Keeping It Simple

[goodandbadjapan]

Is there anything particularly risky or wrong with keeping your investing very simple. I've read a few blogs and whatnot where people show their investments and it all seems nicely diversified but there are also a lot of things being held. Then I look at mine and I have just a few index funds - a global, an emerging, a Japanese - and also bonds. That's basically it as far as stocks and bonds go. My reasoning is that I still know very little and don't want to step out of my comfort zone, but I do question whether or not I should be doing something else!

[N00bster]

If you own index and bond funds, you have a lot of complexity in your investments, only you don't have to care about it. The funds managers do.

You could pick individual stocks or buy different funds, but they would most likely already be covered (in different proportions) by your index funds. So what's the point besides cluttering your mind?

I used to have a Theo account where a lot of complex transactions were happening ; so many that keeping track of everything was very time consuming. After seeing that it's performance was not any better than my 2 index 1 bond funds Rakuten portfolio, I just closed it and moved the proceeds there. Now my investments perform just as well, but I have less things to think about.

Unless you are a professional investor, I believe keeping things as simple as you can is the way to go. The less you mess with your strategy, the less you will be tempted to change it and lose money when facing a downturn.

[RetireJapan]

I believe I could probably get by with one global equity index.

Despite this, I still choose to mess around with buying different things and playing with dividend paying shares, REITs, etc.

At some point I will probably give up and just put everything in the eMaxis all-country fund

[Dabitto]

If you own index and fund bonds, you have a lot of complexity in your investments, only you don't have to care about it. The funds managers do.

You could pick individual stocks or buy different funds, but they would most likely already be covered (in different proportions) by your index funds. So what's the point besides cluttering your mind?

I used to have a Theo account where a lot of complex transactions were happening ; so many that keeping track of everything was very time consuming. After seeing that it's performance was not any better than my 2 index 1 bond funds Rakuten portfolio, I just closed it and moved the proceeds there. Now my investments perform just as well, but I have less things to think about.

Unless you are a professional investor, I believe keeping things as simple as you can is the way to go. The less you mess with your strategy, the less you will be tempted to change it and lose money when facing a downturn.

I couldn't agree more! Keeping things simple will give you peace of mind and will make it more likely you stay your course. In long term investing, it is it often not that important how simple or complex your portfolio looks like. (DISCLAIMER: If well diversified! Which seems to be the case if you talk about index funds of different markets.) It is whether or not you are be able to stick to your own plan, no matter how bad or good the markets may look like, which will have the most influence on your performance. Your own emotions are probably the number two worst enemies of your long term investment goals (your number one worst enemies are probably high fees and/or untransparent fee structures). The most successful long-term investments are usually the most boring ones.

And to team up with Ben, I also have only one fund in my Tsumitate NISA account, which is the eMAXIS Slim all-country fund. I will keep pouring into this fund for at least the upcoming 5 years. I know I was talking about the Rakuten Balance Fund (70/30) in one of my previous posts, but in the end I decided not to do it, because I felt myself a little bit too young for an 30% bond allocation (I'm in my 20s). I will probably switch to this fund when I want to take less risk taking my age into account.

P.S. To adamu, if you read this , you indirectly persuaded me to buy into the eMAXIS Slim all-country fund, so thank you very much for that !

[goodandbadjapan]

Thanks all for putting my mind at ease!

[adamu]

+1, I think the KISS principle very much applies in investing, despite the industry doing its best to persuade us otherwise.

[ricardo]

Some of my pension is in a low-cost global tracker fund. Has been for 25 years and will be for another 8.

Never touched it or fiddled with it and it’s doing very nicely.

However, I may start self-lifestyling it into cash in the three years before I take it, just to protect it from any sudden downturn which could happen just before I want to take it.

Then, again, I might just ride with it to lock in any late upturns. (It’s not the main element of my portfolio).

[StockBeard]

+1 to what everyone said above. "Simplicity" is one of the points of the bogleheads investment philosophy which is a great read if you haven't seen it yet: https://www.bogleheads.org/wiki/Boglehe ... simplicity

[jcc]

Unless you are a professional investor, I believe keeping things as simple as you can is the way to go. The less you mess with your strategy, the less you will be tempted to change it and lose money when facing a downturn.

Even professional investors tend to lose to indexes on average, especially after costs.

The main reason for not going for a single global fund is that the costs are slightly more expensive than making your own(buying proportionate amounts of jp, developed, developing and regularly rebalancing).

Also boredom I guess

[captainspoke]

...
Also boredom I guess

"He deals the cards as a meditation..."