My investment portfolio is a mess. It includes tech stocks from giants like Google to Chinese internet startups, with $30,000 in real estate investment trusts and over $200,000 in Facebook.

The scattered nature of my portfolio stems from an early penchant for picking stocks and experimenting. However, this approach has led to a less-than-ideal asset allocation, and rectifying it will take years due to the potential tax implications of a wholesale transfer.

So, what do I desire? Where should my money go if I were to start over?

If I had $1,000,000 to invest anew in my mutual fund portion of the portfolio, how should I go about it?

Let’s explore this, but first, a thought experiment.

Cubes and Trays

Imagine a salesperson pitching an ice cube service:

Salesperson: “I’ve got something cool for you! I’m with Cube & Tray, an exciting new service handling your ice cube needs so you don’t have to!”
You: “What?”
Salesperson: “Yes, ice cubes! Cube & Tray takes care of producing ice cubes in your home. No more filling trays. We’ve got skilled ice craftsmen ensuring you never run out of quality cubes.”
You: “Is this a joke? Where’s the hidden camera?”
Salesperson: “No joke, sir. We deliver top-quality ice. We turn water into ice. For you. The phase transition from liquid to solid isn’t simple, remember high school chemistry?”
You: “Hmm…”
Salesperson: “Didn’t think so. Remember, our service only costs 2% of your water bill.”
You: “My fridge already makes ice cubes. There’s even a dispenser on the door.”
Salesperson: “We can do better! Our experts craft the most exquisite, luxurious cubes for you.”
You: “Leave before I call the police.”

No sane person would sign up for Cube & Tray. Yet, many enroll in similar schemes to manage one of the most critical aspects of their lives—money.

Fees Devour Your Retirement

Only recently did I start paying attention to mutual fund fees, having previously dismissed them as trivial:

Hey, it’s just 1% or 2%. No big deal.

Turns out, fees are a big deal. A very big deal.

So, how would I invest one million dollars if starting over? Here’s my take on the best way to invest a million dollars.

With a million dollars at my disposal today, I’d allocate a significant portion (at least 60%) to VTSAX, Vanguard’s Total Stock Market Index Fund, which boasts a mere 0.05% expense ratio and covers the entire U.S. stock market.

I’d diversify with smaller allocations to VTIAX (Vanguard Total International Stock Index Fund) and VEMAX (Vanguard Emerging Markets Stock Index Fund), rebalancing annually and capitalizing on tax-loss harvesting during market downturns. This strategy—eschewing high-fee mutual funds—is what I consider the best way to invest a million dollars.

For those seeking simplicity, robo-advisors like Betterment are worth considering. Betterment automatically invests your funds in low-fee Vanguard funds, rebalances your portfolio, and performs tax-loss harvesting—all without any manual intervention or the need for a financial advisor. Investing has never been simpler.

Real estate investment is another avenue worth exploring for potentially higher returns, but it’s not truly passive.