On the money: How to create the ultimate lazy person's portfolio

Investing should not be complicated, it should be simple, low-cost and require minimal input

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Seen the Lego sculpture that went viral a few days ago? It was 12-year-old Riley’s creation - one single long thin Lego brick titled ‘worm’ -  lapped up by social media as breaking-the-mould thinking, with predictions of Riley’s future career aplenty.

It brings to mind a saying attributed to Microsoft’s Bill Gates: "I will always choose a lazy person to do a difficult job because a lazy person will find an easy way to do it."

Riley’s simplicity reminds me of the type of person Gates is on the lookout for.

It’s the kind of outlook I crave when thinking about investing. Keeping it simple.

Truth is, it’s anything but. It’s agony, exhausting, neuro-breaking work.

You have to take on tonnes of theory, probability, information, risk and cost. And after all that, you still have to make a decision.

And there’s a seismic sense of responsibility that goes with all this repeated decision-making.It's especially crippling if a call you make turns out to lose money - more so if there’s more than just you that you need to look after.

But it doesn’t have to be this way. So. to take away headaches, frustration, stress and trauma – I give you: the lazy person’s portfolio.

It turns out such a thing exists. What is it I hear you ask. Here’s the standard blurb: it’s a well-diversified portfolio of two to 11 funds (the thought of more than four makes me anxious) that are low-cost, no-load index funds.

The idea is to invest in equities, and to spread yourself, so that something you’re invested in performs well, regardless of market conditions. Doing this via a fund takes out having to stock-pick. To counter the markets, you’d have a bond allocation too.

Key lazy-fund requirements are:

* Simplicity: you only need a handful of funds to diversify across asset classes.

* Low cost: go for the cheapest option available.

* Add bonds: this is the traditional way of mitigating risk – serving to cushion you from market crashes. The proportion depends on how much risk you can handle. A very high equities allocation is for the young and the brave is the standard mantra.

* Leave it alone: no active trading, no market timing, no commissions paid.

* A very simplistic way to decide which countries to invest in is this: If you are American, you’d be looking to having a large proportion allocated to US domestic equities – given the size and diversity of the domestic market there, this makes sense.

But if you’re not looking to the US, a more international outlook is favoured.

All well and good. But even this means having to take in information, and make decisions. Like: which model of lazy person’s portfolio should you go for? How many funds? What’s the bond versus equities allocation?

I’m afraid you’re going to have to work it out for yourself. But rejoice in this: once you’ve done it, it’s done. You do nothing; repeat, nothing. OK, you rebalance and change your bonds vs equities allocation over time. But that’s pretty minor compared with trying to time markets, pick stocks or trade.

The simplest example I have come across is a 50/50 split between global equity and government bonds. Vanguard is cited time and again in the way of fund choice. Its All World ETF is one example of a single fund offering plenty of diversification - providing exposure to developed as well as emerging markets, without you having to pick and choose anything beyond the fund itself. This is not to say that this 50/50 split is reasonable, or that any split has a specific science to it. In fact, given current market conditions, low interest rates to be precise, I’d question any bond allocation at present – because if markets tank, I can’t see how bonds can offer any gain.

The issues of bonds and allocations are fodder for another time.

Today my message is: celebrate being average. Shake off the need to be on to a winner. Just understand that you are in it for the long-run. We’re talking a minimum of 10 years – and perhaps never selling.

When you’ve decided which part of the world is your turf, take on what Nobel Economist Paul Samuelson said: “Investing should be dull.

“More like watching paint dry or grass grow. If you want excitement, take $800 and go to Las Vegas”

The investor Peter Lynch once said: “If you spend more than 15 minutes a year worrying about the market, you’ve wasted 12 minutes.”

I don’t know how long Riley spent on his creation. But I bet you it was a fraction of the time everyone else did. No one knows the others or their creations, but we know about Riley.

Turns out it pays to be lazy.

Nima Abu Wardeh describes herself using three words: Person. Parent. Pupil. Each day she works out which one gets priority, sharing her journey on finding-nima.com