Lazy portfolios are the dream of most investors.
You create an allocation and just stick to it. No switching out of one holding to another. No stock or bond selection. Just rebalance if it gets out of the targeted allocation.
I talked about this in the past as the Permanent Portfolio (Read the holy grail of investing?) and their low volatility nature.
But what I think is the attractiveness of a lazy / couch / permanent portfolio is that it is simple to execute, which is ideal for average folks holding a day job or leading a busy life.
The more complex it gets the more likely people will not stay on it.
This is where this guy comes in.
I found this post off reddit.com /r/personalfinance.
His guy tracks a few lazy portfolios, couch potato portfolio, permanent portfolio and whatever you want to call it.
He also list down the comparison versus the s&p 500 and also the annualized 5 and 10 year return.
You can take a look at it over here.
Tracking the lazy portfolio | spreadsheet here
The more I see this the more I think why we underperformed is because
- Active management when we are not good at it
- We get emotional about losses and gains
- We dwell on daily stock picking and buying stuff at the wrong time thinking we are great
- Following our advisors advice
Here you will see the portfolios doing very well in a decade that has 2 major bear markets</>
I wonder how a Singapore lazy portfolio will look like. It is likely one based on
- Sti etf
- A bond etf
Kyith is the Owner and Sole Writer behind Investment Moats. Readers tune in to Investment Moats to learn and build stronger, firmer wealth foundations, how to have a Passive investment strategy, know more about investing in REITs and the nuts and bolts of Active Investing.
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Kyith worked as an IT operations engineer from 2004 to 2019. Currently, he works as a Senior Solutions Specialist in Insurance Start-up Havend. All opinions on Investment Moats are his own and does not represent the views of Providend.
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Newbie
Friday 4th of July 2014
Thanks for sharing the link to the portfolio comparison spreadsheet. Out of the 23 portfolios, permanent portfolio fared the worst with a 5-year average return of 7% whereas almost all the others gave average returns of 10-13% pa. But all of them only gave 6-8% pa returns over a 10-year period. My takeaway is that if one can minimise exposure during giant bear markets, one would do very well in any of these portfolios .
Kyith
Friday 4th of July 2014
the question is whether you can correctly anticipate one. my experiences tell me its hard to do that. we have 2 false ones that alot thought its gonna be down again. there is a psychological bias there.
the permanent portfolio will suffer in short in a bull because they are under invested versus the others. it is rather short sighted to use that as a judge of its weakness.
not many realize giant bear like these dont happen very often.
Ed
Friday 22nd of February 2013
Hi Drizzt, so you are saying Developed market such as VEA, EFA have better track record of positive bias?
Drizzt
Friday 22nd of February 2013
hi Ed, yes, or rather emerging markets have been erratic before 2000
Ed
Tuesday 19th of February 2013
Hi, What about Emerging Market ETF such as VWO and EEM? And the bonds of EM countries such as EMLC and LEMB? I am considering the fact that EM is where we live and work etc. Or the risky part is EM goes up high and drop pretty steep?
Share with me your opinions, much appreciated. Thanks!
Drizzt
Tuesday 19th of February 2013
hi Ed, interesting consideration. VWO and EEM are good considerations, but i am still debating bond etf listed in US with all the dividend withholding tax.
the volatility should not be that much of an issue. it is the long term direction of EM. developed markets have shown in the past to be positive bias!