THE BLOG
10/04/2016 05:09 pm ET Updated Sep 17, 2017

A One Fund Investing Strategy

Complexity is the enemy of investors and the ally of brokers. If they can convince you investing is too confusing to deal with yourself, it's easier to drive you into their waiting arms. Once they have your money, they will likely inundate you with analyst's reports, "target prices", stock picking and market timing advice and their purported ability to select the next hot mutual fund manager.

If you are particularly unfortunate, they will persuade you purchase complex, high commission investments, like variable or equity-index annuities, structured notes or non-traded REITS. These investments share the common trait of generating huge commissions for brokers and likely losses or sub-par returns for you.

Legendary mutual fund manager Peter Lynch had this to say about complexity: There seems to be an unwritten rule on Wall Street: If you don't understand it, then put your life savings into it."

He's right. Wall Street touts complex investments because they generate the highest fees. Typically, these investments suffer from "chronic underperformance."

Fortunately, you have alternatives that could not be more different from complex strategies. Here are some suggestions for investing your retirement and non-retirement money in just one fund. These recommendations are for long term, buy and hold investors only.

Vanguard Balanced Index Fund Admiral Shares (VBIAX)

An allocation of 60 percent stocks and 40 percent bonds is right for many -- but not all -- investors. If it's suitable for you, consider the Vanguard Balanced Index Fund Admiral Shares (VBIAX).

The fund has an extremely low management fee of only 0.08 percent. It tracks the two indexes that represent broad barometers for the U.S. stock and U.S. taxable bond markets. It's broadly diversified, holding 3,140 stocks and 6,733 bonds. Since its inception on November 13, 2000, it has had an average annualized return of 5.75 percent.

It's a "set it and forget it" investment. It will rebalance automatically to maintain its allocation of 60 percent stocks and 40 percent bonds.

One disadvantage of this fund is that it provides no exposure to international stocks. John Bogle, the founder of Vanguard, does not endorse investing in international stocks. Other experts vigorously disagree.

Vanguard's LifeStrategy Funds

If you want exposure to international stocks, and are looking at core funds with different allocation options, consider Vanguard's LifeStrategy Funds.

There are four LifeStrategy funds. The asset allocations available are: 20 percent stocks/80 percent bonds, 40 percent stocks, 60 percent bonds, 60 percent stocks, 40 percent bonds and 80 percent stocks/20 percent bonds. It's likely one of those allocations will be suitable for you.

The average expense ratio of these funds is just 0.16 percent. The stock portion of these funds has exposure to international stocks. You can get details about holdings and performance here.

A word of caution

Successful investing on your own involves more than picking the right investments. You will need the discipline to stay the course when markets decline, as they inevitably will. You will also have to ignore most of the financial media which features a steady stream of misinformation, designed to create fear and anxiety and to enrich their advertisers -- the securities industry.

If you have what it takes, a one fund portfolio could be just the ticket for you.

The views of the author are his alone. He is not affiliated with any broker, fund manager or advisory firm.

Any data, information and content on this blog is for information purposes only and should not be construed as an offer of advisory services.