A simple index portfolio usually has two parts: a core of broad, low-cost share index funds for long-term growth, and a bond holding to cushion falls. You pick a mix, such as 60% shares and 40% bonds, and rebalance back to it when markets move it off course. That is the whole method; the hard part is choosing a mix you can stick with in a bad year.
This guide explains the idea with illustrative mixes and dollar examples. It does not name funds or tell you what mix to hold: it is general education about broad asset types, not advice. If you are new to index funds, start with what index investing is.
Before You Build Anything
MoneySense’s portfolio guide starts with your needs, not with products: know your short-term and long-term needs, and “do not take the risk if you do not have the time to recover from your losses”.
In practice:
- Cash first. Keep an emergency fund in insured deposits. Our emergency fund calculator helps size it.
- Money needed within a few years belongs in lower-risk products such as those in our T-bills, Savings Bonds and fixed deposits comparison.
- Only long-term money goes into a share-heavy portfolio.
The Core: Broad Global Shares
The growth engine of a simple index portfolio is usually a broad share index covering many countries, rather than a single country.
Why broad: the MSCI ACWI, one global index, held 2,413 companies across 47 markets on 30 October 2026, according to MSCI. A single-country index can be far narrower: our STI ETF guide shows one with 30 companies and over half in three banks.
Even a global index is not evenly spread. The US was 64.63% of the MSCI ACWI on that date. Our guide to investing in the S&P 500 from Singapore covers fund domicile and currency, which matter for any global holding.
The Cushion: Bonds
Bonds pay interest and, for high-quality government bonds, usually fall less than shares in a crash. They also usually earn less over long periods.
Bond index funds hold many bonds at once, and individual bonds can also be bought directly. Our bond index funds guide explains the choices and the interest rate risk.
Simple Index Portfolio Mixes: Three Illustrations
Illustration only, not a recommendation. These show how the mix changes the size of the swings. Fall figures are rough: they assume the share part falls 50%, close to the MSCI ACWI’s 58.38% maximum drawdown from October 2007 to March 2009, and the bond part is unchanged. Real bond funds can also fall.
| Mix (shares / bonds) | Portfolio of S$100,000 after a 50% share fall | Fall |
|---|---|---|
| 80 / 20 | S$60,000 | 40% |
| 60 / 40 | S$70,000 | 30% |
| 40 / 60 | S$80,000 | 20% |
A higher share weight means more potential growth over decades and deeper falls along the way. Pick the row whose fall you could live through without selling.
The short version: a simple index portfolio is a global share core plus bonds, held in a fixed mix and rebalanced. The mix sets how far you fall; rebalancing keeps the mix honest.
How Rebalancing Works
Markets move your mix. Rebalancing moves it back, by selling some of what has risen and buying what has fallen. MoneySense advises reviewing and rebalancing regularly, “even if you are a passive investor”.
Illustration only. Start with S$100,000 at 60/40: S$60,000 in shares, S$40,000 in bonds.
After a strong year. Shares rise 25% to S$75,000; bonds stay at S$40,000. The total is S$115,000 and shares are now 65%. To get back to 60/40, sell S$6,000 of shares and buy S$6,000 of bonds, leaving S$69,000 and S$46,000.
After a crash. Shares fall 30% to S$42,000; bonds stay at S$40,000. The total is S$82,000 and shares are 51%. To get back to 60/40, move S$7,200 from bonds into shares, leaving S$49,200 and S$32,800.
The second case is the hard one. It means buying shares when the news is worst. Our article on investing during a recession covers keeping to rules in a downturn.
Ways to rebalance
- By the calendar: once a year, on a fixed date.
- By drift: when a part moves more than a set amount, such as 5 percentage points, from target.
- With new money: direct new contributions to whatever is under target, which avoids selling. The compound interest calculator shows how regular contributions add up.
Each sale may cost brokerage and a spread, so rebalancing very often adds cost.
Keep It Simple
More funds do not mean more diversification if they hold the same companies. Two or three broad holdings can cover what many people need. Our list of index investing mistakes covers overlap.
What To Do Next
- Write down your time frame and the largest fall you could sit through, then choose an illustrative mix that fits.
- Read the prospectus and product highlights sheet of any fund you consider, and check its total cost.
- Set a rebalancing rule now, before markets move.
- Check that your broker or platform is listed in the MAS Financial Institutions Directory.
- This is general education about broad asset types, not advice on your situation.
