Overcoming Decision Fatigue in Investing
Do you ever feel overwhelmed by the constant need to make financial decisions? It’s tough to keep up with a complex portfolio while trying to stay informed about Wall Street. You might find yourself doing the bare minimum with your investments, hoping that it’s enough to meet your financial goals.
If that’s you, there’s some good news. A strategy known as KISS—Keep It Simple and Smart—has the potential to transform your lack of engagement into successful investing.
The essence of the KISS strategy is to avoid the trap of trying to pick the “best” equity fund or manager. Instead, focusing on a small number of low-cost funds that track market performance can help ensure you’re still on track to achieve your individual financial objectives.
Why is this the case? As Amy Arnott, a portfolio strategist at Morningstar, aptly puts it, “it’s very hard to beat the market.”
Evidence from Morningstar indicates that many actively managed funds struggle to outperform their passive counterparts.
The research compared after-fee performance of active strategies with a blend of index funds and exchange-traded funds.
According to their findings, “Over the 10 years leading up to June 2025, only 21% of active strategies survived and outperformed passive strategies,” they detail in an interim report regarding Morningstar’s Active/Passive Barometer.
For context, Morningstar discovered that just 7.1% of large-cap blend funds—those investing in both growth and value stocks—outperformed comparable index funds over a span of 20 years.
If most of your investments are in a workplace retirement plan, like a 401(k), you might have options for target-date retirement funds.
These funds distribute your money across various stock and bond funds, often including index funds, to optimize your allocation as you near retirement. For instance, a 40-year-old might choose a fund targeting 2050 or 2055.
As you get closer to your retirement date, these funds become more conservative, shifting from stocks to bonds.
“Target-date funds can be an excellent choice, providing diversification and asset allocation tailored to your age and retirement timeline,” Arnott explains.
If target-date funds aren’t available or you’re not keen on those offered in your plan, think about investing in three broad index funds. You can adjust your investment proportion based on your risk tolerance and timeline.
“In general, a target-date fund is likely to benefit the average person more,” she adds. “However, if you prefer a more hands-on approach, you can create a straightforward portfolio with U.S. and international stocks and investment-grade bonds. Really, just having those three asset classes is key.”
For medium-term goals, looking five to ten years out, it might be wise to invest in a high-quality intermediate-term bond index fund or a low-cost actively managed fund. This is where some active funds tend to perform better relative to their benchmarks. Alternatively, you could explore a low-cost allocation fund consisting of both stocks and bonds.
Just like having a few quality outfits makes choosing what to wear easier, adopting the KISS strategy with a couple of low-cost funds can simplify managing your investments.
A streamlined portfolio provides clarity on your investments.
This simplicity makes it easier to review your holdings annually, ensuring they align with your risk tolerance and timelines.
Moreover, it facilitates conversations with your spouse or adult children, allowing them to step in if you’re unable to manage it anymore.
“As I’ve aged and my financial landscape has gotten more complicated, I’ve recognized more and more how valuable simplicity is,” Arnott notes. “Having a portfolio that someone can easily take over when you’re not around, or if you face cognitive decline, has immense benefits.”
Importantly, a simpler portfolio can help you evaluate whether you need to ramp up your savings. After all, no matter how excellent your investments are, if your savings fall short, you won’t achieve the best returns possible.
