The Three Fund Portfolio

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Re: The Three Fund Portfolio

Postby jay22 » Fri May 03, 2013 9:50 am

I emailed the link to this thread and Ferri's core four thread to a couple of my friends who were paying thousands of dollars to investment firms to manage their assets. Since then, they have fired their advisers and haven't stopped thanking me.
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Re: The Three Fund Portfolio

Postby abuss368 » Fri May 03, 2013 1:02 pm

jay22 wrote:I emailed the link to this thread and Ferri's core four thread to a couple of my friends who were paying thousands of dollars to investment firms to manage their assets. Since then, they have fired their advisers and haven't stopped thanking me.


That is great to hear.

Jack Bogle's crusade "to give investors their fair share" makes it all possible.

Thank you Mr. Bogle!
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Re: The Three Fund Portfolio

Postby LondonJimmy » Thu May 09, 2013 5:32 am

What do people here think of the portfolio I want to have?

I am 29 years old and want to invest a lump sum in 30% bonds, 70% stocks. I am from the UK and this will be from a long-term perspective.

I was thinking simply 30% in U.K. Government Bond ETF - VGOV, and 70% in FTSE All-World ETF - VWRL. Could also add emerging markets too and maybe hold less bonds?

Out of curiosity, why would some people hold an Index mutual fund instead of an Exchange-traded fund? I thought the fees for an ETF were lower.
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Wrong forum.

Postby Taylor Larimore » Thu May 09, 2013 7:10 am

London Jimmy:

Please ask questions about your personal portfolio on the Help with Personal Investments forum.

Thank you and best wishes.
Taylor
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"Investing With a Three Fund Portfolio"

Postby Taylor Larimore » Fri May 17, 2013 1:38 pm

Bogleheads:

Recent article featuring the Three Fund Portfoio:

Investing With a Three Fund Portfolio

I like the ending: "Once you have everything dialed in, you’ll just need to check back periodically to make sure it doesn't get too far out of whack."

Best wishes.
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Re: The Three Fund Portfolio

Postby Anonymous Coward » Thu May 30, 2013 6:14 pm

I submitted a question in the "Q&A for Jack Bogle" thread, but I'd like to ask the same question here.

http://www.bogleheads.org/forum/viewtopic.php?f=10&t=117099#p1708076

Along the lines of the questions asked by Victoria and Howard, above, I'm also curious about the situation with bond funds. I have a fair amount of VBTLX and BND in various accounts, and I'm reading stuff like this:

http://www.forbes.com/sites/investor/20 ... -has-legs/

("Currently a one-percentage-point rise in yield for a 30-year bond will reduce its price by 17%. A three-point increase in yield will knock its price down 41%.")

and this:

http://www.pionline.com/article/2013053 ... -few-years

("U.S. investors will pull an estimated $1 trillion — or 13.5% of U.S. assets professionally managed in fixed income — out of core, core-plus, government and fixed-income index funds over the next three to five years because of fears over rising interest rates, according to Casey, Quirk & Associates.")

and I have to admit I'm wondering if there is any compelling logic/experience/rationale for staying the course (with VBTLX and BND) or pursuing other bond investments like VGAVX, in spite of it's 0.75% purchase fee (which Vanguard says will be charged for the foreseeable future). If so, what might that compelling logic/experience/rationale be?


I've watched BND move through the bottom 60% of it's 52-week range over the last month or so, and I have to admit, I'm wondering if now is a good time to look at other bond investment vehicles.
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Re: Adding VGOVX to The Three Fund Portfolio?

Postby Taylor Larimore » Thu May 30, 2013 8:22 pm

I'm wondering if there is any compelling logic/experience/rationale for staying the course (with VBTLX and BND) or pursuing other bond investments like VGAVX, in spite of it's 0.75% purchase fee (which Vanguard says will be charged for the foreseeable future). If so, what might that compelling logic/experience/rationale be?

I've watched BND move through the bottom 60% of it's 52-week range over the last month or so, and I have to admit, I'm wondering if now is a good time to look at other bond investment vehicles.


Vanguard does not have a fund with ticker symbol "VGAVX." I suspect you mean VGOVX which is Vanguard's new Emerging Markets Government Bond Index fund with a hefty 0.75% purchase fee.

The Three Fund Portfolio is composed of three total market index funds with over 15,000 diversified securities. It makes no attempt to forecast which sub-category will outperform. VBTLX and BND (Total Bond Market) are the most diversified high-quality bond funds available. The primary benefit is their broad diversification which is called the only "free lunch" in investing. Total Bond Market's worst annual return since its 1986 inception was -2.66% in 1986 (followed by +16% in 1987).

Bonds are for safety and income. VGOVX should be much more risky than VBTLX and BND as stated in the VGOVX Prospectus:
• Emerging markets risk, which is the chance that the bonds of governments,
government agencies, and government-owned corporations located in emerging
markets will be substantially more volatile, and substantially less liquid, than the bonds
of governments, government agencies, and government-owned corporations located in
more developed foreign markets. Emerging markets risk should be high for the Fund.
• Country/regional risk, which is the chance that world events—such as political
upheaval, financial troubles, or natural disasters—will adversely affect the value of
securities issued by foreign governments, government agencies, and governmentowned corporations. Because the Fund may invest a large portion of its assets in
bonds of issuers located in any one country or region, the Fund’s performance may be
hurt disproportionately by the poor performance of its investments in that area.
Country/regional risk is especially high in emerging markets.
• Nondiversification risk, which is the chance that the Fund’s performance may be
hurt disproportionately by the poor performance of bonds issued by just a few or even
a single issuer. The Fund is considered nondiversified, which means that it may invest
a significant percentage of its assets in bonds issued by a small number of issuers.
Nondiversification risk for the Fund is high.
• Index sampling risk, which is the chance that the securities selected for the Fund, in
the aggregate, will not provide investment performance matching that of the Fund’s
target index. Index sampling risk for the Fund should be low.
A Note on Risk: Many investors invest in bonds and bond funds in an attempt to
lower the overall risk of their portfolios. This strategy makes sense when the bonds
owned are U.S. bonds because U.S. bond returns typically are not highly correlated
with, and are far less volatile than, stock returns. The strategy is less likely to be
effective, however, when bonds owned are emerging market bonds. Returns of
emerging market bonds, even dollar-denominated bonds like those owned by the 4
Fund, can be quite volatile, and tend to correlate more closely with U.S. and foreign
stock returns than with U.S. bond returns. Consequently, if your goal is to lower risk
and volatility, this Fund is not an appropriate investment.

Best wishes
Taylor
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Re: The Three Fund Portfolio

Postby Anonymous Coward » Thu May 30, 2013 9:51 pm

Appreciate your reply. VGAVX is the Admiral version of VGOVX:

https://personal.vanguard.com/us/funds/snapshot?FundId=0520&FundIntExt=INT

I saw the table of returns you posted on the previous page and thought it was helpful. Certainly the folks who run VBMFX/VBTLX/BND are saavy and their track record is impressive. But at the same time I find myself wondering if really isn't different this time. I don't want to hijack the thread, because I'm a math guy and I've read a couple of Sharpe's papers, etc., and I believe that the rationale for this three-fund portfolio is exceedingly compelling. However, stuff like this gives me pause:

http://mercatus.org/publication/cost-debt-drives-long-term-spending-explosion

http://mercatus.org/publication/high-levels-government-spending-become-status-quo

Are we circling the bowl here in the US? I think it is a fair question.
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Re: The Three Fund Portfolio

Postby Taylor Larimore » Fri May 31, 2013 7:20 am

Anonymous Coward:
I don't want to hijack the thread,

Right. Better to start a new thread elsewhere.

Thank you and best wishes.
Taylor
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Re: The Three Fund Portfolio

Postby Blues » Sun Jun 02, 2013 3:11 pm

Taylor requested that I post the following info from Mike at Long-Term Returns which pays tribute to the value and efficacy of the three fund portfolio:

[Image removed until permission to reproduce copyrighted material is obtained. See below. --admin LadyGeek]

Further details regarding "selecting investment strategy" can be read here:

http://www.longtermreturns.com/2012/03/ ... ategy.html
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Re: Fair Use ?

Postby Blues » Sun Jun 02, 2013 10:24 pm

Taylor Larimore wrote:Orre and Stan:

I sent a message to Long Term Returns seeking approval to post part of their article on this forum. I have little doubt they are appreciative and will approve.

Best wishes.
Taylor


As did I, Taylor, and am awaiting a reply. I apologized for my (clearly unintentional) oversight as attribution and appreciation were clearly intended.

[Snarky comment removed by admin LadyGeek]
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Re: The Three Fund Portfolio

Postby LadyGeek » Sun Jun 02, 2013 10:36 pm

I removed an image displaying a copyright notice, along with several posts questioning the posting of that copyrighted material. Regardless if it meets Measuring Fair Use: The Four Factors (or not - I'm not a lawyer), permission is being sought to post the image. Let's leave the discuss here until the author has given permission.
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Re: The Three Fund Portfolio

Postby Blues » Sun Jun 02, 2013 10:50 pm

Mike at LongTermReturns.com has graciously extended permission to use the following image copied from his site. The link to the original article on "Selecting Investment Strategy" is posted below the image and provides an excellent discussion in support of the venerable three fund portfolio.
(Posted in this thread at Taylor's request.)

Image

http://www.longtermreturns.com/2012/03/ ... ategy.html
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Re: The Three Fund Portfolio

Postby SirHorace » Mon Jun 10, 2013 3:24 pm

Question:

I have been following this thread with the intent of implementing the 3-fund portfolio for at least a part of my holdings. But when I plotted the 3-fund portfolio components against Wellesley (my major holding) I was surprised and confused. From the chart below, it would appear that Wellesley had a 240% gain in the time frame Jan 1999 to June 2013 (limits of available data) and by eyeball it would appear impossible to create that performance from any combination of the 3-fund portfolio. Also, (again by eyeball) it appears the volatility and drawdown characteristics of Wellesley would be superior to those of any implementation of the 3-fund portfolio (unless the 3-fund portfolio consisted of 100% bonds which have performance issues relative to Wellesley). It would not seem that the higher ER of Wellesley makes the difference.

Where am I going wrong? Admittedly, I have only done an eye-ball comparison but to me it seems conclusive. Is the chart lying to me? How should I interpret the chart?


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Re: The Three Fund Portfolio

Postby RadAudit » Mon Jun 10, 2013 5:44 pm

SirHorace wrote: by eyeball it would appear impossible to create that performance from any combination of the 3-fund portfolio. Also, (again by eyeball) it appears the volatility and drawdown characteristics of Wellesley would be superior to those of any implementation of the 3-fund portfolio


Wouldn't you have to construct a 3 fund portfolio, rebalance the portfolio over time, and compare those returns with Wellesley to get an appropriate comparison? Just eyeballing the charts it appears that you have a number of opportunities to profit from a three fund portfolio and rebalnace over time approach.
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Past performance.

Postby Taylor Larimore » Mon Jun 10, 2013 7:42 pm

Sir Horice:

Your chart showing the superiority of Wellesley's past performance over each of the three individual total market index funds is enticing. However, this is what investing authorities tell us about using "past performance" to select funds:
Frank Armstrong, financial author: "Rating services such as Morningstar's 'Star Awards' or the 'Forbes Honor Roll' attest to the futility of applying past performance to tomorrow."

Barra Research: "There is no persistence of equity fund performance."

Wm. Bernstein, author: "For the 20 years from 1970 to 1989, the best performing stock assets were Japanese stocks, U.S. small stocks, and gold stocks. These turned out to be the worst performing assets over the next decade."

Jack Bogle: "In selecting equity funds, no analysis of the past, no matter how painstaking, assures future superiority."

Jack Brennan, author and former Vanguard CEO: "Fund ranking is meaningless when based primarily on past performance, as most are."

Andrew Clarke, author: "By the time an investment reaches the top of the performance tables, there's a good chance that its run is over. The past is not prologue."

Prof. John Cochrane, author: "Past performance has almost no information about future performance."

S.T.Coleridge: "History is a lantern over the stern. It shows where you've been but not where you're going"

Jonathan Clements, author & columnist: "Trying to pick market-beating investments is a loser's game."

Eugene Fama: "Our research on individual mutual funds says that it's impossible to identify true winners on a reliable basis, even if one ignores the costs that active funds impose on investors."

Gensler & Bear, authors: "Of the fifty top-performing funds in 2000, not a single one appeared on the list in either 1999 or 1998."

Ken Heebner's CGM Focus Fund was the top U.S. equity fund in 2007. In November 2009, it ranked in the bottom 99% of its category.

Arthur Levitt, SEC Commissioner: "A mutual fund's past performance, which is the first feature that investors consider when choosing a fund, doesn't predict future performance."

Burton Malkiel, author: "I have examined the lack of persistency in fund returns over periods from the 1960s through the early 2000s.--There is no persistency to good performance. It is as random as the market."

Mercer Investment Consulting from a study of over 12,000 institutional managers: "Excellent recent performance not only doesn't guarantee future results but generally leads to underperformance in the subsequent period."

After fifteen straight years beating the S&P 500 Index, Legg Mason Value manager, Bill Miller's Legg Mason Value Trust (LMNVX) is now (2013) in the bottom 1% of its category for 10-year returns .

Ron Ross, author: "Extensive studies by Davis, Brown & Groetzman, Ibbotson, Elton et al, all confirmed there is no significant persistance in mutual fund performance."

Bill Schultheis, author: "Using past performance numbers as a method for choosing mutual funds is such a lousy idea that mutual fund companies are required by law to tell you it is a lousy idea."

Standard & Poor's: "Over the 5 years ending September 2009, only 4.27% large-cap funds, 3.98% mid-cap funds, and 9.13% small-cap funds maintained a top-half ranking over the five consecutive 12-month periods."

Larry Swedroe, author: "The 44 Wall Street Fund was the top performing fund over the decade of the 1970s. It ranked as the single worst performing fund of the 1980's losing 73%. -- If you are going to use past performance to predict the future winners, the evidence is strong that your approach is highly likely to fail."

David Swensen, Yale University Chief Investment Officer: "Chasing performance is the biggest mistake investors make. If anything, it is a perverse indicator."

Tweddell & Pierce, authors: "Numerous studies have shown that using superior past performance is no better than random selection."

Eric Tyson, author of Mutual Funds for Dummies: "If you had invested in the annual #1 top performing stock and bond funds over the last 15 years, 80% of those top performers subsequently performed worse, over the next 3-10 years, than the average fund in their peer group! Two of three former #1 funds are actually the worst performing funds in their particular category."

Value Line selected Garret Van Wagoner "Mutual fund Manager of the Year" in 1999. In August 2009, Van Wagoner's Emerging Growth Fund was the worst performing U.S. stock fund over the past 10 years.

Vanguard U.S. Growth had the 2nd BEST 10-year return of all Vanguard funds in December, 1998. On December 31, 2005 U.S. Growth had the 2nd WORST 10-year return of all Vanguard funds.

Jason Zweig, Wall Street Journal columnist: "Buying funds based purely on their past performance is one of the stupidest things an investor can do."


Best wishes.
Taylor
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Re: The Three Fund Portfolio

Postby umfundi » Mon Jun 10, 2013 8:02 pm

SirHorace wrote:Question:

I have been following this thread with the intent of implementing the 3-fund portfolio for at least a part of my holdings. But when I plotted the 3-fund portfolio components against Wellesley (my major holding) I was surprised and confused. From the chart below, it would appear that Wellesley had a 240% gain in the time frame Jan 1999 to June 2013 (limits of available data) and by eyeball it would appear impossible to create that performance from any combination of the 3-fund portfolio. Also, (again by eyeball) it appears the volatility and drawdown characteristics of Wellesley would be superior to those of any implementation of the 3-fund portfolio (unless the 3-fund portfolio consisted of 100% bonds which have performance issues relative to Wellesley). It would not seem that the higher ER of Wellesley makes the difference.

Where am I going wrong? Admittedly, I have only done an eye-ball comparison but to me it seems conclusive. Is the chart lying to me? How should I interpret the chart?


SirHorace

Image


At Yahoo Finance:

Wellesley vs. Vanguard LifeStrategy Conservative:
Image

Both are probably without dividends.

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Re: The Three Fund Portfolio

Postby SirHorace » Mon Jun 10, 2013 9:38 pm

UMFONDI wrote:
(Chart of Wellesley vs. Vanguard LifeStrategy)

Looks impressive but I believe there is a problem with data registration in your chart. I believe the proper comparison would be shown by the chart below. I assume the chart is of total return.

Image

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Re: The Three Fund Portfolio

Postby umfundi » Mon Jun 10, 2013 10:46 pm

According to Yahoo Finance total return:

VWINX VSCGX
6.45 6.03 Feb 2, 1996
25.15 17.56 Jun 3 2013
+290% + 190%

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Re: The Three Fund Portfolio

Postby pingo » Tue Jun 11, 2013 3:04 pm

As I understand it, Morningstar.com charts total returns and here's how they look:

Vanguard Wellesely Income Investor (VWINX)
Vanguard LifeStrategy Conservative Growth (VSCGX) (a static 3 Fund portfolio)
Image
Source: VWINX/VSCGX Chart

My "in the box" explanation for the difference is that return and risk are inseparable. Wellesley oscillates within a range of reasonable allocations, whereas the 3 Fund Portfolio stays fixed inside of LifeStrategy Conservative. LifeStrategy's allocation to international equities is 2x that of Welleseley. Welleseley has been well-managed (an argument in its favor), but active-management is a form of risk many would rather avoid given the zero-sum nature of market trading and how few achieve alpha consistently. As well, the past is rarely prologue. I also see that Wellesley is no where near as diversified as the 3 Fund Portfolio. Diversification is a risk reducer, and that often means a reduction in returns, although I think Fama-French fans argue that risk can be reduced with increased diversification and without sacrificing returns through the 3 factor model. In fact, Welleseley's penchant for value and what-not might be in line with some of the arguments for 3 factor portfolios.

Since I have decided what level of risk exposure I am willing accept via my choice of asset allocation, index funds such as those suggested for the 3 Fund portfolio make it simplest to meet the desired level of risk while knowing exactly what my portfolio holds. It is something over which I can exercise some control (unlike returns or value-adding by active management).

The Welleseley / Wellington track records are enticing, but they are a distraction to me because of the temptation to chase past performance. That said, I would have no problem investing in either one if they were in my employer plan and were lower cost and/or more reasonable to meet my goals than other employer options.

Edit: I just remembered that for most of that time frame, the LifeStrategy funds were not 3 fund portfolios. There was also an "Asset Allocation" fund in the mix, managed by Bank of New York Mellon, I think. It was erratic in it's timing of markets and shifting of assets and other strategies. My understanding is that it stunk up some of the performance of LifeStrategy funds. Had it not, I expect Welleseley would still be ahead in the chart. (Sigh.)
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Re: The Three Fund Portfolio

Postby abuss368 » Thu Jun 13, 2013 1:15 pm

We follow the Three Fund Portfolio with a REITs added (or the Core 4 from Rick Ferri). No need to add additional funds, administration, tax issues, high costs, complexity, additional documentation, simple for spouses, etc.

We are very thankful for the results and simplicity.

Thank you Jack Bogle!
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Re: The Three Fund Portfolio

Postby selftalk » Sun Jun 23, 2013 6:55 pm

I just finished reading The Elements Of Investing by Charles Ellis and Burton Malkiel copyright 2010, recommending an equity allocation of the total portfolio of 50% in the Total Stock Market Index Fund and 50% in the Total International Index Fund or 100% in the Total World Index Fund which is about half in each and then !00% in the Total Bond Market Index Fund.These two (2) authors are very well known with a lot of experience in the field of investing research but then again so is John Bogle who recommends a total of 50% Total Stock Market Index Fund for the equity portion and 50% for the Total Bond Market Index Fund for the bond portion. I feel that these two (2) strategies work fine but is it too much allocation to the foreign markets? I suppose if I lived in another country other than the U.S. the foreign allocation would seem normal and I`d feel more confident. However I know from reading The Bogleheads` Guide To Investing that in the long run both allocations are about equal (page 101). Would I be depriving myself of better returns by allocating more toward the foreign markets or is this one of the imponderables?
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Percentage of international stocks in a portfolio?

Postby Taylor Larimore » Sun Jun 23, 2013 7:43 pm

Selftalk:

It is one of the "imponderables."

You will find this Vanguard Research Report informative:

International Equity: Considerations and Recommendations

Best wishes.
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Re: The Three Fund Portfolio

Postby selftalk » Sun Jun 23, 2013 8:29 pm

Thank you Taylor. I read it and decided to give international a 30% weighting in the entire allocation. So I will now allocate at 60% total stock market index, 30% international and 10% bonds. By the way a new Vanguard International Bond Fund seems to have come out. Would it be a good idea to put maybe 2% in it with the rest of the bond allocation being 8% U.S. Total Bond Market index Fund or just let it remain at 10% Total Bond Fund Index Fund?
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Re: The Three Fund Portfolio

Postby abuss368 » Sun Jun 23, 2013 8:33 pm

I would start a new thread, but to answer your question, 2% of anything will have no impact one way or another.
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Re: The Three Fund Portfolio

Postby selftalk » Sun Jun 23, 2013 8:37 pm

Thank you. I`ll let it stand at the 10% Total Bond Index.
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Re: The Three Fund Portfolio

Postby fishdrzig » Sat Jun 29, 2013 8:52 am

Since all I have are IRA accounts, which fund/funds would you recommend if going "all in"
What I mean to say is, I don't have any tax consequences to worry about at this time, since all money is in Simple IRA and Rollover IRA accounts
Thank you
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Re: The Three Fund Portfolio

Postby LadyGeek » Sat Jun 29, 2013 10:51 am

You can find recommendations in the wiki: Three-fund portfolio

Understand that the wiki's suggestions accommodate a wide range of investors. If you want assistance for your specific situation, start a thread in the Investing - Help with Personal Investments forum using the Asking Portfolio Questions format and we'll point you in the right direction.
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Re: The Three Fund Portfolio

Postby fishdrzig » Sun Jun 30, 2013 9:22 am

Do LifeStrategy funds rebalance automatically?
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Re: The Three Fund Portfolio

Postby Blues » Sun Jun 30, 2013 9:30 am

fishdrzig wrote:Do LifeStrategy funds rebalance automatically?


Yes, as do Target Retirement funds.
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Re: The Three Fund Portfolio

Postby LadyGeek » Sun Jun 30, 2013 9:46 am

^^^ The wiki has background info: Vanguard LifeStrategy Funds

They rebalance, but keep the same asset allocation. Compare to a target date retirement fund, which changes the asset allocation over time. See: LifeStrategy Funds vs Target Retirement Funds

If you want to explore further, start a thread in the Investing - Help with Personal Investments forum. We'll get you pointed in the right direction.
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Re: The Three Fund Portfolio

Postby Blues » Sun Jun 30, 2013 10:35 am

LadyGeek wrote:^^^ The wiki has background info: Vanguard LifeStrategy Funds

They rebalance, but keep the same asset allocation. Compare to a target date retirement fund, which changes the asset allocation over time. See: LifeStrategy Funds vs Target Retirement Funds


The "Target Retirement Income Fund" both rebalances and maintains the same asset allocation (30/70 overall) amongst its constituent parts, whereas the other TR funds change the AA over time as LadyGeek so astutely mentions.
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Re: The Three Fund Portfolio

Postby boroc7 » Sun Jun 30, 2013 5:04 pm

Would this three fund portfolio apply all the same after you've retired--with just a different allocation?
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Re: The Three Fund Portfolio

Postby Blues » Sun Jun 30, 2013 5:30 pm

boroc7 wrote:Would this three fund portfolio apply all the same after you'ved retired--with just a different allocation?


Absolutely. (Though many feel that adding TIPS to the equation makes a good deal of sense.)
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Re: The Three Fund Portfolio

Postby Taylor Larimore » Sun Jun 30, 2013 5:34 pm

boroc7 wrote:Would this three fund portfolio apply all the same after you've retired--with just a different allocation?


The Three Fund Portfolio (with a heavier bond allocation) makes it ideal for most retirees:

* It is easy to understand for the retiree.

* It is easy to understand by the spouse.

* It is easy to understand by caregivers.

* It is easy to understand by heirs.

** And it is easy to maintain by all the above.

Best wishes
Taylor
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Three fund portfolio in the news

Postby TheOscarGuy » Mon Jul 08, 2013 2:42 pm

Reading today's WSJ I was delighted to see this portfolio mentioned as well as the forum:

[Link removed by admin LadyGeek --see below]

What do experts think about the comment in the article that the omission of "international bond" 3-fund portfolio makes it lesser diversified?
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Re: The Three Fund Portfolio

Postby LadyGeek » Mon Jul 08, 2013 7:28 pm

There's a thread discussing the article here: A Portfolio That's as Easy, as One, Two, Three

Your WSJ link isn't intended to be posted here; see the thread on how to access the article via Google without a subscription.
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Re: The Three Fund Portfolio

Postby Tabulator » Mon Jul 08, 2013 7:45 pm

Has anyone created an ex-financials variant of a three-fund or lazy portfolio? I would like to figure out how to own all the capital markets just like in a typical Bogleheads portfolio, but while avoiding banks and other financial companies.
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Re: The Three Fund Portfolio

Postby stevewolfe » Mon Jul 08, 2013 7:57 pm

Tabulator wrote:Has anyone created an ex-financials variant of a three-fund or lazy portfolio? I would like to figure out how to own all the capital markets just like in a typical Bogleheads portfolio, but while avoiding banks and other financial companies.


Just curious - why?
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Re: The Three Fund Portfolio

Postby LadyGeek » Mon Jul 08, 2013 9:34 pm

Removing an equity sector (financials) deviates from the total market approach, and is therefore no longer defined as a three-fund portfolio. Your question is better answered by starting a new thread in this forum (Investing - Theory, News & General) or in Investing - Help with Personal Investments if you are looking for help with your specific investments.
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Re: The Three Fund Portfolio

Postby EternalOptimist » Tue Jul 09, 2013 10:40 am

Taylor, thank you for constantly reminding us how simple and effective investing can be.
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Re: The Three Fund Portfolio

Postby newboggler » Wed Jul 24, 2013 8:35 am

The fact that new individual investor can match market and beat half of the managers without special skills or knowledge is a very motivating thing for a newbie like me!
Thank you Mr.Larimore.
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Re: The Three Fund Portfolio

Postby Taylor Larimore » Wed Jul 24, 2013 10:00 am

newboggler wrote:The fact that new individual investor can match market and beat half of the managers without special skills or knowledge is a very motivating thing for a newbie like me!
Thank you Mr.Larimore.

newboggler:

It is gratifying to learn that this Three Fund Portfolio conversation has helped put you on the road to investment success.

Thank you and best wishes.
Taylor
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Morningstar's "Gold Award."

Postby Taylor Larimore » Fri Jul 26, 2013 11:43 am

Bogleheads:

Morningstar recently awarded Vanguard its "Gold" award for overall Target Date Fund performance. The Three Fund Portfolio is very similar to Vanguard's Target Date Funds.

A link to the 69 page study is in this article:

Are Target-Date Funds Aging Well?

Best wishes
Taylor
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Total Stock Market Index Fund.

Postby Taylor Larimore » Tue Jul 30, 2013 4:50 pm

Bogleheads:

According to the current Lipper Performance Report, Total Stock Market Index Fund had the highest 5-year return of the 25 largest mutual funds.

Past performance does not guarantee future performance.

Best wishes.
Taylor
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Re: The Three Fund Portfolio

Postby Dick D » Wed Jul 31, 2013 3:17 pm

Three fund portfolio is great. I consolidated all of my funds into the three about 6 years ago.
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"Three Fund Portfolio is great."

Postby Taylor Larimore » Sun Aug 04, 2013 8:24 am

Dick D wrote:Three fund portfolio is great. I consolidated all of my funds into the three about 6 years ago.

Dick:

I woke up to read your satisfaction with your Three Fund Portfolio. You made my day!

Thank you and best wishes.
Taylor
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Re: The Three Fund Portfolio

Postby Sunny Sarkar » Sun Aug 04, 2013 10:35 am

Sunny Sarkar wrote:Hi Taylor,

Your original post on the 3 total market fund portfolio on the Vanguard Diehards M* forum in 1999 set me on my investment journey, and a life lesson on simplicity. I'll be indebted to you forever for all your guidance all these years.

Thank you!

Hi Taylor,

Over this morning's coffee, I checked the Vanguard website to get a sense of how our portfolio was performing. After all the ups and downs of the last decade, it turns out that approx 25% of our 12-year old simple total market portfolio has come from growth. For the first time we actually "saw" the benefits of staying the course with a simple total market portfolio.

Thank You for holding my hand along the way!
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Re: The Three Fund Portfolio

Postby Taylor Larimore » Sun Aug 04, 2013 12:53 pm

Sunny Sarkar wrote:
Sunny Sarkar wrote:Hi Taylor,

Your original post on the 3 total market fund portfolio on the Vanguard Diehards M* forum in 1999 set me on my investment journey, and a life lesson on simplicity. I'll be indebted to you forever for all your guidance all these years.

Thank you!

Hi Taylor,

Over this morning's coffee, I checked the Vanguard website to get a sense of how our portfolio was performing. After all the ups and downs of the last decade, it turns out that approx 25% of our 12-year old simple total market portfolio has come from growth. For the first time we actually "saw" the benefits of staying the course with a simple total market portfolio.

Thank You for holding my hand along the way!

Sunny:

It has been a pleasure holding the hand of such a lovely family.

Best wishes.
Taylor
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Re: "Investing With a Three Fund Portfolio"

Postby FinancialRamblings » Sun Aug 04, 2013 1:04 pm

Taylor Larimore wrote:Bogleheads:

Recent article featuring the Three Fund Portfoio:

Investing With a Three Fund Portfolio

I like the ending: "Once you have everything dialed in, you’ll just need to check back periodically to make sure it doesn’t get too far out of whack."

Best wishes.
Taylor


Hi Taylor. I know this is long overdue, but thanks for the mention. I really appreciate it.

Thanks also for stopping by the site to leave a comment back when this article first went live. :-)
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