A minimalist approach to investments

When it comes to money, we often tend to over complicate investments.  

Keeping your investments simple will not only help with tracking but also give enough time to focus on your priorities.

What exactly is Minimalism

In the words of JOSHUA BECKER of becomingminimalist.com, “minimalism is intentionally living with only the things I really need—those items that support my purpose. I am removing the distraction of excess possessions so I can focus more on those things that matter most.”

A wardrobe makeover or minimising your shoes is fairly simple as compared to your finances.  Your finances are not in front of you and we often tend to look away from too.

The clutter of current investments

Apart from the tax savings avenues, most investors tend to have some stocks, mutual funds and any other “ investment plan”.
Some investments may have been voluntary, others were mostly sold to gullible investors. 

The problem with cluttered investments

The problem with having too many stocks, mutual funds and any other instruments is the cost of keeping them (fees, churning cost) and the net rate of return.

You will find that most instruments have not managed to beat the index over the long term.  In fact, if you consider management fees, your investments would have grown at a much slower pace than if the money was put in Index.

This article is specifically aimed at investors and not necessarily stock/option traders who are active in the markets for their livelihood.

How to declutter

The first step is to pay off debt.  Easier said.

At least take time to note down all the debts you in order of the highest percentage and come up with a workable plan to pay it off.

No investment can generate return greater than your the charge on your debt. 

So, the priority is to reduce debt.  Either by saving more and paying off or by earning extra.  

The next step is to take a look at all the current investments that you have. 

Real estate



Any financial plan

Employer provided plan

Tax Saving instruments

I suggest keeping a journal with a dedicated page for your finances. This helps in tracking and writing with a pen has proven to have a positive impact on your subconscious/habit pattern.

The next step is to list your financial goal.  

(Early) Retirement 



Children’s education

Any other plan

Once you have the goal ready, the next step is to arrive at a time frame.  

There are many online calculators to help you with this.

How many investments do you need?

TWO. only two as you will read below. 

Again, you should take advantage of all the tax savings instruments available to you.  However, after that, only 2 main instruments are needed for ALL your financial goals.

Instruments needed

After decluttering your financial wardrobe, all you need are 2 broad based Index ETFs.  One would be the Equity Index and the other would be Bond/Debt/Treasury Index ETF.

Broad Based Equity Index fund/ETF

Broad Based Debt/Bond Index fund/ETF

You will find that these ETF are one of the cheapest instruments in terms of fees, cost of acquisition and should be liquid enough to sell if need arises.

Probably one of the reasons why these simple products are not advertised heavily.

Strategy to apply

Having selected 2 ETS – 1 EQ and 1 Debt, it is time to deploy investments into these.  As you may know that the Equity index consists of all the stocks of the companies that are a part of the index – it brings the element of risk to it. 

To balance it out, we have Debt/Bond Index ETF.  

Since everyone is unique, giving a global percentage formula for ratio between 2 etfs may not work.  What can work is the rule of 110.  

Rule of 110 suggests subtracting one’s age from 110 and investing the resulting (%age) in the Equity ETF.  

Example: If my age is 43, i’ll have to invest (110-43) 67% of my savings in Equity ETF. and the remaining 33% in Bond ETF.

Each year, on your birthday, you will rebalance this portfolio as your age changes.  

You will notice that as you age, your Equity exposure slowly comes down and is shifted to the Debt part for security.

In Conclusion

Just having a couple of Index funds for ALL your financial goals may sound scary or even inadequate for a vast majority of people who have been trained to believe otherwise.  

But, I believe the simple path to wealth is the easiest and the best. 

You may like the below books for further reading.

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