Chapter 3: Stay the Course, Optimize Over Time
🎯 Lesson Objective:
By the end of this lesson, you’ll be able to confidently select a low-maintenance investment portfolio tailored to your risk level—so you can automate your path to long-term wealth without second-guessing yourself.
🧠 1. Why Simple Beats Fancy
Too many people get sucked into the trap of complexity:
Trying to pick winning stocks
Tinkering with sector bets
Following YouTubers hyping “the next big thing”
But evidence is clear:
The more complicated your portfolio, the more opportunities you create to make poor decisions.
Instead, your edge as an individual investor is consistency—something institutional investors can’t always replicate due to constraints. A simple, low-cost, diversified portfolio avoids these traps:
Fewer decisions → less stress
Lower fees → more returns
Tax efficiency → fewer surprises
Think of this as your wealth autopilot—once it’s set up, it mostly runs itself.
🧩 2. The 3 Core Building Blocks of a Great Portfolio
Whether you’re 25 or 55, your portfolio is typically built from just a few simple parts:
| 🧱 Asset Class | 💡 What It Does | 🧪 Example Fidelity Fund |
|---|---|---|
| US Stocks | Gives you ownership in American companies, fueling long-term growth | FSKAX – Total US Stock Market Index |
| International Stocks | Adds global diversification to reduce reliance on the US economy | FTIHX – Total International Index |
| Bonds | Reduces volatility and provides income, especially useful near retirement | FXNAX – US Total Bond Market |
🔧 These funds are low-fee, widely diversified, and cover thousands of companies or bonds. No picking, no timing, no guessing.
🛠️ 3. Sample Portfolios by Risk Level
You don’t need 10 different funds. In fact, most people can use just 2 or 3 and be done.
🚀 Aggressive (Age 20–40 or high risk tolerance)
60% US Stocks (FSKAX)
30% International Stocks (FTIHX)
10% Bonds (FXNAX)
⚖️ Balanced (Age 40–55 or moderate risk tolerance)
50% US Stocks
20% International
30% Bonds
🛡️ Conservative (Age 55+ or low risk tolerance)
30% US Stocks
20% International
50% Bonds
You can adjust these percentages slightly depending on your comfort level, but don’t chase performance. Stick to a plan that lets you sleep at night.
🔁 4. Rebalancing: Keep It in Line
Your portfolio will drift over time as markets move.
If stocks soar, you might end up too heavy in stocks
If bonds rally, they might make up too much of your portfolio
Set a rebalancing schedule—once or twice a year is enough:
If you’re using Fidelity or E*TRADE, you can manually rebalance in a few clicks
Some robo-advisors do this automatically
Or set up an automated investing plan that sends new money to whichever part of your portfolio is lagging (this is called “cash flow rebalancing”)
✅ Key Takeaways
You don’t need a complicated portfolio to grow wealth—simplicity scales
Focus on US stocks, international stocks, and bonds
Pick low-cost total market index funds
Adjust your mix based on your risk tolerance and age
Rebalance once or twice a year—or automate it
🧠 Quick Quiz
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US stocks, international stocks, bonds.
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It avoids overthinking, lowers fees, and supports long-term success.
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Reducing volatility and generating stable income.
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To keep your asset mix aligned with your original target.
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FSKAX.
⏭️ Up Next: Let Automation Do the Heavy Lifting
You’ve built a simple, powerful portfolio. Now let’s make sure it grows—without constant oversight.
In the next lesson, you’ll learn how to:
Set up automatic contributions (so you invest without thinking about it)
Choose between broker automation, employer plans, and robo-advisors
Create a system that keeps working even when you’re on vacation, busy, or the market dips
💡 Your job is to build the system. Your system’s job is to build your wealth.