The vanilla investor

There's an old adage in financial circles that you get what you don't pay for.

Just like with vanilla ice cream, sometimes the simpliest, plainest option turns out to be the most financially delicious.

Don't be fooled by people telling you that investing is inherently complex and you have to pay someone to manage your finances.

You can easily create a simple, low cost investment strategy and manage it yourself which will out perform 90% of the strategies financial managers will try to sell you on.

Just follow these simple steps and you can largely forget about your money and what the markets are doing and go do something more interesting.

• Save at 20% of your gross income every year towards retirement.
• If you have access to a 401(k) or 403(b), try to max that out especially if you get a company match.
• Try to fill your Roth IRA or Roth 401(k) .
• If you have money left over, invest through a taxable brokerage account.
• Invest a sizable percentage of your money in risky investments such as stocks, and put the rest in bonds.
• Use a low-cost total stock market index mutual fund and a low-cost total bond market index mutual fund for your investments. You don't need anything else regardless of what you may read.
• Not sure what % of stocks your porfolio should be? Use the Benjamin Graham rule of thumb and pick the highest value between 20-80% you think you can tolerate. 60% is a reasonable starting point.
• Don't change this % no matter what the markets do. Plan to decrease your investments in stocks over time and re-evaluate your plan every 5-10 years.
• Make your investments at a reputable low cost brokerage such as Vanguard, Fidelity or Schwab. All of these are great companies so pick the one you like best.