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Opinions and Characteristics of “Lazy Wallets”

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Opinions and Characteristics of “Lazy Wallets”

Co-founder of Affari Miei

5 March 2024

If you are interested in investments you have most likely heard of Lazy Portfolioa very particular approach to investing that has certain characteristics and which we will now try to understand together.

In recent years more and more people are approaching investments thanks to a greater diffusion of financial instruments and also to the diffusion of approaches and culture regarding the world of finance, even if there is still much to improve.

Today we will look at them together characteristics of this approach and we will delve into all its facets.

Enjoy the reading.

This article talks about:

Lazy Portfolio: what does it mean in detail?

In recent years, the portfolio management has become increasingly accessible even for less experienced investors, thanks to the spread of approaches such asLazy Portfolio“. These wallets offer a simple method and a low maintenance to invest in the long term. But what exactly are the Lazy Portfolio and what strategies do they involve?

These are portfolios made up of a small number of low-cost funds or ETFs, but whatever they are called “lazy wallets”?

They have this particular name because they were created to be long-term financial investment instruments, which do not require particular attention and maintenance, since they require few rebalancingmaybe once or twice a year.

Their objective is to minimize the investment management effort, although obviously this is not a solution that can be suitable for all investors and all people who want to invest and are looking for a portfolio that allows them to obtain returns .

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The investment approach

The approach of this investment is type staticwith only some correction mechanisms.

But who are they recommended for? Especially to those who are perhaps beginners, to those who are trying to understand how to invest and are looking for how to get started, and above all to those who do not yet have enough experience to be able to manage their own investments.

It is therefore one form of passive investment designed precisely to minimize the time and effort needed to manage a portfolio.

The investment horizon for this portfolio is more than 10 years.

The strategies to be implemented

The lazy portfolio strategies they focus on asset allocation, or how to distribute your investments across different asset classes.

But what are the strategy? We see:

Diversifications: investing in a variety of assets such as stocks, bonds or commodities which allows you to reduce the overall risk of the portfolio;
Periodic rebalancing: periodically it will be necessary to reallocate the funds between the different asset classes to maintain the desired allocation;
Low commission and costs: use low-cost mutual funds or ETFs that allow you to reduce management costs to a minimum.

The strategies that will be implemented refer to curbing volatility and containing risk.

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Some examples of lazy portfolios

To understand better and get a more in-depth idea, let’s look at some examples of lazy portfolios:

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60/40 portfolio: this portfolio allocates 60% in stocks and the remaining 40% in bonds;
ETF 40/40/20: made up of 40% shares, 40% bonds and 20% raw materials;
Coffeehouse portfolio: is a combination of stocks and bonds designed to generate profit and minimize risks through 7 ETFs;
Golden Butterfly: composed of US stocks and bonds and 20% gold; Portfolio All-Weather: This portfolio seeks to protect the investor from all market conditions by allocating a fair percentage between stocks, bonds and commodities.

When are they convenient?

I Lazy Portfolio they are particularly suitable for those who are looking for a long-term return and do not want to have too much stress in managing the investment and above all do not have the time necessary to actively manage their portfolio with short-term trading operations.

They are also suitable for those who do not have the knowledge or interest to analyze the market in depth.

Additionally, Lazy Portfolios are often recommended for investors who want to avoid the risk of making bad market moves in response to emotional events or short-term fluctuations in asset prices.

They offer a simple option ea low cost for investors who want to earn solid returns over the long term without having to constantly monitor the market or make frequent trades adjustments to their wallet.

Final opinions of Affari Miei

We have seen all of them in detail characteristics of this type of investment and how it works.

Now we need to understand something more about how it works and above all who it is suitable for or not.

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Attention, first of all I would like to warn you: said like this it would seem to be a simple investment and within everyone’s reach but, since we always talk about money and savings, it is appropriate to consider that there are risks that we must know and control.

Furthermore, I want to tell you something: in my opinion it shouldn’t “pass the message” that this investment does not deserve attention, just because we have seen that it requires little maintenance.

The concept of “lazy portfolio” it is above all a way of acting rather than a product category: we ourselves use this approach for our own model portfolios which are designed for people who wish to carry out relatively few operations without venturing into speculative activities and, above all, controlling the risks.

If everything you have read was difficult for you, I advise you to start with the basics: here you will find a general guide to ETFs with everything you need to know.

Before saying goodbye, I would like to suggest that you read some articles that might interest you, about ways to invest today:

Happy continuation on Affari Miei, see you soon!

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