A few days ago, a friend asked me to

look at his ETF portfolio and over my 19

years of professional investment

experience, both on Wall Street and here

in Europe, I had never seen anything

this ridiculous. My friend had 22

different ETFs, active and passive

funds, large cap and small cap, many

overlapping regions and strategies. This

portfolio was clearly built to maximize

fees for the private banker who

recommended it. Nobody in Europe needs

22 different ETFs, but how many do you

need for an optimal diversified

portfolio? As with all important

questions, the answer depends on who you

are. So, let me walk you through a few

different case studies of my investing

students and what they decided. And I

will share why I personally sometimes

have as many as 10 different ETFs in my

portfolio. Okay, so our first case study

is Jose. He's a 30-year-old software

developer from Spain, now living in

Berlin. He's single, financially

ambitious, and starting to invest from

zero. Importantly, Jose has a high

ability to tolerate investment risk

because he's employed by a government

agency with full unemployment

protections, excellent health care, and

he's got a supportive family back home.

So, even if things go wrong, even if the

market falls by 40% and stays down for

years, even if the economy goes bad,

Jose would not be forced to sell his ETF

portfolio to cover his spending needs.

And this means he can afford to maximize

risk and put 100% of his portfolio into

the stock market. He wants a simple,

passive, set-it-and-forget-it approach.

That is why Jose decided on a one ETF

portfolio. A lot of beginning investors

ask, "Can one ETF really be enough? I

mean, isn't this putting all your eggs

in one basket, which is supposed to be

dangerous?" Well, the thing is, a good

ETF is already highly diversified. Take

for example VWCE, the Vanguard FTSE

All-World Accumulating ETF. This invests

your money in almost 4,000 different

stocks in developed and emerging

markets. If any single company or any

global region gets into trouble, you

should still be fine. And the ETF

structure itself is designed to be very

safe. Even if the fund provider Vanguard

were to go bankrupt, your money is held

separately and that means it stays safe.

So, a single ETF can absolutely be

enough for some investors. That is why

Jose chooses a single global ETF. But

not BWCE. You see, BWCE is an

accumulating ETF. That means when it

gets dividends from stocks, it does not

pay those dividends out. It keeps them

inside the fund. But Jose lives in

Germany. Every year he gets a 1,000 euro

tax-free allowance for investment

income. So, for him, it's optimal to get

a bit of dividends every year. And

that's why he buys the distributing

version of the same ETF. Next case

study. We've got Mary, who is 55 and

lives in Ireland. Over her three decades

at a corporate job, Mary has saved up a

sizable nest egg of 300,000 euros. She

wants to invest this money and add more

to it over the next 10 years until her

retirement. Because Mary is a cautious

person, she chooses a balanced strategy

that can work both before and during

retirement, the 60/40 portfolio. In

short, Mary wants to have 60% of her

money in global stocks and 40% in

high-quality bonds, which can protect

her portfolio in difficult times. So,

how many ETFs does Mary need? Well, it

depends. You can find ETFs which give

you a pre-packaged mix of stocks and

bonds and that means you don't have to

do anything yourself. For example,

there's this one. But Mary wants to have

more control of her portfolio, so she

chooses to have one stock ETF and one

bond ETF. On the stock side, she cares

about socially responsible investing, so

she chooses this fund from Xtrackers,

which is a global stock fund that

filters stocks for their social

responsibility characteristics. And on

the bond side, Mary wants an ETF that is

going to serve as a portfolio

stabilizer. The ETF needs to include

investment-grade bonds, which means low

credit risk, and they need to be

denominated in euros so that Mary

doesn't have any unnecessary currency

risk. Reviewing all this, Mary chooses

the iShares Core Euro Corporate Bond

ETF. And this is Mary's two ETF

portfolio. For our next case study,

we've got a tricky case where the right

answer to how many ETFs is actually

zero. Meet Olga. She is 40 years old,

the owner of a successful marketing

agency, and the risk-taker. Olga is

willing to put 100% of her savings into

the stock market. Specifically, she

wants to invest in developed world

stocks. However, she's concerned about

the geopolitical tensions that Trump is

causing between America and Europe. So,

she wants to invest less in America and

more closer to home. In other words, she

wants to put a home bias in her

portfolio, where 30% is invested in

Europe and the rest is spread

proportionally around the world. Now,

the cleanest way to do this is to use

two stock funds, a developed world fund

plus a European fund. In fact, based on

what she learned from my training, Olga

calculated that if she put 83% of her

portfolio in a developed world fund and

70% in a European fund, this would give

her an overall exposure of 30% to Europe

because the global fund also includes

Europe as part of it. Olga could build

this portfolio by putting 83% into an

ETF like IEUNL, the iShares Core MSCI

World ETF, and 17% into IEUNK, the

iShares Core MSCI Europe ETF. But,

there's an important detail that I

haven't shared. While Olga is originally

from Lithuania, she now lives in Spain,

where she plans to spend the rest of her

life. And in Spain, there's a special

rule where index mutual funds allow you

to move money from fund to fund without

paying capital gains tax. And that's not

the case with ETFs. Like many Spanish

tax residents, Olga does not want ETFs

in her portfolio. Instead, she chooses

index mutual funds. She goes to the fund

platform MyInvestor and chooses these

two funds instead. Next up, let's look

at a student of mine who has six ETFs in

his portfolio and for a good reason. But

before I explain why, here's something

to consider. As you can see, choosing an

optimal ETF or index fund can be a

little bit tricky. You've got to take

into account your age, your goals, and

your tax situation. If you want to learn

how to do this well, you might benefit

from my step-by-step training program

for European investors, the index

masterclass. In the training, I take you

through everything that you need to

know, including the local tax rules in

your European country. If that sounds

interesting, follow the first link in

the description and book a call with my

team to discuss. Okay, but for the next

case study, meet Charles. He's a former

entrepreneur who sold his companies and

now has around 11 million euros in

investments. He's only 50 years old, but

he's fully retired and pursuing his

hobbies. Charles has also chosen a

typical 60/40 retirement portfolio of

stocks and bonds. So, why does Charles

hold six different ETFs? Well, it's

because he is very conservative and

protective of his wealth. Charles splits

his large portfolio among three

different brokerage houses, Interactive

Brokers in Ireland, Saxo in Denmark, and

Julius Baer in Switzerland. Julius Baer

is a private bank and it's quite

expensive, but Charles values its

reputation for customer service and

confidentiality. And at each of these

brokerages, Charles reproduces the same

60/40 stock bond portfolio, but at every

brokerage he purchases ETFs from a

different fund provider. He wants an

extra layer of diversification. So, on

the stock side, his portfolio includes

VWCE, IUSQ, and SPYY. And on the bond

side, he's got this one and this one and

this one. For most beginning investors,

this kind of six ETF portfolio would be

total overkill, but Charles' philosophy

is that no matter what happens with any

of the brokerages, no matter what

happens with any fund provider or

individual fund, he will be fine. And

because he's got a good accountant and

tax adviser, the added complexity in his

case is totally worth it. Next up, we've

got one of my most sophisticated

students with a portfolio that is on the

verge of being too complicated, but it

still makes sense for him. So, Bruno is

from Argentina, but he lives in

Switzerland. He is 35 years old and he

works in private equity. Bruno enjoys

researching

and takes a very hands-on approach with

his money. Now, for most of his

portfolio, he wants to be maximally

diversified. So, he's going to put 70%

into an all world fund that tracks

large, mid, and small cap companies

around the world. Most global ETFs only

include large and mid cap companies, so

by adding small caps, Bruno gets some

extra diversification. The next 10% of

the portfolio he puts into a gold ETF.

He knows that long-term gold is expected

to underperform stocks, but in the short

to intermediate term, gold in small

amounts can be an excellent portfolio

diversifier because gold and stocks tend

to move up and down at different times.

Then, he puts another 10% into a REIT

ETF. This is an ETF which buys real

estate investment trusts. Bruno chooses

it because real estate is a massive part

of the global economy which is

underrepresented in the stock market.

And finally, with the last 10% of his

portfolio, Bruno wants to play. He wants

to make some market bets. Right now,

he's allocating it to a clean energy

ETF. He knows that these kinds of sector

bets don't work out that well for most

people, but he believes in his own

ability to make good choices. Okay, so

this is a portfolio with four major

components. Building it would normally

take four to five ETFs, depending on

whether you can get all company sizes in

a single ETF or whether you need two

different funds. But there's another

nuance. Because Bruno lives in

Switzerland, he actually has access to

US-domiciled ETFs, not only European

ones. So, here are the funds he actually

uses to build his portfolio. Okay, but

what about me? How many ETFs do I have

in my portfolio? Well, it depends on the

moment in time. There are some days when

you might look at my portfolio and I

might have as many as 10. It might be a

mess of overlapping funds, but that is

simply because I'm doing YouTube videos

and webinars and workshops for my

students where I demonstrate buying and

selling different funds. On a long-term

basis, I have a pretty simple all-world

portfolio covering large, mid, and

small-cap stocks. That said, I do this

across multiple brokerages in different

countries to protect my family's wealth.

And at every brokerage, I often buy a

different version of the same ETF from a

different provider. As a result, I have

five major ETFs in my own portfolio.

Now, all of the case studies I walk you

through are based on my students who

built their own ETF and index fund

portfolios on their own. I never give

investment recommendations. I don't give

you the fish, I teach you how to fish so

that you can make good decisions. So,

they completed my step-by-step training

program for European investors, the

Index Masterclass, and they started

investing. They also benefited from the

country tax briefings that we provide,

which makes it much easier to choose the

right funds for your local tax rules. If

you too would like to start ETF

investing or to improve your portfolio,

I invite you to follow the first link in

the description, check out our program,

and book a call with my team to see if

you are a good fit.