If you’re looking for an easy, hands-off way to grow your money over time, lazy portfolios might be just what you need. These simple investment strategies use one to three broadly diversified mutual funds or ETFs to create a long-term portfolio that practically runs itself.
They’re designed for investors who want low fees, minimal maintenance, and reliable performance — no market timing or stock picking required.
Here’s how lazy portfolios work, and how to choose the right one for you.
🔹 One-Fund Portfolios: The Ultimate Set-It-and-Forget-It Strategy
The simplest lazy portfolio is a target date fund, which automatically adjusts your investments as you get closer to retirement (or another financial goal).
How it works:
Target date funds hold a mix of stocks and bonds that becomes more conservative over time. Early on, they’re heavy on stocks to maximize growth. As the target year approaches, they shift toward bonds to reduce risk.
Where to find them:
-
Offered by providers like Vanguard, Fidelity, and iShares
-
Available in 401(k)s, IRAs, and many brokerage accounts
-
Look for funds labeled by retirement year, such as:
-
iShares LifePath Target Date 2070 ETF (ITDJ) – for younger investors
-
iShares LifePath Target Date 2045 ETF (ITDE) – for mid-career
-
iShares LifePath Target Date 2030 ETF (ITDB) – for those nearing retirement
-
💡 Tip: Target date funds can also be used for non-retirement goals. For example, if you’re saving for a child’s college costs in 18 years, you could choose a fund with a 2043 target date.
Cost:
-
Average expense ratio: 0.29% (as of 2024, per Morningstar)
-
You may pay even less by building your own portfolio with index funds.
🔹 Two-Fund Portfolios: Simple and Customizable
A two-fund lazy portfolio includes:
-
One stock index fund
-
One bond index fund
These funds can be U.S.-focused or global. Examples include:
-
Stock fund: Vanguard Total World Stock ETF (VT) or an S&P 500 ETF
-
Bond fund: Fidelity Total Bond ETF (FBND) or a Treasury bond ETF
How to allocate:
Start with a growth-heavy mix, like 80% stocks and 20% bonds, and gradually shift toward more bonds as you near your goal.
🎯 Ending allocation ideas:
-
60% bonds / 40% stocks — moderate risk
-
80% bonds / 20% stocks — conservative
🔹 Three-Fund Portfolios: Add Global Diversification
Want broader exposure? A three-fund lazy portfolio adds international stocks to the mix. That means you’ll invest in:
-
U.S. stock fund
-
International stock fund
-
Bond fund
Why go global?
In some years, international stocks outperform U.S. stocks. A three-fund portfolio ensures you’re not missing out on global growth opportunities.
Sample allocation:
-
55% U.S. stocks (S&P 500 ETF)
-
25% international stocks (e.g., iShares Core MSCI Total International Stock ETF – IXUS)
-
20% bonds
As you get closer to retirement, gradually increase the bond portion and reduce stocks for added stability.
🔄 How to Maintain a Lazy Portfolio
“Lazy” doesn’t mean doing nothing. Here’s how to keep your portfolio in shape with minimal effort:
✔️ Use Dollar-Cost Averaging
Invest a set amount on a regular schedule (monthly or per paycheck). This smooths out the impact of market ups and downs and helps avoid buying in at market peaks.
✔️ Rebalance Annually
Over time, your allocations may drift. Rebalancing once a year helps keep your portfolio aligned with your goals.
📊 Example:
You’re 30 and start with 80% stocks and 20% bonds. By age 70, you want 60% bonds and 40% stocks.
That’s a 1% shift per year. So, each year, reduce your stock allocation by 1% and increase your bond allocation by 1%.
⚖️ Why not rebalance more often?
Too much tinkering can trigger taxes and trading costs. According to a 2022 Vanguard study, annual rebalancingstrikes the best balance between staying on track and avoiding unnecessary fees.
Final Thoughts
Lazy portfolios are a powerful tool for building long-term wealth — no stress, no stock picking, no trying to outsmart the market. Whether you prefer a one-fund solution or want to add international exposure with a three-fund portfolio, the key is consistency and patience.
🧠 Smarter Investing Starts Here
At CreditVana, we help you make smart money moves — from building credit to growing wealth. Want to track your progress and stay in control of your finances? Start using our tools to see the full picture of your money, all in one place.
