When strategizing how to build your investment portfolio, you need to ask yourself a few questions. What do I want out of my portfolio? How much am I willing to invest? Your answer to these questions determines how many funds you should possess. One tried and true portfolio strategy that basically earns on its own is a two-fund portfolio. If you prefer to keep your hands off your investments and let them grow on their own, this could be the recipe that will earn you the most. Here’s a two-portfolio fund strategy that often works pretty well.
60% Stocks
The stock market is popular for a reason. As opposed to the bond market, if you choose the right stock assets, your returns on stock investments could be huge. Most investors look at purchasing a Vanguard Total World Stock ETF, which covers world-renowned and established companies in the stock market as well as any new players. While it does carry a lot of risk, it’s often used by elite investors due to the massive upside.
40% Bonds
The bond market, since it’s a little safer than the stock market, acts as a great counterbalance to the stock exchange. For this, you need to use Vanguard Total Bond Market ETF. The gains are often modest in nature with this asset, but it often proves to be a reliable income stream. It exposes your portfolio to the broader bond market, focusing on the U.S., since its value is mostly affected by interest rates.
Naturally, if you are a little more risk-aversive, you can change the layout of your portfolio so that the market you’re most comfortable with supersedes the one you’re not. You could absolutely go for a 60% bond, 40% stock portfolio and still get results. The stock market can be a little riskier, but if you’re willing to invest more into it, the profits could be highly favorable.