This is the Simplest Investing Strategy you’ll ever Find
Unless you are a weirdo like me, you probably don’t enjoy thinking about investing and retirement planning. Between our jobs, our families and the ever-growing amount of technology around us, we have never had more things competing for our immediate attention. It’s understandable then that so few of us think about an investment and retirement strategy.
We all know it’s important to invest and save for retirement, but it’s also something we won't benefit from for decades in the future. It’s also a very daunting task to sit down and create a retirement plan. There are very difficult questions that need to be answered.
- When do I want to retire?
- How much money do I need to retire?
- How do I make sure I don’t run out of money?
- What type of investments should I consider?
Regarding how much money you need in retirement and how to ensure you don’t run out, this article will help answer those questions.
Whether you are planning for early retirement (FIRE) or traditional retirement in your late 50’s or 60’s you will need…medium.com
Another very important question is how you are going to invest the money you are saving for retirement?
This is a question that can stress people out. How much money should I put in stocks? How much should I put in bonds? what about real estate or bitcoin? For most people, considering these questions are a combination of boring and terrifying.
Most people would rather not think about these questions, so they don’t. The result of avoiding these difficult questions is that most people are not saving nearly enough for retirement.
- Nearly twice as many Americans have credit cards (76%) as have retirement accounts (47%)
- Two-thirds of Americans aren’t making any contribution to their 401(k)
- 20% of Americans that do contribute to their 401(k) are not contributing enough to receive the full employer match, which is free money being left on the table
One Stop Shop Retirement Investment Plan
If you have been spinning your wheels about how to invest your retirement savings the most important thing you can do is get off the sidelines and act.
Vanguard has created an ETF that can act as your one stop shop for retirement savings. It’s called the “Balanced Index Fund” (VBINIX). The fund answers the “how do I invest my retirement savings” question for you by allocating 60% of your investment into stocks and 40% into bonds.
What I Love About this Fund
If thinking about investing stresses you out this fund is for you.
- Every dollar you invest is diversified across the U.S Stock and bond market
- It’s passively managed which means it will mirror the returns in the stock and bond markets.
- It’s an inexpensive way to gain instant diversification with a 0.19% expense ratio
- You never need to think about it. Vanguard will rebalance the fund for you to maintain the 60%-40% stock-bond split. The only decisions you need to make are how much to contribute and when you want to retire.
If this Fund is so Great, Why Aren’t you Investing in It?
Excellent question, I’m glad you asked. As I stated at the top of this article, I am a weirdo that loves thinking about investing. For me, I like to tailor my investment strategy specifically to my situation given my finances, risk tolerance and time to retirement.
In a previous article, I talked about “why I hold 80% stocks and 20% real-estate” inside my Tax-Free Savings Account…medium.com
Given those factors, I have been investing more aggressively putting all of my retirement savings into stocks. As I get older and my retirement account grows larger, I’ll begin allocating more of my retirement funds to bonds.
The Vanguard balanced fund is best suited for folks who don’t want to think about investing.
Are there Similar Funds to the Vanguard Balanced Index Fund?
Of course! Vanguard is by no means the only company that provides one-stop-shop balanced funds. The Balance (no pun intended) put together a good list of similar funds here.
So, there you have it, the simplest way to build a diversified investment portfolio that I can think of. I’d love to hear your thoughts.
- how are you investing your retirement nest egg?
- Are you self managing your investments?
- Do you have an investment advisor?
- Did you know these balanced ETF funds existed?
- Would you consider using one?
I’d be happy to discuss in the comment section.
This article is for informational purposes only, it should not be considered Financial or Legal Advice. Consult a financial professional before making any major financial decisions.