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Should my portfolio have 2 funds or 12?

posted Apr 28, 2014, 7:26 AM by Tim Isbell

I occasionally write about simple investing strategies that produce solid results over the long haul, primarily using stock and bond mutual funds (mostly index). The simplest is just 2 funds while the most complex uses 10-12.

Historically the real (inflation-adjusted) rate of return on stocks was nearly 7%/year; while the real return on bonds was about 3.5%. Since these tend to be uncorrelated, they can combine into quite a nice portfolio.

This post uses a market proxy benchmark to analyze the payoff for the more complex portfolio. (Hint: it's less than you might think.) To read the post click on 2 Funds or 12?.

All the best,
Tim Isbell