Who uses the 3 fund portfolio ?

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aaja
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Who uses the 3 fund portfolio ?

Post by aaja » Thu Apr 05, 2018 11:32 pm

I love the 3 fund portfolio. The simplicity of it is what attracts me to it and everything I have read about it makes so much sense. I currently have a 4 fund portfolio Total US Stock, Total Intl Stock, Total Bond market and Megacorp. Megacorp is 60% of my current portfolio and I am working on slowly transitioning these over to the 3 fund portfolio. I am maxing out my tax-advantaged accounts and happy that I have a well-defined plan for retirement.

The reason I ask this question is that as I read more on this forum I see a lot of diversification in terms of the funds that folks on here own (especially fixed income). This makes me wonder whether the 3 fund portfolio is only for beginners and in 2-3 years as I gain expertise and learn more from the folks on this forum I too need to diversify beyond the 3 funds? Do all the seasoned experts on this forum also own the 3 fund portfolio or are you diversified beyond that. I find the simplicity of it appealing but just wanted to know if there is an evolutionary path ahead that I need to be aware of.

<Just Me venting>
Until 3 days ago I had the last of my 5th fund (5k in TSLA) and decided to sell it to move it to my new aa. I sell at $255 and as always the stock bounces back and goes up by 20%. This just feels the worst and kind of strengthens my resolve to not own individual stocks anymore. I guess my luck can impact an individual stock but I most certainly cannot bring down the entire market right? :D.
</Just Me venting>

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eye.surgeon
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Re: Who uses the 3 fund portfolio ?

Post by eye.surgeon » Thu Apr 05, 2018 11:39 pm

I use a 3 fund portfolio. Not too simple, not too complex, and relatively easy to maintain among my 401k, IRAs, and taxable accounts.
"I would rather be certain of a good return than hopeful of a great one" | Warren Buffett

aaja
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Re: Who uses the 3 fund portfolio ?

Post by aaja » Thu Apr 05, 2018 11:44 pm

eye.surgeon wrote:
Thu Apr 05, 2018 11:39 pm
I use a 3 fund portfolio. Not too simple, not too complex, and relatively easy to maintain among my 401k, IRAs, and taxable accounts.
Hey, you joined the forum 1 year ago today. Happy 1 year birthday :D

Thanks for the reply.

MoneyMarathon
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Re: Who uses the 3 fund portfolio ?

Post by MoneyMarathon » Fri Apr 06, 2018 12:14 am

aaja wrote:
Thu Apr 05, 2018 11:32 pm
I love the 3 fund portfolio. The simplicity of it is what attracts me to it and everything I have read about it makes so much sense.
The great thing about indexing is that you get 100% of the market return, minus expenses and taxes, each and every year. It's simply wonderful not to have to wonder if you'll underperform for the next 1/3/5 years or deal with the stress of underperforming for the last 1/3/5 years. Every equity tilt that I've seen can underperform for more than five years at a time (and that's it even if it still can be captured).

So if the market is your frame of reference for returns, you can't beat buying the market (for peace of mind and staying the course).
aaja wrote:
Thu Apr 05, 2018 11:32 pm
I currently have a 4 fund portfolio Total US Stock, Total Intl Stock, Total Bond market and Megacorp.
Same, but I sell Megacorp at every opportunity. Always Be Selling!
aaja wrote:
Thu Apr 05, 2018 11:32 pm
Megacorp is 60% of my current portfolio and I am working on slowly transitioning these over to the 3 fund portfolio.
I understand there could be tax implications of unwinding this position, but I wouldn't sit on this long.

This portfolio has a huge amount of uncompensated risk because of the overweight to Megacorp stock.
aaja wrote:
Thu Apr 05, 2018 11:32 pm
The reason I ask this question is that as I read more on this forum I see a lot of diversification in terms of the funds that folks on here own (especially fixed income). This makes me wonder whether the 3 fund portfolio is only for beginners and in 2-3 years as I gain expertise and learn more from the folks on this forum I too need to diversify beyond the 3 funds? Do all the seasoned experts on this forum also own the 3 fund portfolio or are you diversified beyond that. I find the simplicity of it appealing but just wanted to know if there is an evolutionary path ahead that I need to be aware of.
People have different strategies in fixed income for a couple reasons:

It doesn't matter that much (no, really). The bond market is able to be a lot more predictable than the stock market, so it's not like you're going to lose out if you don't hold a particular junk bond or treasury issue. There are many ways to get something not-so-volatile with-modest-return-most-years, so people take their pick, for various reasons. As long as you understand that certain kinds of bonds have more or less default risk, which has correlation to equity risk, you'll be relatively okay, maybe just a bit better or worse, with your fund selections within the bond market.

For example, different types of bonds are basically sub-asset classes (for example, callable debt, like mortgage backed securities), so there is a little bit different behavior there. Some people avoid BND to avoid that, but the long-run material result isn't earth-shattering.

There are tax implications. Munis exempt from state and federal. Treasuries exempt from state. I-bonds growing tax-deferred. Junk throwing off more dividends in most years, which gets taxed.

Some investments protect the principal, such as bond ladders, CD ladders, I-bonds, money market funds, and certain fixed income funds. This can be useful for short-term planning with funds needed in the next couple years, or just as a way not to see the volatility.

There's also some home bias (or bias against home) at work. You can choose bonds in your currency, or other currencies. Hedged, or unhedged. This might depend on the kind of risks you're protecting against or what currency you'll need to be spending in.

(Equities can also be currency hedged, but many like the reduction in correlation and expense from not hedging.)

Picking a mix of sub-asset classes within fixed income isn't a declaration that you're smarter than other investors and hope to outwit them for better return (at their expense) by researching individual securities, or by gathering expected risk premiums from some persistent behavioral finance issues that somehow refuse to go away, so it's not uncommon for Bogleheads to do it.

TravelGeek
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Re: Who uses the 3 fund portfolio ?

Post by TravelGeek » Fri Apr 06, 2018 12:31 am

I would if I could find a time machine or if Congress were to pass a bill that allowed rebalancing of my personal portfolio without triggering cap gains.

That said, the bulk of my money is essentially in the three funds. I should do the math, but I would guess 80%, if not more. The various other funds (nothing outrageously bad... think Fid Contrafund, Vanguard Healthcare) are going to be used to fund the fire few years of retirement,

I don’t hold any employer stock; RSUs will get sold off the moment the vest.

TwstdSista
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Re: Who uses the 3 fund portfolio ?

Post by TwstdSista » Fri Apr 06, 2018 4:05 am

Pick me! Pick me!

Solely three funds here (across five accounts).

theplayer11
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Re: Who uses the 3 fund portfolio ?

Post by theplayer11 » Fri Apr 06, 2018 5:56 am

4..couldn't decide on the bond fund so I bought both BND and BIV

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Re: Who uses the 3 fund portfolio ?

Post by RadAudit » Fri Apr 06, 2018 7:45 am

aaja wrote:
Thu Apr 05, 2018 11:32 pm
This makes me wonder whether the 3 fund portfolio is only for beginners
The simple answer is no.
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blueblock
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Re: Who uses the 3 fund portfolio ?

Post by blueblock » Fri Apr 06, 2018 7:47 am

I went to 3 funds in 2015 when I retired and rolled over my 401K to a Vanguard IRA. The simplicity appealed to me then and still does, so I'm not especially open to complicating things.

I do hold sector ETFs in taxable and Roth (e.g. tech, small cap, emerging markets, etc.), for no better reason than it just evolved that way over 30 years of drifting away from individual stocks. (These comprise about 15% of my total investment portfolio.)

magicrat
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Re: Who uses the 3 fund portfolio ?

Post by magicrat » Fri Apr 06, 2018 8:02 am

10-yr Boglehead, decent size portfolio, 3 fund approach (actual execution by account varies, for example I use S&P 500 in 401k and Total Stock in taxable due to fund availability). Through this I own a piece of every stock in the world according to their market weights, and a representative sample of US Bonds. The only way I could increase diversification would be with international bonds or some sort of alternatives. Buying other stock or US bond funds would reduce diversification.

The simplicity of the Boglehead approach is great. But I use it because theory, common sense and empirical data tell me it's the best approach, not because it is simple.

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birdog
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Re: Who uses the 3 fund portfolio ?

Post by birdog » Fri Apr 06, 2018 8:12 am

Everything is in the three-fund portfolio via ETFs with two items of note. First, BIV made more sense to me than BND. Second, due to my income tax bracket I have about a third of the bond allocation in VTEB. So technically the portfolio is VTI, VEU, BIV & VTEB. Utilizing four funds to achieve a more tax-efficient three-fund style portfolio.
Last edited by birdog on Fri Apr 06, 2018 10:33 am, edited 1 time in total.

lostdog
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Re: Who uses the 3 fund portfolio ?

Post by lostdog » Fri Apr 06, 2018 8:13 am

Two fund portfolio here.

Vanguard Total World Index--removes speculation and home country bias. The most bogleheadish fund in existence.

Vangaurd Total Bond Index

Exafchick
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Re: Who uses the 3 fund portfolio ?

Post by Exafchick » Fri Apr 06, 2018 8:42 am

I just recently transferred into a 3-fund portfolio. Before that I had my Roth IRA in the Vanguard STAR fund (still do) and my 401k in another balance fund. Now my 401k is 80% TSM and 20% TISM. I know some believe the bonds should be in the 401k, but this is easier for me.

I also wondered if this portfolio is only until I retire then will move funds to an income portfolio. Right now (with still over 15 years to go!) I'm considering 80% Vanguard Wellesley and 20% Vanguard Target Retirement. Luckily, I have a military pension with TRICARE (which will become TRICARE for life) so as long as I live modestly, my projected investment balances will last well into my 90s if not forever!

Thank you to all who provide knowledge here purely for education and not for profit!

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Re: Who uses the 3 fund portfolio ?

Post by rixer » Fri Apr 06, 2018 9:23 am

I kind of wonder the same thing. We hear about simplicity with the 3 fund, balanced and T/D funds and how they will serve you best. But it seems that those who recommend those funds actually have more complicated portfolio's when more info comes out.

I have a 3 yr cd ladder of minimum expenses that I keep rolling over in case of a significant downturn. The rest is all in a balanced fund. I hope I chose well.... :?:

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1210sda
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Re: Who uses the 3 fund portfolio ?

Post by 1210sda » Fri Apr 06, 2018 10:05 am

Other than a couple of local bank accounts, my entire portfolio is in the 3 fund portfolio (along with Prime MMF).

I'm in my 17th year of retirement.

It wasn't always this way. I began investing over 35 years ago. I made plenty of mistakes along the way (especially at the start). I gradually evolved from real estate limited partnerships, oil and gas limited partnerships and individual stocks to asset class investing (ala DFA). Then around eight to ten years ago I began the move to the 3FP. I've been there ever since. The only change I anticipate is further simplifying when either my spouse or I become widowed.

At that point, I (or my spouse) intend to use a single fund approach.....LifeStrategy, Balanced Index or Tax Managed Balanced.

1210

MotoTrojan
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Re: Who uses the 3 fund portfolio ?

Post by MotoTrojan » Fri Apr 06, 2018 10:30 am

Yup but I swapped total bond with small-value ;).

remomnyc
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Re: Who uses the 3 fund portfolio ?

Post by remomnyc » Fri Apr 06, 2018 10:47 am

I have more than 3 but that is due to capital gains tax implications of selling things (mostly tilts) I had before I found BH. All rebalancing and any new purchases go to total stock, total international, or total bond. I must admit, however, my fixed income portfolio also contains a 4-yr CD ladder.

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ruralavalon
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Re: Who uses the 3 fund portfolio ?

Post by ruralavalon » Fri Apr 06, 2018 10:50 am

aaja wrote:
Thu Apr 05, 2018 11:32 pm
The reason I ask this question is that as I read more on this forum I see a lot of diversification in terms of the funds that folks on here own (especially fixed income). This makes me wonder whether the 3 fund portfolio is only for beginners and in 2-3 years as I gain expertise and learn more from the folks on this forum I too need to diversify beyond the 3 funds? Do all the seasoned experts on this forum also own the 3 fund portfolio or are you diversified beyond that. I find the simplicity of it appealing but just wanted to know if there is an evolutionary path ahead that I need to be aware of.

The Three-fund portfolio is a good way to start, and a good way to continue. There need not be an evolutionary process ahead.

Elaboration on the three-fund portfolio is often just a matter of personal preference or a matter of differences in personal circumstances. Sometimes the investor has a legacy investments that can't be dropped for some reason, like large capital gains or a position in employer stock that can't be sold.

We are 72, retired, and have no pension or annuity. We use 4 funds:
1) Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX);
2) Vanguard Small-cap Value Index Fund Admiral Shares (VSIAX);
3) Vanguard Total International Stock Index Fund Admiral Shares (VTIAX); and
4) Vanguard Intermediate-term Bond Index Fund (VBILX).

In addition to Vanguard Total Bond Market Index Fund, Vanguard offers a large number of other intermediate-term and short-term bond funds which in my opinion are suitable for use in a three-fund type portfolio.

Sometimes an investor is able to use a different fixed income investment, like a stable value fund if offered in their 401k or high interest federally insured CDs, rather than a bond fund.

Sometimes an investor wants a real estate fund for part of the domestic stock allocation. Some investors consider real estate a separate 4th asset class. A real estate fund can add some diversification benefit, and some inflation protection.

Sometimes an investor in or near retirement wants/needs an inflation protected bond fund for part of the bond allocation.
Last edited by ruralavalon on Fri Apr 06, 2018 11:15 am, edited 1 time in total.
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Hillview
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Re: Who uses the 3 fund portfolio ?

Post by Hillview » Fri Apr 06, 2018 11:14 am

well, sort of.
3 funds except:
1) 401k is in a Vanguard 2035 fund (which is a 4 fund product with a bond split btwn Bond II fund and an int't bond fund)
2) taxable is in VLCA Vanguard Large Cap Index Fund Admiral Shares for Tax Loss Harvesting purposes

3funder
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Re: Who uses the 3 fund portfolio ?

Post by 3funder » Fri Apr 06, 2018 11:42 am

I do. It's great.

noco-hawkeye
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Re: Who uses the 3 fund portfolio ?

Post by noco-hawkeye » Fri Apr 06, 2018 11:59 am

I use either the 3 fund portfolio or target date funds, depending upon which account. I don’t consider myself a beginner, maybe somewhere in the middle.

zzebie
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Re: Who uses the 3 fund portfolio ?

Post by zzebie » Fri Apr 06, 2018 12:08 pm

I don't have a 401(k). In my taxable account I have the below four ETFs:

VTI(Total Stock Market);
VXUS(Total International Stock);
VB(Small cap);
VSS(All world Ex-US small cap)

I am some who understood the discipline of regular investing or even investing very late in my life. Courtesy Bogleheads, I have started investing in the above 4 ETFS.

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Phineas J. Whoopee
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Re: Who uses the 3 fund portfolio ?

Post by Phineas J. Whoopee » Fri Apr 06, 2018 12:29 pm

For asset allocation I use three fund plus TIPS:

25% total US stock; 15% total international stock; 40% inflation-protected fixed income; 20% nominal fixed income.

So call it 40/60.

I literally do have more than four mutual funds, but that's for logistics reasons. It might as well be four, because the asset classes are consistent. I anticipate consolidating in several years, when the logistical issues fade.

Part of the 40% is Series I Savings Bonds.

PJW

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Earl Lemongrab
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Re: Who uses the 3 fund portfolio ?

Post by Earl Lemongrab » Fri Apr 06, 2018 1:05 pm

I don't. Nothing wrong with it, but I like a tilted portfolio. Mine is along the lines of the sample portfolios that I found in Swedroe, Bernstein, Merriman back in 2007. If I were starting over, I'd probably go with something closer to Trev's Four Fund approach.
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Re: Who uses the 3 fund portfolio ?

Post by BuckyBadger » Fri Apr 06, 2018 1:41 pm

3 funds here, or as close as i can get in our employer sponsored accounts. This is across a 401k, a 403b, two IRAs, an HSA that we're using as a stealth IRA, and a taxable account.

So easy. I love it.

3funder
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Re: Who uses the 3 fund portfolio ?

Post by 3funder » Fri Apr 06, 2018 1:43 pm

noco-hawkeye wrote:
Fri Apr 06, 2018 11:59 am
I use either the 3 fund portfolio or target date funds, depending upon which account. I don’t consider myself a beginner, maybe somewhere in the middle.
I'll give a plug for target date funds too. I switched to 3-fund to save pennies, but I used to invest in target date funds, and I thought they were great.

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UpsetRaptor
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Re: Who uses the 3 fund portfolio ?

Post by UpsetRaptor » Fri Apr 06, 2018 2:01 pm

Phineas J. Whoopee wrote:
Fri Apr 06, 2018 12:29 pm
For asset allocation I use three fund plus TIPS:

25% total US stock; 15% total international stock; 40% inflation-protected fixed income; 20% nominal fixed income.

So call it 40/60.

I literally do have more than four mutual funds, but that's for logistics reasons. It might as well be four, because the asset classes are consistent. I anticipate consolidating in several years, when the logistical issues fade.

Part of the 40% is Series I Savings Bonds.

PJW
That's a lot of TIPs PJW. Smelling inflation up in them thar hills?

Pseudo 3-fund here. Logistics means I have some same asset classes in different places, like a generic S&P 500 index in 401k, VTSAX elsewhere.

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Phineas J. Whoopee
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Re: Who uses the 3 fund portfolio ?

Post by Phineas J. Whoopee » Fri Apr 06, 2018 2:19 pm

UpsetRaptor wrote:
Fri Apr 06, 2018 2:01 pm
...
That's a lot of TIPs PJW. Smelling inflation up in them thar hills?
...
No. My allocation is not based on any forecast of inflation. It's based on my careful evaluation of my situation, concluding inflation is the biggest financial risk I face. The stocks are there to help over the long term, but they might not. The TIPS should help over the intermediate term. The Series I Savings Bonds help over the short term.

The 20% in nominal fixed income takes into account the fact inflation is not the only risk I face.

I explained my basic approach here, then a couple of years later I answered some questions about it.

If you would like to know more about my choices and why I made them, beyond what I already wrote in the links, I'll try my best to answer.

PJW

UpperNwGuy
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Re: Who uses the 3 fund portfolio ?

Post by UpperNwGuy » Fri Apr 06, 2018 2:33 pm

Four Vanguard funds: Total Stock, Total International, Total Bond, Intermediate-Term Tax-Exempt.

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tooluser
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Re: Who uses the 3 fund portfolio ?

Post by tooluser » Fri Apr 06, 2018 8:57 pm

I love the 3 fund portfolio - it's simple and better than good enough.

But practical circumstances lead me to 26 different holdings across three brokerages. The reasons include not wanting to pay unnecessary taxes in taxable accounts, not wanting to pay unnecessary trading commissions due to past investment choices and changes in brokerage policies, savings and bonuses due to account synergies for specific entities (e.g cost savings at Bank of America when one has a Merrill Edge account), risk mitigation among brokerages (two would be enough), and lag in optimizing simplification of accounts (no harm other than complexity).

I also have a soft spot for the 10-speed portfolio (one of my past investment choices), as it affords more frequent and possibly more optimal opportunities for buying factors at relative lows than the 3-fund portfolio offers. That's speculation based on academic research though.

A spreadsheet and not terribly sophisticated thinking gets me what I want from a stocks/bonds allocation and tax standpoint. It could be simpler and I would like that. I work towards that always. The crash of 2008 allowed me to simplify greatly, though it took me until 2011 to realize that (via bogleheads.org). I think it's underappreciated how much good one can do for one's portfolio by restructuring in the bad times.
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Re: Who uses the 3 fund portfolio ?

Post by JBTX » Fri Apr 06, 2018 9:06 pm

I’ve been here less than a year, and I still have way too many funds. My goal is to simplify going forward but I’m not in a rush. Most of the funds I have are there for a reason.

I doubt I will ever get to a three fund. If I really wanted to simplify I’d go to a life strategy or target fund. I suspect I will always want to do some modest tilting one way or other.

123
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Re: Who uses the 3 fund portfolio ?

Post by 123 » Fri Apr 06, 2018 9:21 pm

I used a basic 3 or 4 fund portfolio for a number of years. A few months ago I started to switch accounts to a Vanguard LifeStrategy fund that was close enough to my desired asset allocation. I had no issue myself with the 3 or 4 fund portfolio, I didn't mind re-balancing. I am switching to a fund-of-funds to allow more of an auto-pilot situation when I am no longer around. Three of four funds across a number of accounts would look too complex to my spouse so I decided to simplify. I know the expense ration is higher for a fund-of-funds, I am treating the higher expense ratio as an insurance premium I am willing to pay to hopefully protect my spouse from evil and dastardly financial advisers.
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Taylor Larimore
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Re: Who uses the 3 fund portfolio ?

Post by Taylor Larimore » Fri Apr 06, 2018 9:48 pm

aaja wrote:
Thu Apr 05, 2018 11:32 pm
I find the simplicity of it appealing but just wanted to know if there is an evolutionary path ahead that I need to be aware of.
aaja:

The "evolutionary path " for most investors is towards simplicity.

When we moved all our securities from Merrill Lynch to Vanguard in 1986, we purchased sixteen Vanguard funds (ouch). Over the past 32 years, with more knowledge and experience, I now own just three Vanguard funds for a much-improved portfolio.

Read my "Simplicity" link below.
Albert Einstein: "The five ascending levels of intellect are: smart, intelligent, brilliant, genius, simple."
Best wishes.
Taylor
"Simplicity is the master key to financial success." -- Jack Bogle

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Re: Who uses the 3 fund portfolio ?

Post by finite_difference » Fri Apr 06, 2018 10:45 pm

My core holding is the Taylor Larimore 3 fund (TL3F) portfolio for the portfolios that I manage in my family.

I do tilt a little bit, mainly for fun, but only around 15% total. 85% of holdings are TL3F.
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stemikger
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Re: Who uses the 3 fund portfolio ?

Post by stemikger » Sat Apr 07, 2018 6:13 am

Duplicate Post!
Last edited by stemikger on Sat Apr 07, 2018 6:18 am, edited 1 time in total.
Choose Simplicity ~ Stay the Course!! ~ Press on Regardless!!!

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stemikger
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Re: Who uses the 3 fund portfolio ?

Post by stemikger » Sat Apr 07, 2018 6:13 am

Although Jack Bogle and Taylor Larimore don't endorse sophisticated strategies, they are so smart they practice simplicity.

Taylor Larimore has a book coming out on the 3 fund portfolio and Jack just updated his Little Book on Common Sense Investing (10th Anniversary edition). In this updated book, Jack talks about what many refer to as the Bogle Model. It is either two funds or one fund. The two fund version is Total Stock Market Index and Total Bond Market Index. The one fund model is the Vanguard Balanced Index Fund 60/40. I have been investing for 23 years now and never went beyond the two fund Bogle Model (60/40) and when I leave my employment it will all go into the one fund Bogle Model (Balanced Index 60/40).

As Jack has said in Common Sense on Mutual Funds, investing doesn't get better than that.

Most people prefer the 3 funder because it holds international. I personally don't feel it is necessary and neither does Jack Bogle.

Good Luck and stay with Simplicity. Simplicity is the ultimate in Sophistication.

Note: The 60/40 Balanced Index Fund, holding only U.S. stocks in its equity allocation, outperformed the Top University Endowments Returns through June 30, 2016.
Choose Simplicity ~ Stay the Course!! ~ Press on Regardless!!!

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1210sda
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Re: Who uses the 3 fund portfolio ?

Post by 1210sda » Sat Apr 07, 2018 7:06 am

123 wrote:
Fri Apr 06, 2018 9:21 pm
I used a basic 3 or 4 fund portfolio for a number of years. A few months ago I started to switch accounts to a Vanguard LifeStrategy fund that was close enough to my desired asset allocation. I had no issue myself with the 3 or 4 fund portfolio, I didn't mind re-balancing. I am switching to a fund-of-funds to allow more of an auto-pilot situation when I am no longer around. Three of four funds across a number of accounts would look too complex to my spouse so I decided to simplify. I know the expense ratio is higher for a fund-of-funds, I am treating the higher expense ratio as an insurance premium I am willing to pay to hopefully protect my spouse from evil and dastardly financial advisers.
Well said! I agree.

1210

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Re: Who uses the 3 fund portfolio ?

Post by goblue100 » Sat Apr 07, 2018 8:14 am

Taylor Larimore wrote:
Fri Apr 06, 2018 9:48 pm

The "evolutionary path " for most investors is towards simplicity.

Taylor
I agree with this. A lot of people start with a potpourri of selections either just pulled from the air, or possibly through an adviser. As we gain knowledge, we start parring our redundant or nonsensical selections. I am not 3 fund but at least I know why I own the funds beyond the three, and I have been simplifying.
Can't take it with you when you're gone | But I want enough to get there on - Rollin with the flow - Jerry Hayes

aaja
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Re: Who uses the 3 fund portfolio ?

Post by aaja » Sat Apr 07, 2018 10:20 am

Thank you everyone for the replies. Certainly good to see the almost unanimous vote for striving towards simplicity in portfolio allocation. Gives me a lot more confidence in my decision.

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Re: Who uses the 3 fund portfolio ?

Post by Frank Grimes » Sat Apr 07, 2018 1:39 pm

I've been reading here only about a year so I have a lot of stuff in my portfolio, mostly sector ETFs that are low fee and have a lot of capital gains so I'm in no hurry to unload them. But since starting here I've bought only 4 ETFs - total stock market, total international stock market, total bond market and intermediate tax-exempt. So over time the old stuff will have less and less significance to my overall holdings.

401ks are another story in that they don't have those same funds, but I've set them up according to the same principles.

Stewpac14
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Re: Who uses the 3 fund portfolio ?

Post by Stewpac14 » Mon Jun 11, 2018 2:38 pm

I do! I am about 30 years old and VTI, VXUS and BND make up my portfolio. At the moment, I am about 90% stock allocation and 10% bonds. I follow vanguards 2060 retirement funds allocation to match mine up, give or take a few percents.

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Taylor Larimore
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Re: Who uses the 3 fund portfolio ?

Post by Taylor Larimore » Mon Jun 11, 2018 6:14 pm

Stewpac14 wrote:
Mon Jun 11, 2018 2:38 pm
I do! I am about 30 years old and VTI, VXUS and BND make up my portfolio. At the moment, I am about 90% stock allocation and 10% bonds. I follow vanguards 2060 retirement funds allocation to match mine up, give or take a few percents.
Stewpac14:

Welcome to the Bogleheads Forum!

In my opinion, you are on the road to investment success.

Stay the course.

Best wishes.
Taylor
"Simplicity is the master key to financial success." -- Jack Bogle

avoidingdumbmistakes
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Re: Who uses the 3 fund portfolio ?

Post by avoidingdumbmistakes » Mon Jun 11, 2018 7:40 pm

I'm have a slightly more complicated version of the 3 fund. Equities are mostly total US and International with additional tilts with small cap US and emerging markets. Fixed income is split between aggregate bond index, short/intermediate treasuries, and a high yield income fund. Overall I like the allocation very much and it's performing nicely and very easy to maintain. Additional small cap exposure has proven to be smart for now but hard to say how that will perform over over the next 10 years compared to the basic 3 fund. I can easily consolidate becuase I keep the tilts in tax advantaged. My taxable account is total US and Int only so my taxable account is a true set and forget.

I appreciate this forum very much and the knowledge shared here was instrumental in helping me execute a solid plan.

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Cycle
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Location: USA

Re: Who uses the 3 fund portfolio ?

Post by Cycle » Mon Jun 11, 2018 8:03 pm

I am. DW has Target fund in her 401k due to lack of good us market fund.

I'd prefer just 1 fund (Target), but the fees are higher than I'd like. Target fund is .14, but we are sitting at .08 on average by doing a little manual balancing. Perhaps my cheapness is showing here.

One of my favorite pastimes is buying VTIAX every Wednesday.

Independent George
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Re: Who uses the 3 fund portfolio ?

Post by Independent George » Mon Jun 11, 2018 9:11 pm

I'm on the 4-fund portfolio in my IRA, because I bought into the REIT index fund a long time ago, when they were the hot investment, and prefer to ride it out instead of selling. I don't plan on buying any more of it, so it should become more and more like a 3-fund portfolio as time goes on.

I suppose my 401k is really just a different 4-fund portfolio - I'm 100% invested in the Vanguard Target Retirement 2050 fund. I'd prefer not to be invested in international bonds, but that was my best choice available in my 401k.
aaja wrote:
Thu Apr 05, 2018 11:32 pm
I currently have a 4 fund portfolio Total US Stock, Total Intl Stock, Total Bond market and Megacorp. Megacorp is 60% of my current portfolio and I am working on slowly transitioning these over to the 3 fund portfolio. I am maxing out my tax-advantaged accounts and happy that I have a well-defined plan for retirement.
Is Megacorp your employer, received via stock awards?
Last edited by Independent George on Mon Jun 11, 2018 9:19 pm, edited 1 time in total.

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femur
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Re: Who uses the 3 fund portfolio ?

Post by femur » Mon Jun 11, 2018 9:19 pm

I have a plain old 3fund portfolio and am very happy with it. I will, however, go to a 2fund portfolio whenever vanguard total world gets cheap enough or offers admiral shares.

am
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Re: Who uses the 3 fund portfolio ?

Post by am » Mon Jun 11, 2018 9:48 pm

I have a 3 funder. I know I could probably do better with a tilted portfolio with alternate funds described in Larrry’s latest book. But I think it’s good enough for me and my wife who could care less about investing. I don’t have to be patient or have regret about tracking error. I don’t have to keep up with the latest factors, expensive alt. funds, understand complex strategies, etc.

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tuningfork
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Re: Who uses the 3 fund portfolio ?

Post by tuningfork » Mon Jun 11, 2018 9:58 pm

I'm as close to 3-fund as I can get with my accounts across several financial institutions. Vanguard Total US Stock, Total Intl Stock and Total Bond index funds in my Vanguard accounts, equivalent Fidelity index funds in my Fidelity accounts, equivalent ETFs in my HSA brokerage account at TD Ameritrade (previously I used Vanguard ETFs in the HSA but switched when TDA started charging trading fees for Vanguard ETFs), and one lonely active fund in a taxable account, leftover before I knew about index funds, that would incur too much capital gains taxes to bother converting. That fund is my primary source for living expenses and Roth IRA conversion taxes, so I am slowly drawing it down.

My primary goal since I retired 5 years ago has been to simplify, simplify, simplify. 3-fund is easy to understand but performs well enough.

corey407woc
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Re: Who uses the 3 fund portfolio ?

Post by corey407woc » Mon Jun 11, 2018 10:50 pm

2 fund portfolio

VTSAX + Wellesley (Bond fund on steroids)

Wellesley houses my emergency fund and acts as bond fund, I am willing to take a 10% loss if we have another 2008 but also get more than a bond fund

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FrugalInvestor
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Re: Who uses the 3 fund portfolio ?

Post by FrugalInvestor » Mon Jun 11, 2018 11:36 pm

theplayer11 wrote:
Fri Apr 06, 2018 5:56 am
4..couldn't decide on the bond fund so I bought both BND and BIV
Between us we average 3.

I had 3 but never was never dedicated to Total International. I needed income beyond dividends in retirement and also needed to keep income down for ACA purposes. Total International had the lowest cap gains so that made the decision for me. I liquidated the last of it in 2017. So now I'm Total Stock Market in Taxable and Total Bond Market in retirement accounts.
IGNORE the noise! | Our life is frittered away by detail... simplify, simplify. - Henry David Thoreau

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