I have read about this before from passive investors, can anyone explain?
The porfolio is pretty simple…
90% - S&P 500 Index Fund (an fund that tracks the performance of the S&P 500 index)
investing in the S&P 500 is a way of investing in the best 500 US companies at any given time. In the long-term, the investor is likely to get exposure to the growth of the entire US economy while diversifying as well.
10% - In short-term US government securities
If an investor invests in US government bonds over an extremely long period of time, they are likely to get caught by an interest rate rise which might raise inflation. If you invest in short-term government debt, you might get caught by an interest rate rate (but it won’t have an incredibly significant effect)
And don’t forget to invest all dividends!