diversified career in the financial services industry.
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