couch potato portfolio

Couch potato portfolio is a bunch of stocks with an intention for a long term investment. People like us who buy stocks for really long time and are willing to leave money on the table. That means let the money play itself with only annual monitoring, then it’s the same scenario.

Some of you who react to daily ups and down in the market does not account into this kind of strategy.

Keypoints from the blog

  1. Takeaways from the couch potato portfolio
  2. Making of a couch potato portfolio

1. Takeaways from the couch potato portfolio

  • An indexing strategy which only requires annual maintaining but offers good returns for long term.
  • This portfolio have equal distribution in two assets, common stocks as well as bons ( index funds or ETF’s )
  • In this portfolio, equity allows for growth as well as debt provide protection against market volatility.
  • Couch potato strategy decline less in downgrade market but also moves lesser forward in growth.

2. Making of a couch potato portfolio

Scott burns, a personal finance writer and co founder of developed this strategy in 1991.

This strategy is for for people who don’t want to invest a lot on people for managing their portfolio on short term basis. Instead they can go for couch potato, sit for long term and pay the least account managing charges. It takes least investment and minimum set up time.

Investors have to divide their portfolio into exactly two sectors. Equity and bonds. Bonds are subjected to lowest risk, stable growth in many cases and least reaction to volatilities. This gives balance to overall portofolio which gives good returns in long term with very less efforts.

3. Weighing couch potato portoflio

In most bear markets, volatility in the market equity is the one which is in highest concern. In 2000, 2002 bear markets most of the people lost money but if we see couch potato portfolio which lost only 1/10th compared to active traders.

Long term investment is always benefecial with lowest management cost and higher returns as index take care of volatility.

Hope you got to learn everything from this blog, stay tuned for more upcoming informational blogs.


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