I'm a big believer in the K-I-S-S principle - Keep It Simple, Stupid - when it comes to investing. Indeed, I think one of the biggest mistakes of managing an investment portfolio is making the process too complex.

How do we overly complicate our investing?

	We overdiversify. The more stocks you have in an investment portfolio, the more difficult it is to follow all of your investments. Surprisingly, you don't need a portfolio of 50 stocks and 25 mutual funds and four bonds and real estate and an ostrich farm to be properly diversified. You can have decent portfolio diversification with 13-17 stocks, especially if you balance this stock portfolio with a few mutual funds. If you have 40 or 50 stocks, you are not leveraging your best investment ideas. You are watering down your investing with a lot of mediocre or bad ideas. Furthermore, the more stocks you have, the more difficult it is to invest regularly in each of your holdings. And regular investing is what truly increases your potential to create wealth. Bottom line: Simplify your portfolio by having a manageable number of investments.
	We trade stocks frequently. Frequently buying and selling stocks complicates your investment process because it forces you to constantly have good investment ideas. Unfortunately, most of us won't have that many good ideas about anything, let alone investing, in our lifetimes. If you have what you think is a good investment idea, let time work its magic on that idea. Good investment ideas have longer shelf lives than six months. The other bad thing about frequent trading of stocks is that it is not very tax friendly. If your stocks are held outside of a tax-preferenced account, every trade in which you make money will be taxed at your full income tax rate.
	We focus too intently on short-term news. Quite honestly, most daily market news is nothing but noise for long-term investors. Whether this company met its earnings, or that company's stock was downgraded by a brokerage firm has little bearing on the long-term investment appeal of the stock. If you buy and sell stocks based on today's news, you are buying and selling after the news has already been reflected in the stock price. Long-term investors who understand the importance of keeping their investment strategies simple block out the day-to-day noise in the market.
	We buy exotic investments. A sure-fire way of overcomplicating your investment program is introducing investments that are out of the mainstream. Options and futures, for example, are ways individual investors ramp up the complexity of their investment practices. Unfortunately, most individual investors are not adequately prepared to participate in the futures and options markets. These are markets for professionals, not individuals. On average, individual investors are much better off avoiding the options and futures markets.

Investing need not be rocket science. Of the thousands of portfolios I've reviewed over the years, the most successful were those where investors bought quality stocks and added to them over time. Indeed, although it's not very sexy, buying and holding 15 or 20 quality blue-chip stocks - and adding to them on a regular basis -- is a simple yet extremely effective way to potentially build wealth over time.