How to build a couch potato portfolio + MORE Sep 3rd

Though the investment industry now offers a few different ways to create a couch potato portfolio, they all have a few things in common. First, they all adhere to the ethos of passive investing, such that you end up with broad exposure to the stock and bond markets—and possibly other asset classes, too.

They are also liquid, meaning you can (if you wish) buy and sell investments on your own timetable (in contrast to, say, guaranteed investment certificates and private assets). At the same time, the greatest benefit comes from a long-term, buy-and-hold strategy. Your returns will vary from year to year, but all you have to do is average a 7% return over 10 years to double your money—which is more than most advisors and actively managed mutual funds do for their clients.

Finally, a couch potato portfolio should be highly cost-effective. By taking over responsibility for asset allocation, you are saving yourself the cost of portfolio management. Even with a modestly priced robo-advisor, this typically costs 0…

We know: it’s not the sexiest-sounding way to invest. But buying a diversified handful of index funds, then letting them do their thing, and checking in only once or twice a year to rebalance your holdings is a surprisingly effective (and low-cost!) way to manage your money. That’s why MoneySense has been showing Canadians how to build so-called “couch potato portfolios” for almost as long as it’s been possible—more than 20 years.

The key enabler for most of today’s couch potato investors was the popularization of index-tracking exchange-traded funds (ETFs). But you can also use mutual funds—and today, there are ETFs that will hold and rebalance whole portfolios in a single investment, allowing investors to be more sedentary than ever.

With this MoneySense guide to the couch potato portfolio, we aim to help prospective couch tycoons sort through the options and create the ideal cost- and labour-saving portfolio.

Are you a couch potato investor?

The couch potato style suits a particular type of investor…