Investment strategy: simple, 15-min work per year, outperforms 90% professionals over time

Why do all that when the 10% it will not outperform is the easiest?

Put the 15% of your pay into:

1) 90% in a S&P 500 Index ETF (SPY - State Street Investments S&P 500 Index)
2) 10% in a Total Bond Index ETF (FBND - Fidelity Total Bond ETF)

Forget about International Investing as it has underperformed for decades and it’s greatly affected by currency exchange rates.

At age 60, allocate the above to 50%/50%.

Investing in bonds with a decades-long investment horizon is throwing money away.

Anyone who isn't 100% equities before the age of 50 or so lacks both heart and brain.

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Anyone who isn't 100% equities before the age of 50 or so lacks both heart and brain.

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A universal statement without knowing investor risk/return aversion lacks sensibility and financial markets historical context.

If stocks and bonds were equally risky, no one would own the bond, with its limited upside. Stock upside is potentially unlimited to entice investors who must endure their high risk, while bond upside is limited (bond ownership has no other upside beyond the full repayment of interest and principal).

On the other hand, if stocks and bonds had the same return, no one would want to own the stocks, with their higher risk.

Risk/Return:

For a personal example, I prefer $0.40, possibly will go as low as $0.30, for EVERY coin flip '

versus

A coin flip that pays $1 for heads and $0 for tails (ie, expected return of $0.50) before I will prefer the 50% risk of $0.

Why?

Wealth building objective is to have "enough" (ie, I define as: when I can do what I want, with whom I want, whenever I want, for as long as I want).

Life is far too short, and time is far too precious of a resource.

A major bonus of this investment strategy is freeing up time to enjoy life (instead of spending a large portion of it reading Mornginstar, Bloomberg, and hours on end to try to "beat the market" when 90% of financial professionals do not do over time), in doing so.

Ignoring the historical financial market context and the diversification value of bonds (Life is short and I need to run), this is a solid investment strategy to "get rich" with relatively low risk and minimal effort that many on the MT board might consider, bonds included.

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That’s it; if you can follow this simple recipe throughout your working career, you will almost certainly beat out most professional investors.

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Is this completely accurate?

Does it take into consideration the money the traders and professional investors pay themselves.

Investing and trading for a living is completely different than investing with idea that you aren't touching the money for several decades.

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A universal statement without knowing investor risk/return aversion lacks sensibility and financial markets historical context.

If stocks and bonds were equally risky, no one would own the bond, with its limited upside. Stock upside is potentially unlimited to entice investors who must endure their high risk, while bond upside is limited (bond ownership has no other upside beyond the full repayment of interest and principal).

On the other hand, if stocks and bonds had the same return, no one would want to own the stocks, with their higher risk.

Risk/Return:

For a personal example, I prefer $0.40, possibly will go as low as $0.30, for EVERY coin flip '

versus

A coin flip that pays $1 for heads and $0 for tails (ie, expected return of $0.50) before I will prefer the 50% risk of $0.

Why?

Wealth building objective is to have "enough" (ie, I define as: when I can do what I want, with whom I want, whenever I want, for as long as I want).

Life is far too short, and time is far too precious of a resource.

A major bonus of this investment strategy is freeing up time to enjoy life (instead of spending a large portion of it reading Mornginstar, Bloomberg, and hours on end to try to "beat the market" when 90% of financial professionals do not do over time), in doing so.

Ignoring the historical financial market context and the diversification value of bonds (Life is short and I need to run), this is a solid investment strategy to "get rich" with relatively low risk and minimal effort that many on the MT board might consider, bonds included.

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If someone decades from retirement needs to hold bonds to keep them from panicking during downturns and doing something stupid, then they lack both heart and brain. But assuming they have the self awareness to see that, then kudos to them for compensating for their shortcomings.

As for the rest, it's a strawman. As I've posted many times before on here, I invest the exact same amount of money, weekly, 75% into VTSAX and 25% into VWIGX. I spend exactly zero hours trying to "beat the market". Pretending as though a 100% equity portfolio requires being actively traded creates a false dichotomy.

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OP never connected 100% equity and active trading. Rather, 100% equity may be right for some and not others, depending on their risk aversion.

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OP, in his reply to me, said this:

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Life is far too short, and time is far too precious of a resource. A major bonus of this investment strategy is freeing up time to enjoy life (instead of spending a large portion of it reading Mornginstar, Bloomberg, and hours on end to try to "beat the market" when 90% of financial professionals do not do over time), in doing so.

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That's what I was replying to re: strawman.

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I invest the exact same amount of money, weekly, 75% into VTSAX and 25% into VWIGX. I spend exactly zero hours trying to "beat the market".

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I’m equally as boring with a small caveat:
I front load my retirement accounts (which has been the wrong answer the last two years, but in the majority of retrospective reviews is generally considered the best strategy. I tossed in a year’s worth of SIMPLE IRA contributions exactly 3 days before the COVID crash, and I did it again q1 of 2021 and 2022. I’ll keep it up.
I do match myself monthly and invest that automatically through my 401k (dumped the SIMPLE), but that’s a minor amount. Most of it goes in up front.
Portfolio is 60% s&p500
20% international
20% small cap (I use the Russell 2000)


I’d imagine the correlation in our portfolios isn’t 1, but it isn’t far from it, either.

I haven’t thought of an allocation change in three years.I won’t buy a bond for another 20.
We started a little late so make up for it by going a little closer to 20% of gross
Everything is Roth except for HSA (but we pay all expenses in cash, hold receipts, and plan to use it as an IRA unless the law changes drastically)

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I’m equally as boring with a small caveat:
I front load my retirement accounts (which has been the wrong answer the last two years, but in the majority of retrospective reviews is generally considered the best strategy. I tossed in a year’s worth of SIMPLE IRA contributions exactly 3 days before the COVID crash, and I did it again q1 of 2021 and 2022. I’ll keep it up.
I do match myself monthly and invest that automatically through my 401k (dumped the SIMPLE), but that’s a minor amount. Most of it goes in up front.
Portfolio is 60% s&p500
20% international
20% small cap (I use the Russell 2000)


I’d imagine the correlation in our portfolios isn’t 1, but it isn’t far from it, either.

I haven’t thought of an allocation change in three years.I won’t buy a bond for another 20.
We started a little late so make up for it by going a little closer to 20% of gross
Everything is Roth except for HSA (but we pay all expenses in cash, hold receipts, and plan to use it as an IRA unless the law changes drastically)

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Frontloading is the traditional "correct" answer, but going weekly is my one (that I'm aware of) mental crutch to keep myself from being stupid. I started noticing that when it was time to make a contribution, my brain wanted to start being cute. "Maybe if we hold off for another week or two, we can take advantage of a drop..."

Even doing monthly contributions, I found myself watching the market to see whether my buy date turned out to be "good" or "bad". So I set up weekly draws to completely crush that. Now, I don't care. Couldn't even tell you exactly when my pulls generally happen. Helps me stay on the path.

I did that about 6 years ago (not with all my money but with a chunk of it). The US total market index fund is the only one that has grown at all. The international index fund and the bond index fund have both been losers over the past 6 years.