How to build a set-and-forget ETF portfolio in 2026

If you've followed the markets in 2026, the war with Iran alone has been enough to make even sensible investors feel like the next sell-off is always just one headline away.

When headlines are dominated by war, rate hikes and AI hype, it's easy to feel like you need to do something. Most of the time, though, the best move can be to do less.

Markets have often climbed a wall of worry, and headlines rarely help you build wealth. In fact, reacting to them is one of the fastest ways to sabotage long-term returns.

My rule is simple: build a portfolio you can hold through the next anxiety-inducing headline, because there's always another one coming. It is times like these that disciplined investors stay the course.

One of the most effective ways to deal with the noise is to build a portfolio that runs largely on autopilot. A simple, diversified ETF portfolio combined with a disciplined process can reduce the temptation to react to every headline.

In other words, you design the system so your behaviour doesn't hurt your long-term returns.

Start with broad diversification

The foundation of a set-and-forget portfolio is diversification.

Exchange-traded funds can make this remarkably simple. With just a handful of ETFs, you can get exposure to thousands of companies across Australia and around the world.

For most investors, a sensible core portfolio might include Australian shares, international shares and some defensive assets such as bonds or cash. Each plays a different role.

• Australian shares provide exposure to the local economy and, in many cases, income and franking credits.
• International shares offer diversification and exposure to global companies and industries underrepresented in Australia such as technology and healthcare.
• Cash and bonds provide a defensive cushion when markets are volatile.

Defensive assets won't thrill you in good years, but they can help you stay invested in bad ones.

Diversification doesn't eliminate volatility, but it helps spread risk across many markets and sectors. When one area struggles, another often performs better.

Think of diversification as your portfolio's anti-panic system.

Automate your investing

Once your structure is in place, the next step is automation.

One of the most powerful habits investors can develop is contributing regularly, regardless of what the market is doing. By setting up automatic contributions into your ETF portfolio, investing becomes routine rather than a decision you need to revisit each month.

This approach also harnesses dollar-cost averaging. When markets fall, your regular contribution buys more units. When markets rise, you buy fewer. Over time, the average price smooths out.

Automation forces you to buy when you least feel like it, which is usually when it matters most.

Rebalance once a year

Even diversified portfolios can drift over time.

If shares have a strong run, they can become a bigger slice of your portfolio than originally intended. After a downturn, the opposite can happen. That is where rebalancing comes in.

A simple annual rebalance is usually enough. Pick one date a year and reset your portfolio to your target allocation.

This forces you to sell a little of what has done well and top up what has lagged. In effect, you are buying low and selling high in a disciplined way. Crucially, you are doing it based on a plan rather than reacting to market narratives. Rebalancing shouldn't feel exciting. If it does, you're probably trading.

Ignore the story of the day

Markets produce non-stop stories. Some are convincing, many are alarming and almost all are short-lived.

The problem for investors is that getting caught up by headlines can lead to bad timing, whether that means selling after a fall or waiting for the "perfect" moment to invest, only to miss the recovery

A well-constructed ETF portfolio acknowledges that volatility is part of investing. Instead of reacting to the latest news from Iran, China or anywhere else in the world, focus on what you can control: diversification, regular contributions and disciplined rebalancing.

When the system is working in the background, you are far less likely to make emotional decisions.

And over the long term, that behavioural advantage can matter far more than being "right" about the next headline.

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