Many people think "diversification" is owning a bunch of different stocks, bonds, mutual funds and ETFs. And while this is better than nothing, there's likely a lot of overlap among these investments, where 2 or more funds/ETFs own many of the same stocks which waters down the diversification benefit.
I encounter this all the time...
I couldn't agree more with your closing idea of "Keep It Simple, Keep It Smart"
For my clients - and with my own money - I recommend just 3 ETFs:
- Total US stock market
- Total non-US stock market
- Intermediate term Treasury bonds
Broadly diversified, low cost, tax efficient and no overlap among underlying holdings.
Many people think "diversification" is owning a bunch of different stocks, bonds, mutual funds and ETFs. And while this is better than nothing, there's likely a lot of overlap among these investments, where 2 or more funds/ETFs own many of the same stocks which waters down the diversification benefit.
I encounter this all the time...
I couldn't agree more with your closing idea of "Keep It Simple, Keep It Smart"
For my clients - and with my own money - I recommend just 3 ETFs:
- Total US stock market
- Total non-US stock market
- Intermediate term Treasury bonds
Broadly diversified, low cost, tax efficient and no overlap among underlying holdings.
My attempt as "simple and smart"