Rich_by_the_Bay
Moderator Emeritus
I'm unsure about how to find the "sweet spot" where diversification is broad enough to reflect the major noncorrelated sectors, yet simple enough to manage with ease -- the point of diminishing returns, so to speak. So, I read lots of articles on the web, most of which deal with how many individual stocks (20 or so give you almost all the diversification you need).
I am more of a mutual fund index investor. Just not sure where slicing and dicing becomes a waste of effort or worse.
To explain what I mean, here are two portfolios (let's forget bonds for now). The percentages are just as an example, could easily be modified.
The KISS Portfolio
---------------------------
Total Stock Market Index 50%
Total International Stock Market Index 25%
REIT Fund 25%
The RONCO Portfolio (for the Ron Popiel fans out there)
-----------------------------
Large Growth 10%
Large Value 10%
Small Growth 10%
Small value 10%
Midcap 10%
REITs 20%
Commod 5%
Total International 20%
Emerging International 5%
I'm interested in whether the total returns over time would really be demonstrably better in one or the other give the same long horizon, annual rebalance, "let the dogs run" approach. I have moderate volatility tolerance for this bucket part of my portfolio.
So, how basic would you let yourself go and still feel comfortable that you were well-diversified and could rebalance effectively? Would anyone feel that the KISS apporach is perfectly acceptable? Other suggested packages?
I am more of a mutual fund index investor. Just not sure where slicing and dicing becomes a waste of effort or worse.
To explain what I mean, here are two portfolios (let's forget bonds for now). The percentages are just as an example, could easily be modified.
The KISS Portfolio
---------------------------
Total Stock Market Index 50%
Total International Stock Market Index 25%
REIT Fund 25%
The RONCO Portfolio (for the Ron Popiel fans out there)
-----------------------------
Large Growth 10%
Large Value 10%
Small Growth 10%
Small value 10%
Midcap 10%
REITs 20%
Commod 5%
Total International 20%
Emerging International 5%
I'm interested in whether the total returns over time would really be demonstrably better in one or the other give the same long horizon, annual rebalance, "let the dogs run" approach. I have moderate volatility tolerance for this bucket part of my portfolio.
So, how basic would you let yourself go and still feel comfortable that you were well-diversified and could rebalance effectively? Would anyone feel that the KISS apporach is perfectly acceptable? Other suggested packages?