The three-fund portfolio is an investment strategy that consists of only three assets, which is usually focused on low-cost index funds or ETFs. it is often referred to as the “lazy portfolio” because it requires little on-going maintenance to generate results.
The three-fund investment portfolio is perfect for anyone who wants to put the least amount of effort into their strategy, but also be diversified. It’s especially a great approach for beginners or those not interested in monitoring their investments daily.
It helps you stay more balanced and protected in stock market corrections or bear markets. Sure, you are never 100% protected, and how balanced you are depending on the percentage of allocation to funds.
One of the safest investment vehicles out there is probably Certificates of Deposit or “CDs” as they are generally abbreviated. These will put your money to work for you over a period of time, and have very lower risk to invest.
And because there is lower maintenance to maintain when it comes to keeping your portfolio balanced, there is less you’ll need to sell and this helps you avoid any capital gains tax.
One of the maintenance items with investing in the stock market is rebalancing your portfolio. This is where you adjust your portfolio to ensure you are on your target.