Does anyone use a one fund portfolio?

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nptit
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Does anyone use a one fund portfolio?

Post by nptit »

The market swings have me thinking, does anyone use a one fund portfolio? I am thinking about simplifying from my current three fund portfolio. This may help simplify things like dealing with rebalancing, tax loss harvesting, and some mental games regarding tilting your allocations.

For example https://investor.vanguard.com/mutual-fu ... file/VSMGX A Vanguard fund that is a combination of their main stock/bond funds targeted at 60% stocks 40% bonds.

What are the pros and cons of this approach? Does it matter if this is in taxable account vs IRA?

Only cons I see is the inability to tax loss harvest? Would it make a difference regarding regular income taxes or level of significance?

Thanks!
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David Jay
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Re: Does anyone use a one fund portfolio?

Post by David Jay »

Extensive discussion here: viewtopic.php?t=287967
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jjface
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Re: Does anyone use a one fund portfolio?

Post by jjface »

A lot of people do. There are a lot of advantages to simplicity.

It won't be the most tax efficient and tax loss harvesting isn't as easy or efficient (have to sell the bonds too) but is still possible (eg vanguard balanced index to vanguard wellington to vanguard lifestrategy moderate growth). But the simplicity may outweigh both of those.

I highly recommend 1 fund to those who have trouble seeing their balances fall during crashes as the fund will hide the magnitude of how much stocks have dropped to some degree. It is also easy for those who don't want to mess and tinker. Or who are too tempted to tinker too much if they have lots of funds. It helps with discipline.
Triple digit golfer
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Re: Does anyone use a one fund portfolio?

Post by Triple digit golfer »

Do it if you have access to your desired fund in all of your accounts. I wouldn't think twice.
Topic Author
nptit
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Re: Does anyone use a one fund portfolio?

Post by nptit »

Triple digit golfer wrote: Sat Mar 28, 2020 9:26 pm Do it if you have access to your desired fund in all of your accounts. I wouldn't think twice.
So I have access to it in my Taxable and IRAs that are with Vanguard. My 401k will not have this option, but should be able to do something comparable. I do make sure to rollover my 401k whenever I switch jobs to my Vanguard IRA, so that helps!
Ferdinand2014
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Re: Does anyone use a one fund portfolio?

Post by Ferdinand2014 »

nptit wrote: Sat Mar 28, 2020 9:21 pm The market swings have me thinking, does anyone use a one fund portfolio? I am thinking about simplifying from my current three fund portfolio. This may help simplify things like dealing with rebalancing, tax loss harvesting, and some mental games regarding tilting your allocations.

For example https://investor.vanguard.com/mutual-fu ... file/VSMGX A Vanguard fund that is a combination of their main stock/bond funds targeted at 60% stocks 40% bonds.

What are the pros and cons of this approach? Does it matter if this is in taxable account vs IRA?

Only cons I see is the inability to tax loss harvest? Would it make a difference regarding regular income taxes or level of significance?

Thanks!
Yes, for all the reasons you suggest. I personally only own FXAIX (Fidelity 500 index fund) and 3 years of expenses in treasury bills (cash). I do not rebalance, do not maintain an asset allocation and have my investments on automatic investing every Friday. It has completely eliminated mental games. I am very happy.
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UpperNwGuy
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Re: Does anyone use a one fund portfolio?

Post by UpperNwGuy »

Ferdinand2014 wrote: Sat Mar 28, 2020 9:31 pm
nptit wrote: Sat Mar 28, 2020 9:21 pm The market swings have me thinking, does anyone use a one fund portfolio? I am thinking about simplifying from my current three fund portfolio. This may help simplify things like dealing with rebalancing, tax loss harvesting, and some mental games regarding tilting your allocations.

For example https://investor.vanguard.com/mutual-fu ... file/VSMGX A Vanguard fund that is a combination of their main stock/bond funds targeted at 60% stocks 40% bonds.

What are the pros and cons of this approach? Does it matter if this is in taxable account vs IRA?

Only cons I see is the inability to tax loss harvest? Would it make a difference regarding regular income taxes or level of significance?

Thanks!
Yes, for all the reasons you suggest. I personally only own FXAIX (Fidelity 500 index fund) and 3 years of expenses in treasury bills (cash). I do not rebalance, do not maintain an asset allocation and have my investments on automatic investing every Friday. It has completely eliminated mental games. I am very happy.
I have considered going to a one-fund portfolio. If I ever do, the one-fund would probably be either VFIAX or FXAIX with VTSAX and FSKAX as TLH partners. I would need to emulate Ferdinand2014 and have a fixed amount in cash or bonds off to the side. I would not hold a balanced fund containing both stocks and bonds.

At present, however, I am 60/40 in separate stock and bond funds.
Normchad
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Re: Does anyone use a one fund portfolio?

Post by Normchad »

I don’t have a one fund portfolio, but I have considered it in the past.

Currently, I have a bunch of accounts, and I probably couldn’t get them all into one fund at this time.

However, I do like the simplicity of it. I’d consider either. VBIAX or VSMGX for myself. (I do own a bunch of VSMGX already.

I love the idea of the simplicity of it. And the tax efficiency arguments don’t really sway me in either direction. For me, the most attractive aspect is that it would be something my wife could manage if I predeceased her.
SevenBridgesRoad
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Re: Does anyone use a one fund portfolio?

Post by SevenBridgesRoad »

nptit wrote: Sat Mar 28, 2020 9:21 pm The market swings have me thinking, does anyone use a one fund portfolio? I am thinking about simplifying from my current three fund portfolio. This may help simplify things like dealing with rebalancing, tax loss harvesting, and some mental games regarding tilting your allocations.

For example https://investor.vanguard.com/mutual-fu ... file/VSMGX A Vanguard fund that is a combination of their main stock/bond funds targeted at 60% stocks 40% bonds.

What are the pros and cons of this approach? Does it matter if this is in taxable account vs IRA?

Only cons I see is the inability to tax loss harvest? Would it make a difference regarding regular income taxes or level of significance?

Thanks!
Yes. There is an entire thread on this subject:
viewtopic.php?f=10&t=287967

Member "longinvest" has a number of convincing arguments for one-fund and answers your questions in the thread I'm directing you to. It's a bit non-conventional wisdom for the BH forum, but it makes a lot of rational sense.
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travelogue
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Re: Does anyone use a one fund portfolio?

Post by travelogue »

Of course the target date index funds are great as well. Or maybe VGWLX — I have an allocation to this fund and hope the ER decreases as AUM goes up. On the ETF side, AOM/AOK/AOA could be an option.
Last edited by travelogue on Sat Mar 28, 2020 10:41 pm, edited 1 time in total.
dru808
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Re: Does anyone use a one fund portfolio?

Post by dru808 »

nptit wrote: Sat Mar 28, 2020 9:21 pm The market swings have me thinking, does anyone use a one fund portfolio? I am thinking about simplifying from my current three fund portfolio. This may help simplify things like dealing with rebalancing, tax loss harvesting, and some mental games regarding tilting your allocations.

For example https://investor.vanguard.com/mutual-fu ... file/VSMGX A Vanguard fund that is a combination of their main stock/bond funds targeted at 60% stocks 40% bonds.

What are the pros and cons of this approach? Does it matter if this is in taxable account vs IRA?

Only cons I see is the inability to tax loss harvest? Would it make a difference regarding regular income taxes or level of significance?

Thanks!
This was my primary fund for 3 years or so when I first started investing. I still own it but have since added a couple slices of active & factor funds to it.

I’d be perfectly comfortable holding this instead of a 3-4 fund diy portfolio if I gave up Wellington & dividend growth.
..........
jpmorganfunds
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Re: Does anyone use a one fund portfolio?

Post by jpmorganfunds »

jjface wrote: Sat Mar 28, 2020 9:25 pm I highly recommend 1 fund to those who have trouble seeing their balances fall during crashes as the fund will hide the magnitude of how much stocks have dropped to some degree.
Isn't that the biggest disadvantage? You won't be able to rebalance or supplement the lagging segments.
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travelogue
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Re: Does anyone use a one fund portfolio?

Post by travelogue »

jpmorganfunds wrote: Sat Mar 28, 2020 10:40 pm
jjface wrote: Sat Mar 28, 2020 9:25 pm I highly recommend 1 fund to those who have trouble seeing their balances fall during crashes as the fund will hide the magnitude of how much stocks have dropped to some degree.
Isn't that the biggest disadvantage? You won't be able to rebalance or supplement the lagging segments.
It’s the biggest advantage as well. You won’t screw up by fiddling and making the wrong moves (or failing to make moves, or regretting what you did or didn’t do and feeling bad about it). The fund handles it all automatically and keeps you on a reasonable track in accordance with its promised asset allocation. If that fits your investment policy, bingo! Just keep investing and stay the course.
Last edited by travelogue on Sat Mar 28, 2020 10:47 pm, edited 1 time in total.
BrownEyedGirl_27
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Re: Does anyone use a one fund portfolio?

Post by BrownEyedGirl_27 »

I basically use total market US index funds across all of my investments except for my company's 401k, which offers a low-cost S&P 500 index fund.
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KEotSK66
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Re: Does anyone use a one fund portfolio?

Post by KEotSK66 »

100% vwiax when i retire

matching a fund to your plan makes staying the course easy, everything that happens just seems to come with the territory. this too will pass

can't make changes to a single fund portfolio either, can't get in the black box and play portfolio manager. a man's gotta realize his limitations

after a while change is just too much trouble. benign neglect

kiss
"i just got fluctuated out of $1,500", jerry
jjface
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Re: Does anyone use a one fund portfolio?

Post by jjface »

jpmorganfunds wrote: Sat Mar 28, 2020 10:40 pm
jjface wrote: Sat Mar 28, 2020 9:25 pm I highly recommend 1 fund to those who have trouble seeing their balances fall during crashes as the fund will hide the magnitude of how much stocks have dropped to some degree.
Isn't that the biggest disadvantage? You won't be able to rebalance or supplement the lagging segments.
Nope an all in one fund rebalances daily. You don't even have to think about it.

Biggest disadvantage is tax inefficiency. You can't put your bonds in tax advantaged. You can't tax loss harvest as easily or efficiently.
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Re: Does anyone use a one fund portfolio?

Post by pkcrafter »

nptit wrote: Sat Mar 28, 2020 9:21 pm The market swings have me thinking, does anyone use a one fund portfolio? I am thinking about simplifying from my current three fund portfolio. This may help simplify things like dealing with rebalancing, tax loss harvesting, and some mental games regarding tilting your allocations.

For example https://investor.vanguard.com/mutual-fu ... file/VSMGX A Vanguard fund that is a combination of their main stock/bond funds targeted at 60% stocks 40% bonds.

What are the pros and cons of this approach? Does it matter if this is in taxable account vs IRA?

Only cons I see is the inability to tax loss harvest? Would it make a difference regarding regular income taxes or level of significance?

Thanks!
Yes, it would make a difference in taxable income. I will suggest you consider Vanguard tax-managed balanced, VTMFX ~50/50. You could use total stock market or some lifestragy growth to get the allocation up to a target of 60 equity.

Paul
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smectym
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Re: Does anyone use a one fund portfolio?

Post by smectym »

KEotSK66 wrote: Sat Mar 28, 2020 10:54 pm 100% vwiax when i retire

matching a fund to your plan makes staying the course easy, everything that happens just seems to come with the territory. this too will pass

can't make changes to a single fund portfolio either, can't get in the black box and play portfolio manager. a man's gotta realize his limitations

after a while change is just too much trouble. benign neglect

kiss
We have “too many” funds, not all of which make it possible to invest in Vanguard Wellesley Income (VWIAX), but yes: that’s what both our IRA’s are in. A solid choice and it has withstood the stress test of this market insanity so far, relatively well. Of course, needing a little assistance from the Fed on the corporate bond side: and corporate bonds, even investment grade, are a question mark right now: could prove to be an Achilles’ heel for VWIAX going forward. Still, any conversation about one fund investing shouldn’t ignore VWIAX
matti
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Re: Does anyone use a one fund portfolio?

Post by matti »

I don't have a ton of investing or market knowledge, so I have all of my retirement funds invested in Vanguard Target Retirement 2040. I like that I don't have to make decisions, worry about rebalancing, etc. It may not be perfect, but for someone like me it is a good fit.
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1789
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Re: Does anyone use a one fund portfolio?

Post by 1789 »

I am using one fund SP500/US TSM in every account i have. But I have CA$H in money market account as well.
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iamblessed
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Re: Does anyone use a one fund portfolio?

Post by iamblessed »

He does https://www.youtube.com/watch?v=T71ibcZAX3I

I think LifeStrategy Moderate Growth looks great.
Last edited by iamblessed on Sun Mar 29, 2020 12:33 pm, edited 1 time in total.
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KEotSK66
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Re: Does anyone use a one fund portfolio?

Post by KEotSK66 »

LSMG is a good choice

wellington is a good choice too, for a 60/40-ish AA

good luck
"i just got fluctuated out of $1,500", jerry
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Re: Does anyone use a one fund portfolio?

Post by L82GAME »

I currently enjoy having the flexibility to TLH and have only VTSAX in our Taxable account. However, I foresee the value in retirement of transitioning to the low maintenance set-and-forget attributes of one fund.
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longinvest
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Re: Does anyone use a one fund portfolio?

Post by longinvest »

I do. Here's what I wrote in another thread:
longinvest wrote: Tue Mar 10, 2020 6:02 pm Last year I moved my entire portfolio into an all-in-one Vanguard "Asset Allocation ETF" very similar to a LifeStrategy fund (except for a different home bias). I was lucky to do the switch early enough before having accumulated significant unrealized gains in my taxable account. This has made investing much simpler for my wife and, surprisingly, for me (which isn't something I had anticipated). I had not realized how simpler a One-Fund Portfolio actually is. It almost feels like a bank account, except for its fluctuating balance, in that I only have to regularly put money in. I don't have to think, anymore, about planning rebalancing moves carefully to avoid (the equivalent of) wash sales, etc.

I think that there's a lot of unfounded fear about the use of a lifestrategy or a target date fund in a taxable account. I think that too few forum members pay attention to the following statement of our wiki's page on Tax-efficient fund placement: "Tax rates and brackets change frequently. What was a logical tax location one year may turn out to be a poor choice a few years later. Consider if it's worth the effort (added complexity) to take this approach."

I've provided, in the One-Fund Portfolio thread, a mathematical proof that a mirrored asset allocation is more resilient in face of an unknown future than prioritizing the placement of a specific asset (stocks or bonds) into specific tax-advantaged accounts:
longinvest wrote: Thu Oct 17, 2019 12:28 am Here's the thing. If prioritizing bonds in tax-advantaged accounts turns out to be best over one's specific lifetime, a mirrored allocation will turn out to be superior to having prioritized stocks in tax-advantaged accounts. If prioritizing stocks in tax-advantaged accounts turns out to be best over one's specific lifetime, a mirrored allocation will turn out to be superior to having prioritized bonds in tax-advantaged accounts. A mirrored allocation is thus mathematically guaranteed not to turn out to have been the worst location strategy among these three strategies, even if tax laws change in unexpected ways.
Some people might consider this mathematical guarantee, of not being the worst asset location strategy, "not very attractive", yet I have not seen a mathematical proof of a "more attractive" asset location strategy that is guaranteed to always beat a simple mirrored allocation strategy.

It's quite similar to indexing, when you think about it. William Sharpe's theorem guarantees that a simple total-market cap-weighted index investment strategy is guaranteed to never be worse than average (before fees). Some people might consider this mathematical guarantee "not very attractive", yet I have not seen a mathematical proof of a "more attractive" investment strategy that is guaranteed to always beat it.

Now that I have experienced the simplicity of a One-Fund Portfolio (with, obviously, a mirrored asset allocation) and the peace of mind it brings, I'll never go back to holding separate funds or ETFs.
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Invest4Life2882
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Re: Does anyone use a one fund portfolio?

Post by Invest4Life2882 »

I like to invest and track and even I love the simplistic approach.

I use VFFVX in my 401K and would use it in every account but I don’t want that much exposure to foreign equities. So I use VTSAX in my taxable, Roth, and HSA to tilt heavier to US markets.

Also use VBTLX for my bonds in Roth.

So all in I am using three total funds.

VFFVX
VTSAX
VBTLX

And I use new investments to keep me at my desired 90%+ equity allocation.
MadHungarian
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Re: Does anyone use a one fund portfolio?

Post by MadHungarian »

Well i just switched my smaller Vanguard IRA from three-fund to a single balanced fund (at about the same AA). Because Vanguard doesn't do automatic rebalancing, and in times when the market is doing distressing things, i like to put my investments on complete autopilot and go hands-off for awhile. I took this same approach back in the previous market crashes and it worked out well for me before.
Redlion
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Re: Does anyone use a one fund portfolio?

Post by Redlion »

Not sure if anyone mentioned this, The Life Strategy funds can be used as a one fund portfolio and are pretty common.
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Re: Does anyone use a one fund portfolio?

Post by bgf »

nptit wrote: Sat Mar 28, 2020 9:28 pm
Triple digit golfer wrote: Sat Mar 28, 2020 9:26 pm Do it if you have access to your desired fund in all of your accounts. I wouldn't think twice.
So I have access to it in my Taxable and IRAs that are with Vanguard. My 401k will not have this option, but should be able to do something comparable. I do make sure to rollover my 401k whenever I switch jobs to my Vanguard IRA, so that helps!
i do and hold AOA in my 401k. look into ishares core allocation ETFs for your 401k, mentioned by another poster above.

in our other accounts we hold target date funds.
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Scott S
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Re: Does anyone use a one fund portfolio?

Post by Scott S »

I switched my 401k to a single TR fund a year ago. To be honest, I sometimes wish I had done my whole portfolio in TR funds from the get-go. Sure, the AA and glidepath may not be what everyone has in mind, but by taking away the option to tinker, they remove the ability to make a lot of bad decisions. :beer
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Re: Does anyone use a one fund portfolio?

Post by Olemiss540 »

I am entirely in a target date retirement fund. I am happy to not have any decisions to make and pay a very small premium so other much more intelligent folks make those decisions for me.

Simplicity can be extremely helpful when guarding against behavioral mistakes we are all prone to making.
I hold index funds because I do not overestimate my ability to pick stocks OR stock pickers.
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Re: Does anyone use a one fund portfolio?

Post by GibsonL6s »

I try to as much as possible, my small IRA is now one balanced funds after an ill advised ETN wipeout. An inherited IRA I have is a Schwab Target date fund. My 401k is a few Vanguard funds but honestly if they had the target date funds, it would be in that. I wish my taxable was, but it is a few left over individual stock and mostly VTI after tax loss harvesting VT.

If I had it to do over again, I would have just bought one US stock fund or ETF, left out the individual stocks and had a few CDs or treasuries for the EF. Simple is better.
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Re: Does anyone use a one fund portfolio?

Post by Bama12 »

I use 10 funds and 30 stocks :)
jyou1651
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Re: Does anyone use a one fund portfolio?

Post by jyou1651 »

If rebalancing is a concern of yours, I'm curious how often you rebalance your portfolio? I've always read and understood that rebalancing needs to occur once a year... and with very little emphasis on exactness to your percentages.
Samueul
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Re: Does anyone use a one fund portfolio?

Post by Samueul »

Redlion wrote: Sun Mar 29, 2020 12:51 pm Not sure if anyone mentioned this, The Life Strategy funds can be used as a one fund portfolio and are pretty common.
Yep, all in on VASGX (Growth fund 80/20) in my Roth, will switch to moderate growth fund when I hit 50 and go from there.
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Re: Does anyone use a one fund portfolio?

Post by abuss368 »

nptit wrote: Sat Mar 28, 2020 9:21 pm The market swings have me thinking, does anyone use a one fund portfolio? I am thinking about simplifying from my current three fund portfolio. This may help simplify things like dealing with rebalancing, tax loss harvesting, and some mental games regarding tilting your allocations.

For example https://investor.vanguard.com/mutual-fu ... file/VSMGX A Vanguard fund that is a combination of their main stock/bond funds targeted at 60% stocks 40% bonds.

What are the pros and cons of this approach? Does it matter if this is in taxable account vs IRA?

Only cons I see is the inability to tax loss harvest? Would it make a difference regarding regular income taxes or level of significance?

Thanks!
We simplified from a 6 Fund Portfolio of Total Stock, Total International, US REIT, International REIT, Total Bond, and Total International Bond to simply Total Stock and Total Bond.

It is working much better and less motivated to tinker with.
John C. Bogle: “Simplicity is the master key to financial success."
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