Here's a Fast Way to Build a Winning Retirement Portfolio

You can find a lot of information nowadays on how to invest and diversify that it may be overwhelming for the average person. It doesn't have to be that complicated. Leave that for the hedge fund managers of the world. If you're like many people, you don't wish to hassle with stock or fund research. What you absolutely need is a simple yet efficient way to invest your hard earned dollar for retirement. A good retirement portfolio has to be diversified enough to control risk, but not too diversified so it waters down returns. It has to be simple enough to create yourself without having to think about it.Here's what you do. You put 60% of your investment portfolio in an S&P 500 index fund and put 40% of your investment portfolio in a bond index fund. Done. It works because Index funds are managed by computer and for that reason, very low cost. It's a fact that fund manager's don't beat their benchmarks very often. On top of that they charge very large fees to manage the fund. The manager's fees and costs of trading all total higher expense ratios that eat into your profits every year.
The S&P 500 Index is diversified in the united states stock market well enough for your retirement portfolio. The index includes 500 of the top US companies and contains many large blue chip companies together with smaller companies. Historically the stock market has returned 11% per annum.
The reason that you invest 40% of your portfolio in bond index funds is that bonds balance your stock portfolio. Historically, bonds flourish when stocks are not doing well and when stocks do well bonds don't prosper. Bonds help diversify your portfolio even more, lowering your risk so that you have an outstanding risk return ratio. In other words, you get the maximum returns with lower risk. Ultimately, what this means for your portfolio is you won't have quite the roller coaster ride that regular stock funds can have. Your portfolio will go down now and then, but just not quite as much as pure stocks.The nice thing about this technique is its simplicity and superior diversification. All you do is set it forget it so you won't have to do any kind of that boring research.
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