I’d also encourage investors to look into holding an REIT fund in retirement accounts, such as Vanguard REIT Index (VGSIX; 0.26%). For why REITs make sense in retirement accounts, see this post. Therefore, the Target Retirement funds are preferable for taxable accounts (ignore the year and simply examine the stock/bond percentages that match your desired allocation). 100% in the Vanguard Target Retirement 2050, you can see the similarities and negligible difference from a composition standpoint (note that tax ramifications should still be considered, however). I’ll take it even one step further and suggest how you can be truly diversified using one fund from the options in Vanguard’s LifeStrategy or Target Retirement Funds. Your stock portion should be in taxable accounts and the spillover (hopefully, it’s significant) should be in retirement accounts. Hold bonds in retirement accounts, if at all possible, due to the tax ramifications. All-Encompassing Bond Fund – Stocks will be the majority of your portfolio for most of your life, but bonds are necessary to reduce risk and increase diversification at all times.

The allocations of stock to bonds obviously shift as you age, so that should be taken into consideration. Bond funds and REITs are more tax inefficient than stock funds and are thus best held in tax-advantaged accounts, while the stock portion should be in your taxable accounts. The income is more reliable and they have still returned around 7% since 1998 (beating stocks). These have historically outperformed large-cap stocks, but you must realize that there is increased risk involved. Motianey is an engaging writer and “Supercycles” should be considered a must read for economic junkies. Now that we have a basis for understanding the philosophy and logic behind simple, dollar-cost averaged low-cost index fund investing for the long-term, we can give a more detailed layout of what your holdings might look like. While not an exhaustive list, what follows are a couple of the items on my investment checklist – things I would check before investing.. Ultimately, investment is an art and there are really no rules that can work at all times. Money market fund – It’s essentially a cash account, but there are times when you need to take advantage of buying opportunities or have extra emergency cash available.

Most of the new styles of scuba fins are designed by using technical and involved mathematical angles and engineering so that the fin works to the divers advantage as far as efficiency and ease of use. This is a built-in advantage of SIPs. Yes, that’s right – just one fund that won’t require any re-balancing. Waste Management – one of the big companies which offers a comprehensive waste management and environmental services in the US. Small-Cap Fund – In order to capture the growth companies and “the next Microsoft” you need to have some money allocated to a small company fund. Today, all companies have an online website, through which you can register for shares and funds. In an article linked on his website, he shows how his second grade son took on Wall Street with this simple approach. For principles of tax efficient fund placement, see this article. You can slice and dice funds as you see you fit based on your own personal circumstances or keep a more simplified approach.

For a discussion of eight pre-screened portfolios using the low-cost index fund approach, see my article on Lazy Portfolios. This is another decent article on the happenings in Ireland, which, for those not familiar, faced a huge real estate bust and decided to bail out the bank bondholders by sacrificing future generations. Greece’s central bank activated the Emergency Liquidity Assistance (ELA) program to help its struggling banks stay afloat. The LifeStrategy funds have a similar principle in that they invest in a variety of Vanguard index funds with a single fund. I’d encourage the use of a single Small Value fund, like VISVX, as reported in my Lazy Portfolios post, but you could just as easily have neither. The portfolios vary from 3 funds to 11 funds and offer investors a great resource for do-it-yourself portfolios. Using Morningstar’s free X-Ray tool is a great way to analyze your portfolio holdings. It’s really a great option if you can’t handle keeping track of more than that.