6 ideas
The rational default for almost every investor is to assume they cannot beat the market, because prices already reflect the analysis of countless well-resourced professionals competing for the same information. Having an edge means consistently knowing something the market has not priced in, and even most full-time fund managers cannot demonstrate this after costs, so an individual reading the news almost certainly cannot.
An investor without an edge needs only two assets: a low-cost world equity index fund for risk and return, and short-to-medium-term government bonds in their own currency from a highly rated issuer for near-riskless safety. Risk is adjusted by changing the proportion between the two, not by picking different stocks, so every investor holds the same risky portfolio in different doses.
Holding only domestic equities is an implicit bet that your home market will outperform, which is itself a claim to an edge most investors do not have. A world index weighted by market capitalisation gives the broadest diversification at the lowest cost and removes concentrated exposure to one economy, especially important for investors in small European markets.
Fees, trading costs and taxes are the one component of investment return an investor can reliably control, and a difference of 1–2% a year compounds into a large share of terminal wealth over decades. Seen this way, a cheap index tracker beats most active funds not through skill but through arithmetic, since the average active investor earns the market return minus higher costs.
There is no universally safe asset: what counts as minimal risk depends on the currency your future spending is denominated in. For a euro-based investor it is highly rated euro government bonds, for a British investor gilts, because holding foreign government debt adds exchange-rate risk that defeats the purpose of the safe portion.
The split between world equities and minimal-risk bonds should be chosen by asking how large a loss you could bear in a bad year, using equities' historical volatility and possible drawdowns of 40–50% as a guide. The allocation reflects personal circumstances such as time horizon, income stability and emotional capacity for losses, not forecasts of where markets are heading.