My Lazy Investment Portfolio: Where and How Much I Invest

A lazy portfolio — or when only a few funds are selected for long-term growth — have made my life richer and easier. Take a look inside my lazy portfolio, which contains a mix of 50% domestic funds and 50% international funds. My other insights include: forget timing the market and, while you’re at it, forget about bonds.

Honestly, investing has never been scary for me. It’s very predictable over the long-term and it’s very easy to get started (I started at age 10). At first, I wasn’t good at it, but today I’m proficient at investing thanks to resources like bogleheads.org.

I’m writing about my investment philosophy and, specifically, my investment accounts outside of my employer. My employer offers a Roth 401(k) and an Employee Stock Purchase Program. But not everyone has those and I want this to be more of a general chat about investing.

Lazy Portfolios Are Cool

I refer to my investments as my “lazy portfolio” because that’s what they are commonly referred to when only a few funds are selected for long-term growth.

I have two accounts at Vanguard. One account is a Roth IRA, one is a taxable investment account. My Roth IRA is invested into one Vanguard domestic index fund with a high-risk tolerance. I’m 24. — I can wait out the market swings. I fill the Roth IRA to its max of $5,500/year as soon as possible. I have my checking account linked to the investment account and push the money over. If I sell something and have a $5,500 influx of cash, I’ll throw it in all at once.

I never time the market — anymore. I used to and I just ended up wasting time and losing money. Dollar-cost averaging is the way to go, and over the long-term, that’s how my portfolio plays out. But no one knows where the market is headed. Getting your cash in the game ASAP means you’ll begin collecting dividends and the rest is up to luck.

When my Roth IRA is topped-off, I begin chucking cash at my taxable investment account. Here, I invest in mostly international funds. That way, I can take advantage of foreign tax credits. As a general rule, domestic funds go inside a Roth IRA and foreign stocks go outside.

I like to have a mix of 50% domestic, 50% international in my portfolio. That means I have to put some domestic stocks into my taxable account to keep the proper ratio.

People talk a lot about when to rebalance funds. I don’t ever sell and buy something else to keep my balance. Instead, when my 50/50 ratio gets a bit off, I buy whatever fund (domestic or international) needs help to get back to the perfect balance.

As for bonds, I don’t wanna talk about. “If you can’t say anything nice, don’t say anything at all…”

That’s pretty much it. Lazy portfolios FTW. Actively managed portfolios FTL. Here’s a fantastic video about why you should avoid them. Watch it. I didn’t even really want to when I first watched it and I found it immensely entertaining/informative.

Exactly What I Invest In

Oh, you want to actually where my money is parked? My portfolio is about 50% VTSAX and 50% VDMAX (but VDMAX is closed to new investors, so if you’re looking to replicate my portfolio, VTMGX is pretty similar).

If you don’t have a big enough initial investment for a Vanguard mutual fund, nearly all of them have ETF alternatives.

But out of all this writing, remember to invest early: Compound interest is the eighth wonder of the world.

Note: I don’t know if it’s true but the IRS seems to keep a close watch on young people with any decent sum of money. Maybe I’m just paranoid but they seem quick to call me out when something seems fishy. But both times they’ve contacted me, they made the mistake. So if you get a letter from the IRS, don’t freak out like I did. Chances are, they just tripped up.

For more information on index funds, check out: The Best Performing Index Funds to Consider (Expenses, Performance, etc)

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24 comments

  • Great to finally read your investment strategy, Will! Great set-up and solid funds, can’t go wrong with them.

  • Thanks for sharing, Will! Out of curiosity, why do you invest in mutual funds instead of comparable ETFs?

    Paul

    • William Lipovsky says:
      First Quarter Finance logostaff

      1) You can buy fractional shares (all my money goes to work ASAP so no loss opportunity cost) ((meanwhile for an ETF, the money would either sit in your bank account or if you want to invest it faster once you have enough for a whole share, it has to sit in a brokerage account in a terrible investment like their money market fund that yields less than a bank account yet has a .17% E/R.

      2) The Vanguard mutual funds I’ve been interested in have lower E/R’s than their ETF counterparts (although it’s not a rule)

      3) ETF’s are so young, I’d rather have the longer track record of mutual funds to use as a (small) indication of future performance

      4) automatic investment is easy

      5) Dividends are reinvested same-day as they are paid in NAV

      Sorry for the delay in response!

  • I still have a lot of individual stocks, but the ones with shakier business models are long gone, the only really volatile stock I still own is Tesla, everything else is more boring like Visa, Kraft, and Disney… Stuff that should still be around after another market crash. I think that once my portfolio got to a point where I didn’t trust myself picking that many stocks I started shoveling it into the exact same vanguard index fund you mentioned. That’s my, let’s ignore this chunk of money fund. Every few months I check up on it to see how it’s growing but beyond that I just forget it’s there.

    I’ve been very lucky with individual stocks and I know that eventually my luck will run out so I’m starting to play some defense before that kicks in.

    • William Lipovsky says:
      First Quarter Finance logostaff

      I really believe in the Tesla mission so I don’t blame you for owning some of that genius!

  • Most people should be replicating exactly what you are doing (with whatever mix of funds that suits them). Lazy is the way to go! I wish were American so I had access to Vanguard straight from the source. Instead, I have to buy Vanguard ETFs. Can’t win them all!

  • I’m with you will. My investments are boring. In fact, I have stopped investing for now, besides my Roth, because I am debt snowballing. I would like to get into stocks and serious investing when my student loans are paid off, however.

    • William Lipovsky says:
      First Quarter Finance logostaff

      Warren B. quote alert!

      “Investors should remember that excitement and expenses are their enemies.”

      What do you mean by serious investing?

  • Vanguard Index funds are going to be our “go to” investment after the debt is down. LOVE the idea of the lazy portfolio: I’ve got too much else to do to be worrying about handling investments. 🙂

    • William Lipovsky says:
      First Quarter Finance logostaff

      Heyo, Laurie!

      Yeah, investments should be on autopilot. Passive>active investing. Plus, it’s smarter to spend your time earning more money to invest, rather than toying with the investments you currently have. It’s science. 🙂

  • I love your footnote about IRS. Lazy portfolios are pretty popular. I fancied you as a lending club type with maybe a bit of hand picked stocks on the side. Bonds will come back into favour when interest rates increase. I’m gonna watch that video. I didn’t watch The Night Before Christmas though because I don’t like scary movies. I hope that video doesn’t scare me too much.

    • William Lipovsky says:
      First Quarter Finance logostaff

      I used to be the lending club/individual stock picker type. Too much work for higher risk and (mayyybe) comparable gains.

      How did you like the video?!

  • Kassandra says:

    I don’t have access to 401k being self-employed so I opened a SEP-IRA along with our IRA’s but I’m glad I can choose my investments. Like you, I’m with Vanguard and keep things pretty simple.

    • William Lipovsky says:
      First Quarter Finance logostaff

      You’re so cool for being self-employed!!! I considered opening up a LLC primarily to shove money into a SEP-IRA. But then I found out you can only put $5500 towards all IRA’s. You can’t do $5500 traditional, $5500 Roth, $5500 SEP. Made me sad when I found out.

  • “The 401(k) is one of the only products that Americans buy where they don’t know the price of it. It’s only one of the only products that Americans buy where they don’t know it’s quality.”

    I feel pretty savvy when it comes to my Roth IRA (i.e. I have one and it’s doing pretty well) but I’m STILL learning the ins and outs of 401(k)s. Forwarding that video to my family… thanks for the resource!

    • William Lipovsky says:
      First Quarter Finance logostaff

      That’s funny, I almost find the 401(k) simpler since I have fairly limited fund choices.

  • Christine says:

    You’re “lucky” you invested so young, you must feel pretty confident investing now? I am terrified of it… which is silly! I’ll need to wait until we’re settled and look into how investing in NZ or elsewhere will affect my tax status before I get started!!!

    • William Lipovsky says:
      First Quarter Finance logostaff

      Yeah, I’m confident with investing. It stopped keeping me up at night years ago.

      Investing is pretty fact-driven. It’s hard for me to get worried about facts. They are what they are.

  • Lazy is definitely the way to go. Although actively managed funds could be a good thing for people who are overly emotional investors and would pull out immediately if the market crashed–sometimes it’s good to have a rational barrier between you and your money.

    • William Lipovsky says:
      First Quarter Finance logostaff

      Ooh, I like everyone to be their own emotional barrier.

      “If you cannot control your emotions, you cannot control your money.” -Warren Buffett

    • The only way active management is worth it is if you’re chasing out-sized returns as I am with my Biotech fund. To invest in an actively managed Large Cap fund is essentially throwing money away. Chase money in high risk-reward sectors or regions (I plan to make a play in SE Asia or Africa soon)