Managing investments often feels more complex than it needs to be. Old workplace plans, overlapping mutual funds, a couple of brokerage accounts and a random stock or two can turn into a mess surprisingly fast.

Morningstar’s director of personal finance, Christine Benz, calls this “portfolio sprawl” — and trimming it back can improve both clarity and long-term results.

Tame Portfolio Sprawl

Portfolio sprawl usually creeps in over time. A job change adds a new 401(k). A hot fund gets added to a taxable account. An advisor once opened an IRA that you never closed. Each step feels harmless, but the end result is a tangle that is hard to monitor. When you own too many accounts and too many funds, it becomes difficult to answer basic questions: What is your real stock-bond mix? Are you overloaded in one sector? How much are you paying in fees overall?

Merge Old Accounts

A powerful first step is consolidating similar accounts where rules allow. Many people have several old workplace plans scattered across former employers. Rolling those into a single IRA or into a current 401(k) makes tracking far easier. IRAs usually offer the broadest investment menu: index funds, ETFs and individual securities from many providers. A current 401(k) may be fine if it has low-cost, diversified funds, but an IRA often gives you more flexibility and simpler oversight.

Cut Fund Costs

Consolidation can also unlock lower expense ratios. Fund families frequently offer cheaper “tiers” once your balance in a specific fund crosses a threshold. Imagine holding twenty thousand dollars in an international fund in one old plan and another twenty thousand in a similar fund in an IRA. Combined in one place, forty thousand could qualify you for an institutional or “premium” share class with lower fees, shaving perhaps 0.10%–0.20% per year. Over decades, that fee cut compounds into real money.

Know The Limits

Some constraints still apply. While you can often roll old 401(k)s into an IRA after leaving a job, you cannot usually move your active 401(k) until you separate from that employer. And accounts are always owned individually. Even if you manage money as a couple, each person’s IRA, workplace plan and taxable account must remain legally separate, even if the investment strategy is coordinated.

Build Around Indexes

Once accounts are streamlined, the next simplifier is fund choice. Benz recommends using broad, low-cost index funds as the foundation. These track entire markets rather than trying to beat them. A very clean structure is the classic “three-fund” core: a total U.S. stock market index, a total international stock market index and a total U.S. bond market index. With just these three, you can build a globally diversified portfolio and adjust risk by changing the stock-bond mix.

Consider Target Funds

For many retirement savers, a single target-date fund can be even simpler. These funds automatically mix stocks and bonds based on an approximate retirement year, gradually shifting toward safety as you age. They are not perfect, but they are “good enough” for a large number of people and dramatically reduce decision fatigue. One fund, regular contributions, minimal tinkering.

Beware Niche Funds

Specialty funds—sector funds, style tilts, regional themes—are often what create clutter. They may seem appealing when a particular area is hot, but they tend to be more expensive and increase overlap. For example, owning both a total market index and a technology sector fund can concentrate you even further in large tech names that already dominate broad indexes. That means more complexity, more risk, and usually higher costs, without a guaranteed reward.

Mind Tax Details

When simplifying, always separate tax-advantaged accounts from taxable ones. In retirement accounts like IRAs and 401(k)s, you can generally sell and reshuffle investments without triggering taxes, making them ideal places to clean up overlapping holdings.

In taxable accounts, selling appreciated funds can create capital gains. That does not mean you should never simplify, but it does mean weighing the tax bill against the benefits of lower fees and a clearer allocation. Sometimes a gradual, multi-year cleanup is the best compromise.

Make Cash Work

Cash is part of the portfolio too, and it often gets neglected. Default sweep accounts at brokerages or traditional banks may pay very low interest. Over time, that “lazy” cash quietly loses ground to inflation.

A better approach is to park emergency funds and near-term spending money in competitive high-yield savings accounts or short-term certificates of deposit. For money you might need in the next year or two, safety and liquidity matter more than squeezing out the last bit of yield, but you can usually do far better than a minimal sweep rate.

Match Cash To Goals

Think of cash in buckets. One bucket holds your emergency fund. Another might hold money for a major purchase within a few years. A third, smaller bucket could be a “dry powder” reserve for investing opportunities. Keeping these amounts in separate, clearly labeled accounts makes it easier to know what is truly available to invest and what is earmarked for stability.

Stay Focused, Not Fancy

The real benefit of decluttering is behavioral. A streamlined setup makes it easier to see your whole picture, rebalance when needed, and avoid unnecessary trades. With fewer moving parts, you are less tempted to chase short-term performance or hop between strategies. Over time, that calm, consistent behavior often matters more than picking the perfect fund.

Conclusion

Simplifying investments is not about being boring for its own path; it is about clearing away noise so your money can work harder with less effort. Fewer accounts, broad index funds, and intentional cash choices create a portfolio that is easier to manage and cheaper to own. Looking at your current setup, where could you reduce clutter so your future self has a clearer, stronger financial foundation?