A lazy portfolio is a set-and-forget collection of investments that require little or no maintenance. Most portfolios consist of a small number of low-cost funds that are easy to implement and rebalance. Lazy portfolios are designed to perform well in most market conditions, making them the perfect choice for long-term investors.
| ETF: VBR Small Value | 20% |
| ETF: VXUS INTL | 20% |
| ETF: VNQ REIT | 10% |
Lazy portfolios are designed to weather changing market conditions without requiring investors to make significant changes to their asset allocation or goals. For that reason, they can sometimes be referred to as “couch potato” portfolios.
When you build this kind of portfolio, you start by deciding which investments to include. You can then decide how often you want to invest and in what amount. Automating investments monthly, for example, can be a simple way to benefit from dollar-cost averaging over time.
You’d still need to rebalance your portfolio routinely to make sure your asset allocation continues to match up with your goals and risk tolerance. Tax-loss harvesting is something you may want to tackle once or twice yearly if you’re investing in a taxable brokerage account.
Lazy portfolios can follow an index investing strategy, which relies on index funds as the centerpiece. With this type of portfolio, the goal is to meet the market and match the performance of the underlying index. That doesn’t mean that a lazy portfolio can’t deliver above-average returns, however. It’s possible that a couch potato portfolio could outperform an active portfolio, depending on which investments you choose and how the market moves.
This kind of approach is better suited for investors who have a longer window in which to invest or those who aren’t interested in active day trading. Lazy portfolios make it possible to reap investment rewards without doing much heavy lifting to get there.