Even armed with some basic investment knowledge, many beginners don’t think they know enough to invest money or will be able to find the right investments with stock picking\individual stocks.
If this sounds like you, then the three-fund portfolio may be for you. This is a very simple strategy to invest your money that will get you into the investing game and headed in the right direction.
What is the 3 Fund Portfolio?
For all the investment options out there, the stock market can mostly be boiled down to three main categories. Domestic stocks, International stocks, and bonds.
Using these three main categories as a guide, the three fund portfolio aims to take advantage of all three by investing in one fund that focuses on each of the investment categories.
Who is the 3 Fund Portfolio For?
Also called the “Lazy Portfolio”, this investing strategy is mostly for those of us who really want to invest, but don’t want to spend a lot of time and effort doing it.
As mentioned already, a big reason is its simplicity. Don’t mistake simple for ineffective though.
Why Use the 3 Fund Portfolio?
Just because you’re not out chasing stocks, doesn’t mean you won’t see good returns. Because the three fund investment portfolio invests in the three main areas of the stock market, you’ll see good returns no matter which sector is doing well.
Basically the equivalent to “don’t put all your eggs in one basket”, spreading your assets across the domestic stocks, international stocks, and bonds, will expose you to a broad part of the market and will keep the volatility of your portfolio at a relatively low level.