Does every one here only have 3 funds in their portfolios?

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22twain
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Re: Does every one here only have 3 funds in their portfolios?

Post by 22twain »

As others have noted, exceptions to "3-fund purity" are often due to limited choices in employer retirement plans: 401(k), 403(b), etc.

As a retired college professor, my main investment vehicle is my TIAA 403(b) plan, in which I've always used only the bond-like TIAA Traditional account and the CREF Stock account (US + international). Two funds!

That was my only investment vehicle until my mid 50s, when I received an inheritance. After a couple of years with a collection of T. Rowe Price mutual funds, I discovered Bogleheads and replaced them with two Vanguard ETFs: VT (Total World Stock) and BND (Total Bond Market).

So now I technically have four funds, but they "pair up" functionally: TIAA Traditional and BND on the one hand, and CREF Stock and VT on the other hand.
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Re: Does every one here only have 3 funds in their portfolios?

Post by helloeveryone »

Zillions wrote: Tue Jun 02, 2020 4:32 pm I just placed sell orders for all the mutual funds & ETFs that are not total stock / bond / international markets index funds.

I understand that this is Bogleheads and that this is also deeply personal but is the 3 fund portfolio the norm here? I don't intend to offend anyone. We've been with this portfolio for a while now and it was very very difficult to dump 90% of our portfolio to exchange into the 3 funds. I guess I am just looking for some reassurance. This is the portfolio that will one day feed / clothe / shelter my disabled kid long after I am gone, so I am really emotional right now.
I have two funds - index 500 (fidelity) and vanguard total bond.
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jakehefty17
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Re: Does every one here only have 3 funds in their portfolios?

Post by jakehefty17 »

I agree with this recommendation to anyone who is new to investing, wants to simplify a complicated portfolio, or doesn't want to monitor their accounts. There is nothing wrong with the 3 fund portfolio. However, not everyone will be content with the ultimate simplicity.

The Bogleheads investment philosophy states:
1) Develop a workable plan
2) Invest early and often
3) Never bear too much or too little risk
4) Diversify
5) Never try to time the market
6) Use index funds when possible
7) Keep costs low
8) Minimize taxes
9) Invest with simplicity
10) Stay the course

As long as you are following this philosophy, you're doing fine.

I deviate from the three fund in the following ways:
1) I hold a Developed Global REIT index fund in my 401k. Very low cost, and potential for diversity.
2) I split my bond holdings to include US Aggregate index, TIPS index and ex-US (USD hedged) index. For diversity.
3) I split my US stock holdings into S&P 500 and Extended Market index. For a moderate tilt into mid and small caps.

Variety is the spice of life. I'd say if you have access to low-cost funds with the potential to increase diversity, you should consider them.
"The problem with the world is that the intelligent people are full of doubts, while the stupid ones are full of confidence." -Charles Bukowski
Dave55
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Re: Does every one here only have 3 funds in their portfolios?

Post by Dave55 »

abuss368 wrote: Wed Jun 03, 2020 7:50 pm
Dave55 wrote: Wed Jun 03, 2020 7:48 pm
abuss368 wrote: Wed Jun 03, 2020 5:50 pm
Dave55 wrote: Wed Jun 03, 2020 8:48 am Four funds/ETF's at the moment, but this could change in the future.
VTI - Vanguard Total Stock
VXUS - Vanguard Total International Stock
VFSUX - Vanguard Short-Term Investment-Grade Fund
VBTLX - Vanguard Total Bond Index

Dave
What changes are you considering Dave? More simplicity?
Too simple, not good. Too complicated, not ideal. The middle road is just about right! In all seriousness, I really don't know right now. One thought I have is in the event bonds went negative, I would not own them. I would rather get 0% in an FDIC account.

Dave
Nominal or real rates going negative?
Nominal.
dbr
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Re: Does every one here only have 3 funds in their portfolios?

Post by dbr »

It is frequently the case that authors and educators in things financial lay out portfolios for people. But these things exist to teach and illustrate and only in rare cases can be taken literally as an actual plan for someone to implement. Posters on this thread have pointed out many reasons that actual portfolios might be different.

What is important is to replicate the concept and the rationale that is being illustrated by the three fund idea.

On the other hand there are lots of portfolios, plenty of them on the forum, that really do depart from the three fund idea for good reasons or bad. That is one of the reasons this board has the amount of discussion it does.

I would not say it is easy to wade through all of this in casual reading, in a short time, and without some thought.
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Re: Does every one here only have 3 funds in their portfolios?

Post by abuss368 »

Dave55 wrote: Thu Jun 04, 2020 7:32 am
abuss368 wrote: Wed Jun 03, 2020 7:50 pm
Dave55 wrote: Wed Jun 03, 2020 7:48 pm
abuss368 wrote: Wed Jun 03, 2020 5:50 pm
Dave55 wrote: Wed Jun 03, 2020 8:48 am Four funds/ETF's at the moment, but this could change in the future.
VTI - Vanguard Total Stock
VXUS - Vanguard Total International Stock
VFSUX - Vanguard Short-Term Investment-Grade Fund
VBTLX - Vanguard Total Bond Index

Dave
What changes are you considering Dave? More simplicity?
Too simple, not good. Too complicated, not ideal. The middle road is just about right! In all seriousness, I really don't know right now. One thought I have is in the event bonds went negative, I would not own them. I would rather get 0% in an FDIC account.

Dave
Nominal or real rates going negative?
Nominal.
I believe I may have read (but not sure) that some real rates have gone negative. Have you heard anything about this?
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Re: Does every one here only have 3 funds in their portfolios?

Post by White Coat Investor »

abuss368 wrote: Wed Jun 03, 2020 5:51 pm We have the very simple and effective Two Fund Portfolio as recommended by Jack Bogle and Warren Buffett. Total Stock and Total Bond work well.
I'm not sure I've ever heard Warren Buffett recommend the Total Stock Market Fund.
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Re: Does every one here only have 3 funds in their portfolios?

Post by abuss368 »

White Coat Investor wrote: Thu Jun 04, 2020 10:37 am
abuss368 wrote: Wed Jun 03, 2020 5:51 pm We have the very simple and effective Two Fund Portfolio as recommended by Jack Bogle and Warren Buffett. Total Stock and Total Bond work well.
I'm not sure I've ever heard Warren Buffett recommend the Total Stock Market Fund.
Correct as his annual report in 2013 noted a simple Two Fund Portfolio of S&P 500 and Treasuries. There is a story (you would have to look for it if interested) where Jack Bogle wrote Warren Buffet asking why the recommendation is S&P 500 and not Total Stock. At that time, I believe Mr. Bogle did not yet receive a response. Over the long term it probably does not matter.
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Re: Does every one here only have 3 funds in their portfolios?

Post by Vanguard Fan 1367 »

White Coat Investor wrote: Thu Jun 04, 2020 10:37 am
abuss368 wrote: Wed Jun 03, 2020 5:51 pm We have the very simple and effective Two Fund Portfolio as recommended by Jack Bogle and Warren Buffett. Total Stock and Total Bond work well.
I'm not sure I've ever heard Warren Buffett recommend the Total Stock Market Fund.
I am pretty sure that I have "heard" or read that Buffet doesn't like bonds.
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Re: Does every one here only have 3 funds in their portfolios?

Post by dacalo »

Not us, although majority of our holdings are total stock market MFs or ETFs. We also have sector specific ETFs and individual stocks.
heyyou
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Re: Does every one here only have 3 funds in their portfolios?

Post by heyyou »

My stock portfolio is a slice and dice of size, value, and domestic/foreign index funds, because that is what suits me better than one or two cap-weighted total market funds, where I was when the 2000 Crash occurred. The top handful of stocks were so overvalued (and lost so much), delaying my retirement, it didn't seem prudent to continue on that course.

Others are welcome to do whatever suits them.
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Re: Does every one here only have 3 funds in their portfolios?

Post by Elric »

Vanguard Fan 1367 wrote: Thu Jun 04, 2020 2:33 pm I am pretty sure that I have "heard" or read that Buffet doesn't like bonds.
Biffet" My advice to the trustee could not be more simple: Put 10% of the cash in short-term government bonds and 90% in a very low-cost S&P 500 index fund. (I suggest Vanguard's. (NASDAQMUTFUND:VFIN.X)) I believe the trust's long-term results from this policy will be superior to those attained by most investors -- whether pension funds, institutions, or individuals -- who employ high-fee managers."

When you have that level of wealth, 10% bonds can tide you over market downturns. Very few have that level of wealth.
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Re: Does every one here only have 3 funds in their portfolios?

Post by dbr »

Elric wrote: Fri Jun 05, 2020 12:43 am
Vanguard Fan 1367 wrote: Thu Jun 04, 2020 2:33 pm I am pretty sure that I have "heard" or read that Buffet doesn't like bonds.
Biffet" My advice to the trustee could not be more simple: Put 10% of the cash in short-term government bonds and 90% in a very low-cost S&P 500 index fund. (I suggest Vanguard's. (NASDAQMUTFUND:VFIN.X)) I believe the trust's long-term results from this policy will be superior to those attained by most investors -- whether pension funds, institutions, or individuals -- who employ high-fee managers."

When you have that level of wealth, 10% bonds can tide you over market downturns. Very few have that level of wealth.
This recommendation by Buffett is hardly a departure from the basic investments of the three fund portfolio, international being the perpetual discussion. But one should underline that the major departure from what people here generally accept is the high allocation to stocks no matter who the investor is. The three fund idea contains the concept that investors should not take too much risk nor take too little risk.

I would add that simply mouthing the words "three fund portfolio" does not contain the information that is needed to decide how to invest. The words refer to a body of learning and discussion that a person needs to attend to eventually arrive at a plan.

But back to Buffett, it is unlikely most people here would hold Buffett's recommendation, though that recommendation could be appropriate for some investors. Also people need to stop worrying about how there might be something wrong with total stock funds while the S&P 500 can be used.
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Re: Does every one here only have 3 funds in their portfolios?

Post by Lazareth »

To the OP, congratulations on your move toward a simple, elegant, and informed three (or four) fund portfolio. In 2018, after 30 years of active stock picking and chasing fund performance, I took that big step and sold everything down to three index funds. I am so happy with the results.... low costs, above average performance, I sleep well, and I can tweek the risk level very easily and economically whenever I can't resist.
a/66, retired, married, enjoy p/t employment.
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Re: Does every one here only have 3 funds in their portfolios?

Post by nanameg »

dbr wrote: Wed Jun 03, 2020 9:24 am I would wager almost no one here actually has just three funds invested altogether.

That is for two perfectly good reasons that are still completely consistent with the idea of a three fund portfolio.

1. The funds one actually holds can be affected by what is available in various retirement plans such as 401, 403, 457, etc. distinct from what can be chosen in an IRA or taxable brokerage account. But saying that holding an S&P 500 fund in a 401k and a total stock fund in taxable is different funds while literally true is not different asset allocation for purposes of thinking of the three fund portfolio.

2. For any variety of additional reasons people hold more than one fund that for practical purposes are not different from the idea of a three fund portfolio. I hold Treasury and TIPS funds rather than Total Bond but I don't think all those low cost intermediate duration bond funds are different enough from the overall point of view to make a distinction. I would probably also not distinguish CDs at the same conceptual level.

(3.) I also don't think eschewing international stocks is a fundamental violation of the concept.

People make way too big a deal about choosing exactly what funds to own. People also don't pay enough attention to the fact that what matters is the overall return and risk to return of the portfolio as a whole. People need to stop selecting funds like they were going through the options list on the purchase of an automobile.
Can u explain why you think eschewing international stocks in not a fundamental violation of the concept of the three fund portfolio? I don’t understand.
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Re: Does every one here only have 3 funds in their portfolios?

Post by dbr »

nanameg wrote: Sat Jun 06, 2020 6:35 am
Can u explain why you think eschewing international stocks in not a fundamental violation of the concept of the three fund portfolio? I don’t understand.
I answered your question in a post on June 3.
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Re: Does every one here only have 3 funds in their portfolios?

Post by avidlearner »

In principle yes but actual tickers may vary because of TLH or company retirement accounts offering different funds than vanguard.
nanameg
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Re: Does every one here only have 3 funds in their portfolios?

Post by nanameg »

dbr wrote: Sat Jun 06, 2020 8:30 am
nanameg wrote: Sat Jun 06, 2020 6:35 am
Can u explain why you think eschewing international stocks in not a fundamental violation of the concept of the three fund portfolio? I don’t understand.
I answered your question in a post on June 3.
I’m sorry but I don’t understand your answer from june 3.

I think you’re saying it’s ok not to hold international if u don’t want to and that u do personally but u don’t say why not holding international is still a three fund portfolio. I’m sure I’m missing something in your answer.
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Re: Does every one here only have 3 funds in their portfolios?

Post by dbr »

nanameg wrote: Sat Jun 06, 2020 10:36 am
dbr wrote: Sat Jun 06, 2020 8:30 am
nanameg wrote: Sat Jun 06, 2020 6:35 am
Can u explain why you think eschewing international stocks in not a fundamental violation of the concept of the three fund portfolio? I don’t understand.
I answered your question in a post on June 3.
I’m sorry but I don’t understand your answer from june 3.

I think you’re saying it’s ok not to hold international if u don’t want to and that u do personally but u don’t say why not holding international is still a three fund portfolio. I’m sure I’m missing something in your answer.
It isn't a three fund portfolio -- and it doesn't matter that it is not. That is what I mean to say.

The underlying point is that there is a set of important ideas behind the suggestion of "the three fund portfolio" but two ideas that are not important are exactly how many funds there are and whether or not there is a holding of international stocks -- or of international bonds for that matter. That's the best I can do.

If you want me as an example I do hold a little in international stocks and all my bonds are intermediate Treasuries and intermediate TIPS. It doesn't mean anything whether or not someone wants to say I do or do not have a three fund portfolio. Obviously with four funds it isn't I guess, if a person wants to take the issue literally.
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Re: Does every one here only have 3 funds in their portfolios?

Post by nanameg »

dbr wrote: Sat Jun 06, 2020 10:59 am
nanameg wrote: Sat Jun 06, 2020 10:36 am
dbr wrote: Sat Jun 06, 2020 8:30 am
nanameg wrote: Sat Jun 06, 2020 6:35 am
Can u explain why you think eschewing international stocks in not a fundamental violation of the concept of the three fund portfolio? I don’t understand.
I answered your question in a post on June 3.
I’m sorry but I don’t understand your answer from june 3.

I think you’re saying it’s ok not to hold international if u don’t want to and that u do personally but u don’t say why not holding international is still a three fund portfolio. I’m sure I’m missing something in your answer.
It isn't a three fund portfolio -- and it doesn't matter that it is not. That is what I mean to say.

The underlying point is that there is a set of important ideas behind the suggestion of "the three fund portfolio" but two ideas that are not important are exactly how many funds there are and whether or not there is a holding of international stocks -- or of international bonds for that matter. That's the best I can do.

If you want me as an example I do hold a little in international stocks and all my bonds are intermediate Treasuries and intermediate TIPS. It doesn't mean anything whether or not someone wants to say I do or do not have a three fund portfolio. Obviously with four funds it isn't I guess, if a person wants to take the issue literally.
What I’m interested in is the thinking behind what experienced and articulate investors do and have done and what they’ve learned from what they’ve done.

I don’t think the literal number of funds matter at all either . The important concept of the three fund portfolio seems to be that simplicity and inexpensive passive investing is doable and successful for the average investor.

The sticking point for me is the brouhaha over international vs us only on this forum. The three fund portfolio ALWAYS seems to include international and that’s the important distinction I’m interested in..not the literal number of funds. It doesn’t seem it can be said that someone follows the concept behind three fund portfolio and also doesn’t hold international stocks.

I’m not interested in the actual number of funds as much as I’m interested in international holdings vs us only and the thinking behind those decisions.
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Re: Does every one here only have 3 funds in their portfolios?

Post by scrabbler1 »

I have 6 total funds, 2 in my rollover IRA and 4 others in my taxable accounts (3 from my main financial institution and 1 from a different one). This came about from a gradual consolidation in both my taxable accounts and old 401k going back 15 years. I am an early retiree, so the taxable account spins off enough income, mostly from one big bond fund, to pay my bills. The rollover IRA has 2 funds, a bond fund and a stock index fund, waiting for me to access it if I need it in a few years (I am 57). Besides the big bond fund, in my taxable account I have a stock index fund, too (different from the IRA's). I also have another bond fund which acts as my second-tier emergency fund because it has checkwriting privileges. Then I have another bond fund which is like an extra slush fund, maybe 3% of my total portfolio. This has been my setup since I began my early retirement in late 2008 and it has been simple enough to manage and keep track of.
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Re: Does every one here only have 3 funds in their portfolios?

Post by dbr »

nanameg wrote: Sat Jun 06, 2020 12:07 pm

The sticking point for me is the brouhaha over international vs us only on this forum. The three fund portfolio ALWAYS seems to include international and that’s the important distinction I’m interested in..not the literal number of funds. It doesn’t seem it can be said that someone follows the concept behind three fund portfolio and also doesn’t hold international stocks.

I’m not interested in the actual number of funds as much as I’m interested in international holdings vs us only and the thinking behind those decisions.
I can't help you with that. Just to show how useless I am, I don't think international is critical to a good investment plan and I hold some international myself.

Maybe the best comment is one that goes back to Taylor who I think once said that the more something is discussed the less important it probably is. I have sometimes made the statement is that Bogleheads unequivocally agree that international should be between 0% and 50% of your stock allocation and maybe even more if the world cap is more than 50%. The good thing about advice like that is that it is easy to follow.
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Re: Does every one here only have 3 funds in their portfolios?

Post by JBTX »

We have a lot more than 3 funds. A lot of this has to do with prior to hanging out here I was constantly tweaking this fund or that one seeking some sort of edge on a risk reward basis. At this point I've eliminated most of the active funds with material fees, but still have a plethora of index funds, low fee active funds, ETFS and target date funds.

I could certainly reduce the number of funds, but we have numerous different retirement accounts between the two of us, and trying to force just 3 funds in numerous different accounts to me doesn't offer any particular advantage. To the extent we simply, I'll likely lean more to target date funds. We've already done that to a degree.
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International Holdings?

Post by Taylor Larimore »

nanameg wrote:I’m not interested in the actual number of funds as much as I’m interested in international holdings vs us only and the thinking behind those decisions.
nanameg:

This is my thinking:

How Much International Stocks? A Suggestion.

Best wishes.
Taylor
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Re: Does every one here only have 3 funds in their portfolios?

Post by Elric »

Zillions wrote: Tue Jun 02, 2020 4:32 pm I just placed sell orders for all the mutual funds & ETFs that are not total stock / bond / international markets index funds.

I understand that this is Bogleheads and that this is also deeply personal but is the 3 fund portfolio the norm here? I don't intend to offend anyone. We've been with this portfolio for a while now and it was very very difficult to dump 90% of our portfolio to exchange into the 3 funds. I guess I am just looking for some reassurance. This is the portfolio that will one day feed / clothe / shelter my disabled kid long after I am gone, so I am really emotional right now.
The 3-fund portfolio is definitely a Bogleheads portfolio, but it is not the ONLY Bogleheads portfolio. I think the bottom line is that you have made a very good choice. Not the only very good choice, but one you can rest easy with.
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Re: Does every one here only have 3 funds in their portfolios?

Post by andrige »

I have a target date fund in my tax sheltered account which adds international bonds and later tips. I have tax exempt bonds in my taxable accounts since makes sense at income bracket.
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Re: Does every one here only have 3 funds in their portfolios?

Post by nanameg »

dbr wrote: Sat Jun 06, 2020 12:34 pm
nanameg wrote: Sat Jun 06, 2020 12:07 pm

The sticking point for me is the brouhaha over international vs us only on this forum. The three fund portfolio ALWAYS seems to include international and that’s the important distinction I’m interested in..not the literal number of funds. It doesn’t seem it can be said that someone follows the concept behind three fund portfolio and also doesn’t hold international stocks.

I’m not interested in the actual number of funds as much as I’m interested in international holdings vs us only and the thinking behind those decisions.
I can't help you with that. Just to show how useless I am, I don't think international is critical to a good investment plan and I hold some international myself.

Maybe the best comment is one that goes back to Taylor who I think once said that the more something is discussed the less important it probably is. I have sometimes made the statement is that Bogleheads unequivocally agree that international should be between 0% and 50% of your stock allocation and maybe even more if the world cap is more than 50%. The good thing about advice like that is that it is easy to follow.
Hahah

Yes, I think I saw that Mr. Latimore also said something along the lines of if experts disagree then it doesn’t matter much.


However, I’m not too sure it’s experts saying international isn’t an important part of a well diversified portfolio. It seems it may be that Mr. Bogle and Mr Buffet are the only experts who hold ( or held) that view.
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Re: International Holdings?

Post by nanameg »

Taylor Larimore wrote: Sat Jun 06, 2020 12:44 pm
nanameg wrote:I’m not interested in the actual number of funds as much as I’m interested in international holdings vs us only and the thinking behind those decisions.
nanameg:

This is my thinking:

How Much International Stocks? A Suggestion.

Best wishes.
Taylor
Jack Bogle's Words of Wisdom (2018): "No one knows what tomorrow may bring. But I'm inclined to stick my by earlier conclusion that holding of non-U.S. stocks should be limited to no more than 20% of equities."
Thank you Taylor. That’s helpful.
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Re: Does every one here only have 3 funds in their portfolios?

Post by Marmot »

I have more than three funds.
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Re: Does every one here only have 3 funds in their portfolios?

Post by drumboy256 »

3 Fund types spread across multiple account types. Personally I find the 3 fund model freeing. I have total index, international and bonds with the split being 80/10/10 right now. Love it.
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Re: Does every one here only have 3 funds in their portfolios?

Post by baconavocado »

Yes, 3 funds.
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Re: Does every one here only have 3 funds in their portfolios?

Post by Vanguard Fan 1367 »

nanameg wrote: Sat Jun 06, 2020 2:47 pm However, I’m not too sure it’s experts saying international isn’t an important part of a well diversified portfolio. It seems it may be that Mr. Bogle and Mr Buffet are the only experts who hold ( or held) that view.
My investment life really began when I read Bogle's books. I think that taking Saint Jack's advice and looking at costs, staying the course, keeping the investments simple, one two or three funds are enough, beginning early in life to invest, etc. are pretty good things to do and I know that most Bogleheads agree.

Trying to save for retirement with a bunch of funds with 2% annual costs dragging you down is pretty anti-Boglehead.

I like the advice I just read to have from zero to 50 percent international.
John Bogle: "It's amazing how difficult it is for a man to understand something if he's paid a small fortune not to understand it."
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