Interview with Taylor Larimore, author of The Bogleheads Guide to the Three-Fund Portfolio

Taylor Larimore

Taylor Larimore, affectionately known as “the dean of the Bogleheads,” will soon (June 26, 2018) see the publication of the third Bogleheads Guide book, The Bogleheads Guide to the Three-Fund Portfolio. Taylor has kindly agreed to answer a few questions for our readers. Additional information regarding the Three-Fund Portfolio, which consists of a Total Market US stock index fund,  a Total Market International stock index fund and a Total Market US bond index fund, can be found here at Financial Page,  here on the Bogleheads Wiki, and here on the Bogleheads Forum.

Financial Page: This is the third book in a series of Bogleheads books. How did this book come about?

Taylor Larimore: About a year ago, I was taking a nap but couldn’t fall asleep. I was thinking about the many replies (now over 2,000) in my “Three-Fund Portfolio” topic post. Suddenly it came to me: Why not write a book on the subject? That’s how it started.

FP: When did you first develop the three-fund portfolio concept?

TL:  In 1986 Pat and I moved all our securities from Merrill Lynch to Vanguard. Not knowing any better, I constructed a portfolio of 16 diversified funds (mostly managed). I wanted to improve our portfolio and I began reading books on the subject of investing. Two of these books were “Bogle on Mutual Funds” and “A Random Walk Down Wall Street” by Burton Malkiel. The logic of index funds was overwhelming — especially total market index funds.

On November 21, 1999, I made a post on the Morningstar Forum titled, “Which is better–15 Funds or 4?” (the 4th fund was a money market fund.) In today’s low interest rates a money market fund may no longer be needed.

FP : What are some of the advantages of The Three-Fund portfolio?

TL: The advantages are many and several are little known. In the book, I have written sub-chapters that list and describe in detail the “20 Benefits of The Three-Fund Portfolio.” My son helped me with the computer and composing the drafts. One day he said: “I’ve changed our investments to “The Three-Fund Portfolio.” The 20 Benefits are very convincing

Sample three fund portfolios

FP: What bond options are suitable for the three-fund portfolio?

TL: Bonds are primarily for safety. I like Vanguard Total Bond Market Index Fund which is very diversified (a free lunch) and invests only in investment-grade bonds. It is now the largest bond fund in the world — for good reasons.

Bonds should be placed in tax-advantaged accounts. If full, and the asset-allocation requires additional bonds, I suggest a good quality municipal bond fund in the taxable account.

FP: I understand that you are donating all your royalties to The John C. Bogle Center for Financial Literacy. Why?

TL: John Bogle changed my life, not just financially, but he has made me a better person by knowing him. Jack imbodies “Character Counts” and “Enough,” the title of two of his books (I own them all). He is my inspiration. I am also indebted to the members of the Bogleheads Forums who have taught me much of what I know. I’ve posted over 50,000 times on the Boglehead and Morningstar forums learning and trying to help others. I am indebted to the Bogleheads who have helped me keep my “marbles” as I enter my 94th year on this wonderful planet. Thanks to Jack and the Bogleheads I am financially able and I want to give back. Donating royalties to Jack’s legacy seems like an ideal way to give back.

FP: Thank you Taylor.

The Bogleheads Guides

The Bogleheads' Guide to Investing

The Bogleheads Guide to Investing (second edition) was written by Taylor Larimore, Mel Lindauer and Michael LeBoeuf, long-time forum members who continue to be active on the forum today. First published in a hardback edition on January 3, 2006; the publication date for the second edition is August 18, 2014. Hardcover: 336 pages Publisher: … Read more

The Bogleheads' Guide to Retirement Planning

The Bogleheads’ Guide to Retirement Planning was written by members of the Bogleheads community (see individual chapter headings) and edited by Taylor Larimore, Mel Lindauer, Rick Ferri and Laura Dogu. Published in October 2009. Hardcover: 370 pages Publisher: Wiley; 1 edition (October 5, 2009) ISBN-13: 98-0470455 From the publisher Wiley, the publisher, states: The Bogleheads … Read more

The Bogleheads' Guide to the Three-Fund Portfolio

The Bogleheads’ Guide to the Three-Fund Portfolio: How a Simple Portfolio of Three Total Market Index Funds Outperforms Most Investors with Less Risk, written by Taylor Larimore, and published by Wiley.Hardcover: 144 pagesPublisher: Wiley; 1 edition (June 26, 2018)ISBN-13: 978-1119487333 From the publisher Wiley, the publisher, states: Twenty benefits from the three-fund total market index … Read more