Lazy Portfolios in 2020

The following table lists 2020 total returns for various examples of “lazy portfolios”. Some of the portfolios (Coffeehouse and Coward’s) are designed as 60/40 stock/bond portfolios. Other portfolios (Armstrong Ideal and Swensen) are designed as 70/30 stock/bond portfolios. The two-fund, three-fund, and four-fund portfolios are scaled to similar stock/bond allocations. Prior to 2018, returns are derived from … Read more

US two fund portfolio – 2020 update

The US two fund portfolio is a portfolio design consisting of two “total” market index funds covering the US stock market and the US taxable investment grade bond market.

The 2020 returns for the portfolio’s constituent Vanguard funds:

  • Vanguard Total Stock Market Index Fund: 20.99%
  • Vanguard Total Bond Market Index Fund: 7.72%

Below are four portfolios with allocations devoting various stock/ bond allocations (click images to enlarge).

The table below provides 2020 returns for these portfolios.

Year80/2060/4040/6020/80
202018.34%15.68%13.03%10.37%

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Three fund portfolio using inflation indexed bonds – 2020 update

The Taylor Larimore three-fund portfolio is a portfolio design consisting of three “total” market index funds covering the US stock market, the international stock market, and the US taxable investment grade bond market.  Newspaper columnist Scott Burns has suggested a three fund portfolio (called the Margarita portfolio) that uses inflation-indexed treasury bonds for the bond allocation … Read more

Three fund portfolios for taxable accounts – 2020 update

Taylor Larimore, advocate of the three fund portfolio.

The Taylor Larimore three-fund portfolio is a portfolio design consisting of three “total” market index funds covering the US stock market, the international stock market, and the US taxable investment grade bond market. However, investors with large taxable accounts and falling in high tax brackets may find that tax-exempt bonds provide higher after-tax returns and would prefer to use an intermediate-term tax exempt bond fund for the portfolio bond allocation in the taxable account.

Investors were able to implement this portfolio beginning in 1997, when Vanguard introduced a total international index fund. The firm had introduced a total US stock market index fund in 1992, and an intermediate US tax-exempt bond fund in 1977. (Tax-exempt bond index funds have limited performance histories, so we are using Vanguard’s low-cost active fund in this analysis.)

The 2020 returns for the portfolio’s constituent Vanguard funds:

  • Vanguard Total Stock Market Index Fund: 20.99%
  • Vanguard Total International Stock Index Fund: 11.28%
  • Vanguard Intermediate Tax-Exempt Bond Fund: 5.21%

Below are four portfolios with allocations devoting 30% of the stock allocation to international stocks (click images to enlarge).

The table below provides 2019 returns for these portfolios. Note that a different weighting of international stocks would result in differing returns.

Year80/2060/4040/6020/80
202015.50%12.93%10.36%7.78%

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Three fund portfolio 2020 update

Taylor Larimore, advocate of the three fund portfolio.

The Taylor Larimore three-fund portfolio, is a portfolio design consisting of three “total” market index funds, covering the US stock market, the international stock market, and the US taxable investment grade bond market. Investors were able to implement this portfolio beginning in 1997, when Vanguard introduced a total international index fund. The firm had introduced a total US stock market index in 1992, and a total US bond market index in 1987.

The 2020 returns for the portfolios constituent funds (admiral class):

  • Vanguard Total Stock Market Index Fund: 20.99%
  • Vanguard Total International Stock Index Fund: 11.28%
  • Vanguard Total Bond Market Index Fund: 7.72%

Below are four portfolios with allocations modeled upon Vanguard Lifestrategy funds (click images to enlarge). The portfolios allocate 30% of the stock allocation to international stocks.

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Lazy Portfolios in 2019

The following table lists 2019 total returns for various examples of “lazy portfolios”. Some of the portfolios (Coffeehouse and Coward’s) are designed as 60/40 stock/bond portfolios. Other portfolios (Armstrong Ideal and Swensen) are designed as 70/30 stock/bond portfolios. The two-fund, three-fund, and four-fund portfolios are scaled to similar stock/bond allocations. Prior to 2018, returns are derived from … Read more

Three fund portfolio using inflation indexed bonds – 2019 update

The Taylor Larimore three-fund portfolio is a portfolio design consisting of three “total” market index funds covering the US stock market, the international stock market, and the US taxable investment grade bond market.  Newspaper columnist Scott Burns has suggested a three fund portfolio (called the Margarita portfolio) that uses inflation-indexed treasury bonds for the bond allocation … Read more

Three fund portfolios for taxable accounts – 2019 update

The Taylor Larimore three-fund portfolio is a portfolio design consisting of three “total” market index funds covering the US stock market, the international stock market, and the US taxable investment grade bond market. However, investors with large taxable accounts and falling in high tax brackets may find that tax-exempt bonds provide higher after-tax returns and would prefer to use an intermediate-term tax exempt bond fund for the portfolio bond allocation in the taxable account.

Investors were able to implement this portfolio beginning in 1997, when Vanguard introduced a total international index fund. The firm had introduced a total US stock market index fund in 1992, and an intermediate US tax-exempt bond fund in 1977. (Tax-exempt bond index funds have limited performance histories, so we are using Vanguard’s low-cost active fund in this analysis.)

The 2019 returns for the portfolio’s constituent Vanguard funds:

  • Vanguard Total Stock Market Index Fund: 30.80%
  • Vanguard Total International Stock Index Fund: 21.51%
  • Vanguard Intermediate Tax-Exempt Bond Fund: 8.71%

Below are four portfolios with allocations devoting 30% of the stock allocation to international stocks (click images to enlarge).

The table below provides 2019 returns for these portfolios. Note that a different weighting of international stocks would result in differing returns.

Year80/2060/4040/6020/80
201923.77%19.52%15.27%11..03%

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Three fund portfolio 2019 update

The Taylor Larimore three-fund portfolio, is a portfolio design consisting of three “total” market index funds, covering the US stock market, the international stock market, and the US taxable investment grade bond market. Investors were able to implement this portfolio beginning in 1997, when Vanguard introduced a total international index fund. The firm had introduced a total US stock market index in 1992, and a total US bond market index in 1987.

The 2019 returns for the portfolios constituent funds (admiral class):

  • Vanguard Total Stock Market Index Fund: 30.80%
  • Vanguard Total International Stock Index Fund: 21.51%
  • Vanguard Total Bond Market Index Fund: 8.71%

Below are four portfolios with allocations modeled upon Vanguard Lifestrategy funds (click images to enlarge). The portfolios allocate 30% of the stock allocation to international stocks.

Read more

Lazy Portfolios in 2018

assetallocationpiechartThe following table lists 2018 total returns for various examples of “lazy portfolios”.

Some of the portfolios (Coffeehouse and Coward’s) are designed as 60/40 stock/bond portfolios. Other portfolios (Armstrong Ideal and Swensen) are designed as 70/30 stock/bond portfolios. The two-fund, three-fund, and four-fund portfolios are scaled to similar stock/bond allocations. The returns are derived from investments in investor share class Vanguard index funds.

 2018 total return

Portfolio 60/40 70/30
Two-fund -5.85% -6.82%
Three-fund -4.78% -5.57%
Ferri Core four -4.98% -5.63%
Vanguard Core four -4.98% -5.95%
Coffeehouse -5.19%
Coward’s -5.01%
Armstrong Ideal -6.81%
Swensen -5.67%

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