Dec. 6, 2025, 3:00 a.m. ET
- Financial experts suggest a simple investment strategy is often the most effective for building wealth.
- Investing regularly in low-cost, diversified index funds is a recommended approach for long-term goals.
- Complex financial products often come with high or hidden fees that can reduce investor returns.
Options, futures, indexed annuities, meme stocks, cryptocurrency, private equity, volatlit — huh?
If you’ve heard some of those can help you build a comfy nest egg but have no idea how, you’re probably not alone, experts said. There have never been more complicated financial products that advisers swear will propel you to a comfortable retirement, but some financial experts say forget about them.
Just as Americans “Marie Kondo” their homes, they should do that with their investments. And a simple strategy is often the best for most Americans.
“Yes, it is possible to build wealth and retire comfortably with a simple saving and investing strategy,” said Alex Michalka, vice president of investment research at investment platform Wealthfront. “In fact, I’d argue that simplicity is often the most effective approach. The key is defining the right kind of simple.”
What’s ‘the right kind of simple’?
Don’t fall asleep, but boring is good when investing, said Steven Conners, founder and president of Conners Wealth Management.
“Stocks are not supposed to be exciting,” he said.
Building wealth is about consistency and discipline, Michalka added. “It isn’t about picking individual stocks based on a hunch; it’s about following proven, timeless principles to help you build long-term wealth,” he said. “You don’t need to time the market or predict the next winning stock. Instead, the best thing you can do is to invest regularly in low-cost, globally diversified index funds, and make sure the risk level of your portfolio is right for you.”
▶ Tip: To determine your risk tolerance, consider how you would feel if your portfolio lost 20% in value. “Would you see it as a buying opportunity and add more money or feel queasy? If you feel queasy, don’t take so much risk,” Conners said.
Also, remember to allocate assets based on your time horizon, financial experts said.
- For shorter-term needs, like emergency funds and savings for near-term goals, it’s best to store cash in high-yield accounts paying competitive interest rates
- For medium-term savings, U.S. Treasuries can provide higher yields and tax advantages.
- For long-term goals, keep a diversified portfolio of low-cost index funds and avoid reacting to market fluctuations.
And rebalance as you age, Conners said. “If you’re in your 30s, 40s, you can be more AI (artificial intelligence) driven, more aggressive” because you’ve got time to recover from any downturns and are still in the wealth-building stage, he said. “If you’re in your late 50s, 60s or older, make sure you make changes to focus on return of capital, not return on capital. Consider dividend stocks or municipal bonds that produce income.”
▶ Tip: “Target-date funds” rebalance automatically. They hold a mix of stocks and bonds that starts aggressive (mostly stock holdings) and gradually grows more conservative over time.
Can building retirement savings really be this simple?
Decades of data, including the latest DALBAR report, show that timing the markets or fancy investment moves, even by professionals, usually don’t beat the S&P 500 index.
Additionally, many professionals charge high fees that eat into client returns, according to famed billionaire investment guru Warren Buffett, who once won a $1 million bet on these principles.
At the end of 2007, Buffett bet hedge fund manager Ted Seides of Protégé Partners that a low-cost S&P 500 index fund would perform better than a group of Protégé’s hedge funds. Buffett’s index investment bet was so far ahead that Seides conceded the match early, in the middle of 2017 instead of year-end.
“When trillions of dollars are managed by Wall Streeters charging high fees, it will usually be the managers who reap outsized profits, not the clients,” Buffett wrote in his 2016 letter to shareholders about the bet. “Both large and small investors should stick with low-cost index funds.”
Why are there so many complex financial products?
Complex financial products might help people, but the average American can’t understand them and often ends up making costly mistakes, some financial experts said.
“The ability of the financial industry to create complicated products with hidden fees leads people to buy expensive, overpriced” products that are hard to price, track and compare. Still, companies make money on them, said John Campbell, Harvard economist and co-author of “Fixed: Why Personal Finance Is Broken and How to Make It Work for Everyone.”
The financial maze also contributes to inequity because common personal finance mistakes by lower-income, less savvy investors reduce costs for rich people, he said. The simplest examples are fees for overdrafts or late credit card payments, which make money for companies and allow them to lower prices for customers who can better manage their money and tend to be wealthier.
Even retirement savings can be confusing. There are 401(k), 403(b), ABLE accounts, IRA – Roth and traditional – and now, even Trump accounts that all have different rules and limits. “Profusion leads to confusion,” Campbell said.
“There’s a race between financial education and complexity, and complexity’s winning the race,” he said. “We need to slow down that complexity and ideally, reverse that with simple products.”
Meantime, Americans should control what they can and “keep it simple, stay the course, don’t get distracted,” Campbell said. “There’s always new bright shiny objects, but just go about your way.”
Medora Lee is a money, markets and personal finance reporter at USA TODAY. You can reach her at mjlee@usatoday.com and subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday morning.