A key investing lesson from Dr. Seuss:

A while back, I came across a post from James Clear related to how Dr. Seuss came to write his famous Green Eggs and Ham book.

It turns out that Theo Geisel took a $50 bet that he could write an entertaining kid’s book with only 50 words. He won. Big time.

So what does that have to do with investing?

Simple: I believe that you can build a killer investment strategy using ONLY six investments! Not only do I believe this, I implement this strategy with my clients.

Too good to be true? I don’t think so. Portfolio theory tells us that we want to build an investment portfolio by purchasing a number of assets in different classes. To me, the key classes for US-based investors are:

Key classes for US-based investors

• The US market
• The developed international market
• The emerging international market
• The real estate market
• The fixed income market

If you “mix and match” amongst these five classes, you are totally capable of building an extremely well-diversified portfolio. Furthermore, if you do your research well, you can find a SINGLE solid investment choice for each asset class—normally a mutual fund. Five classes, five securities. Good to go.

A quick test for the astute reader: Did you see the sleight of hand here? I actually suggested using SIX investments not five! So where is the other investment that I recommend/use?

It is in the US market—I like to leverage the persistent size, value and profitability premiums and introduce two US holdings.

For the “do-it-yourself” reader, I would encourage you to run some numbers using these asset classes. For the reader who is NOT familiar with asset classes and the methodology that you would/could use to build such a portfolio, I would encourage you to seek out professional help with your investments and financial planning.

Would You Like More Support?

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• Would you like to whittle your portfolio down to a handful of investments that you actually understand?

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• Do you have a well-defined Investment Policy Strategy that is used to drive your investments in support of a comprehensive financial plan?

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• Would you like to partner with someone who is used to helping people get through these struggles and (then, with confidence) implement portfolio strategies in a systematic manner while focusing on your desired outcomes?

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If so, feel free to send us an email or give us a call. We’d love the opportunity to help you find a bit more peace of mind when it comes to investing.

 

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