There are people out there, and we’ve met plenty of them, who spend hours every week sweating over their investments. Some of these investing junkies actually seem to enjoy reading balance sheets and analysts’ opinions.

Most of us, though, aren’t like that. We want good performance with low risk — but between our jobs and our families we don’t have a lot of time to follow the market.

If that sums up your situation, MoneySense has the perfect portfolio for you. It will not only beat the performance of most people who spend hours on their investing, it will beat about 80% of the money managed by professionals. Best of all, like an ideal houseplant, this portfolio thrives on neglect. It performs superbly even if you pay attention to it for only 15 minutes a year.

We call our approach the Couch Potato strategy. It’s based on the simple fact that the market is smarter than any single individual. If the market says a stock is worth $20 a share, chances are the stock is probably worth somewhere close to $20 a share.

This may surprise you. Most market commentary is geared to making you believe that there are scads of undiscovered bargains out there. But think about how the world works and you realize how unrealistic that proposition is.

On any given day, thousands of highly paid, highly competitive mutual fund managers and pension fund experts are scouring the market looking for bargains. When they think a stock is undervalued, they buy it. All that buying forces up the price of the stock until it’s trading for what most investors believe is fair value. Similarly, if the pros believe a stock is overvalued, they sell it and keep on doing so until the stock meets their definition of fair value. Thinking that you’re going to beat the system and turn up lots of great, undiscovered stocks is a bit like thinking you can wander into a thoroughly explored wilderness and spot a gold mine that all the professional geologists just happened to overlook.

The best proof of the market’s intelligence is that even the professionals can’t keep pace with it. Over any period of a few years or more, about 80% of actively managed mutual funds lag behind the market. They’re weighed down by the salaries of their managers, by research costs, by marketing expenses, by fees paid to financial planners, by trading expenses.

Here’s where the Couch Potato strategy comes in. It’s based on a simple idea: if active management doesn’t beat the market, why not dump it and buy the market instead?

You buy the market by investing in a small collection of low-cost index funds. These funds passively follow the ups and downs of market indexes, such as the S&P/TSX Composite index of Canadian stocks or the Standard & Poor’s 500 index of U.S. stocks. Your exact mix of funds can vary (and we’ll get to the details in just a second), but the key advantage of the Couch Potato strategy is that it gives you wide diversification among hundreds of stocks and bonds at rock-bottom cost.

Why is this so important? Because low costs are crucial when it comes to investing success. Most investors pay about 2.5% of their assets each and every year to invest in actively managed mutual funds. On the other hand, you can become a Couch Potato for 0.5% a year or less. The couple of percentage points you save go directly to your bottom line and can have a tremendous effect over time.