Just-the-Basics Overview

Just-the-Basics is the epitome of simplicity. Using just three Vanguard "index funds" and one international-growth fund, JtB seeks to match the return of the overall market. Recent research indicates that the average investor badly trailed the market's rate of return over the past two decades; Just-the-Basics ensures this won't happen to you by delivering returns roughly equal that of the market. As an added bonus, it is an extremely easy, low-maintenance way to invest.

Tax-conscious investors will also appreciate the tax efficiency of Just-the-Basics. Due to its static portfolio mix, the same index funds can be held for years with only small rebalancing adjustments made each year. This allows the majority of gains to be deferred for a long time, and eventually taxed at the lower long-term capital gains rates.

HOW HAS JUST-THE-BASICS PERFORMED?

Just-the-Basics has more than held its own vs. the overall market (as measured by the Wilshire 5000, the broadest measure of U.S. stocks) — exactly what we're hoping for with an indexing strategy.

The chart below shows the cumulative effect of the small advantages achieved, comparing the growth of a $25,000 Just-the-Basics portfolio (dark shaded area) vs. the market return (light shaded area).

The overall market ended the 13-year period at $35,594 (gain of $10,594) while Just-the-Basics climbed to $40,380 (gain of $15,380). Research shows that over time, the vast majority of mutual funds (and individual investors) trail the overall market by a significant margin. As you can see, there's no reason that needs to be the case in your portfolio.

THE JUST-THE-BASICS PROCESS

1. Sound Mind Investing's new subscriber materials will help you determine the appropriate amount to invest in stocks vs. bonds, based on your personal circumstances.

2. The bond portion of your portfolio is invested in a leading bond index fund from Vanguard. The stock portion of your portfolio is divided among two Vanguard equity index funds and an international-growth fund according to a prescribed ratio. The specific funds to use are listed on our Recommended Funds page.

3. Once per year, the portfolio is rebalanced back to the starting allocations. It takes most people less than an hour per year to administer the Just-the-Basics strategy. If you're looking for a low-effort, easy to use investing strategy that doesn't sacrifice results, Just-the-Basics is for you.

It's easy — Just-the-Basics requires only a few minutes of your attention once per year, and its track record has been solid. What are you waiting for? Order your subscription to Sound Mind Investing today!