Alternatively, Paul Nikolai, principal and director at wealth-management firm Aspiriant, suggests picking a global stock ETF, a global diversified bond ETF and supplement the investment portfolio with a small exposure to alternative assets, such as a 5% to 10% allocation to real estate or diversified commodities.
Moreover, investors would shift allocations in this “three-fund” strategy based on their own investment timeframe, overweighting stocks for a longer time horizon or moving into bonds with a shorter timeline.
Financial advisors also suggest investors should rebalance at least once a year if not quarterly.
“The biggest pitfall [for all investors who decide on an asset mix and invest accordingly]is behavioral, when people don’t want to rebalance,” Brad McMillan, chief investment officer at Commonwealth Financial Network, said in the article.
For more information on ETFs, visit our ETF 101 category.
Max Chen contributed to this article.