Many investors own loads of stocks and bonds to make sure they are fully diversified. But for average investors, just three mutual funds/exchange-traded funds (ETFs) will do, some experts say.

"In this atmosphere, where it's so easy to get drawn into complicated and niche areas of the market, this is a good way to be disciplined," Abby Woodham, a fund analyst at research firm Morningstar, told The Wall Street Journal.

The key is to find mutual funds and ETFs that provide exposure to U.S. stocks, foreign stocks and U.S. bonds.

Editor's Note: Tiny Loophole Found in 70,320 Page IRS Tax Code Could Pay $87,500

For instance, followers of Vanguard Group founder John Bogle, an avid advocate of index funds, recommend a troika of the Vanguard Total Stock Market Index fund, Vanguard Total International Stock Index and Vanguard Total Bond Market Index, The Journal noted.

Those three funds track more than 15,000 stocks and bonds around the world.

One way to approach those funds would be to place 40 percent in the U.S. stock offering, 20 percent in the international stock fund and 40 percent in the bond fund. But investors should weight the three funds based on their investment time horizon and risk tolerance.

Those weightings, rebalanced annually, returned an average of 7.14 percent a year over the last decade, according to The Journal.

That almost matches the 7.16 percent return for the Standard & Poor's 500 Index during that period. And it easily beats the 4.52 percent return of the Barclays U.S. Aggregate Bond Index.

"The biggest pitfall [for all investors who decide on an asset mix and invest accordingly] is behavioral, when people don't want to rebalance," Brad McMillan, chief investment officer at Commonwealth Financial Network, told The Journal.

Financial author James Picerno says rebalancing is the key issue for a three-fund strategy.

"You can do quite well if you hold a relatively diversified set of assets and you rebalance intelligently," he writes on his blog, The Capital Spectator.

"Assuming you don’t go off the deep end with the initial asset allocation, the lion’s share of how your investment strategy fares will be determined by how and when you rebalance. And, yes, that’s still true for a three-asset class portfolio."

Editor's Note: Tiny Loophole Found in 70,320 Page IRS Tax Code Could Pay $87,500