We believe there is a very simple answer to what can be a very complicated process.  The simple answer is to buy a small number of Exchange Traded Funds (ETFs) that have been selected to:

  • Match your risk profile
  • Consideration your time horizon
  • Provide significant diversification

While the answer may be simple, there is some heavy-duty math (like PhD Level stuff) required to put that into practice.  That’s why we formed a business relationship with Morningstar Investment Management LLC to help us.  The team at Morningstar Investment Management has designed target portfolio models that we use to determine our investment mix and select the ETFs for our portfolios. We also designed a sleek mobile app that makes it easy to match your preferences to these different portfolios with straight forward questions and just a couple of taps.

Our portfolios currently have a target of 7 ETFs each.  For shorter-term investments, we recommend portfolios that rely more heavily on interest paying instruments (bonds), which tend to have smaller price movements. For longer-term investments, we recommend portfolios with a higher percentage of equities (stocks).  While equities fluctuate more in the short term, on average they should have a higher rate of growth over the long run.

Investment Portfolio Asset Allocation

The chart above shows the balance we might recommend for a customer with a 3- to 5-year investment time period.  This type of portfolio would be suitable for a customer who seeks income and stability in the near term while also looking for some level of growth in the portfolio over the longer term.

While the individual ETFs in the portfolio often have names that can be intimidating, like Vanguard Total Market Bond ETF, they are amazingly efficient investment instruments. With the 7 ETFs purchased for the portfolio described above, an investor is actually invested in over 10,000 different stocks and bonds.

So how do we recommend you start investing in the stock market?  Now that’s even simpler.  Download the Evati app, open an account with us, and you will be well on your way!

Morningstar Investment Management LLC is a registered investment adviser and subsidiary of Morningstar, Inc. Morningstar Investment Management is not affiliated with Evati, Inc. or Evati Advisory Services, LLC.