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Even a simple portfolio can be well-diversified but the temptation to tinker is overwhelming
Q I have opened accounts with a discount brokerage and built a portfolio with the following ETFs:
Put all of that together and you’ve got about 8,250 stocks in some 40 countries and well over a dozen currencies, plus hundreds of bonds of all maturities. That is about as diversified as a portfolio can be, even though you have only five ETFs. And did I mention the management fee on this comprehensive portfolio is about $5 a month for every $50,000 you invest?
Adding dividend or REIT funds will not add any meaningful diversification. But it will add both cost and complexity, since specialized funds have higher fees, and rebalancing your portfolio gets more difficult every time you add another holding.
If you managed a pension fund or university endowment you would need to diversify beyond your five-ETF portfolio. But as long as your portfolio is less than eight figures, you have everything you need in the Couch Potato.
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