Jack Bogle - Two Fund Portfolio

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Incendiary
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Re: Jack Bogle - Two Fund Portfolio

Post by Incendiary » Wed Aug 02, 2017 6:32 am

siamond wrote:
abuss368 wrote:How many Bogleheads invest in the Jack Bogle Two Fund Portfolio?
Seems to me that the folks seeking such level of simplicity would be much better off with a single LifeStrategy fund (pick the one you like based on your tolerance for volatility, and be done with it). This is the recommendation I make to many people I speak with, when I sense that they really don't want to hear much more than that.

PS. I would *not* recommend a Target-Date fund though. Definitely not.
Why not?

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siamond
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Re: Jack Bogle - Two Fund Portfolio

Post by siamond » Wed Aug 02, 2017 9:26 am

Incendiary wrote:
siamond wrote:
abuss368 wrote:How many Bogleheads invest in the Jack Bogle Two Fund Portfolio?
Seems to me that the folks seeking such level of simplicity would be much better off with a single LifeStrategy fund (pick the one you like based on your tolerance for volatility, and be done with it). This is the recommendation I make to many people I speak with, when I sense that they really don't want to hear much more than that.

PS. I would *not* recommend a Target-Date fund though. Definitely not.
Why not?
Because aiming at a 30/70 portfolio by the time you retire has a very good chance of badly backfiring after a couple of decades of retirement, as backtesting with retirement calculators clearly shows. Let me suggest you play around with Firecalc or cFIREsim in this respect, and you'll probably appreciate my point. I am not saying that 30/70 is bad for everybody, it all depends on your personal circumstances, but it certainly doesn't appear to be a great starting point for the average retiree.

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Gort
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Re: Jack Bogle - Two Fund Portfolio

Post by Gort » Wed Aug 02, 2017 12:34 pm

siamond wrote:
abuss368 wrote:How many Bogleheads invest in the Jack Bogle Two Fund Portfolio?
Seems to me that the folks seeking such level of simplicity would be much better off with a single LifeStrategy fund (pick the one you like based on your tolerance for volatility, and be done with it). This is the recommendation I make to many people I speak with, when I sense that they really don't want to hear much more than that.

PS. I would *not* recommend a Target-Date fund though. Definitely not.

If you qualify for Admiral shares then splitting the LifeStrategy fund into individual components will result in a lower ER than the LifeStrategy fund. (Of course that obviously adds some complexity which some folks do not want). This leads me to my question; Even with the higher ER I wonder if the LifeStategy fund has better perfomance than using individual Admiral share funds given missed opportunities to rebalance by the individual investor?

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triceratop
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Re: Jack Bogle - Two Fund Portfolio

Post by triceratop » Wed Aug 02, 2017 12:36 pm

Gort wrote:
siamond wrote:
abuss368 wrote:How many Bogleheads invest in the Jack Bogle Two Fund Portfolio?
Seems to me that the folks seeking such level of simplicity would be much better off with a single LifeStrategy fund (pick the one you like based on your tolerance for volatility, and be done with it). This is the recommendation I make to many people I speak with, when I sense that they really don't want to hear much more than that.

PS. I would *not* recommend a Target-Date fund though. Definitely not.

If you qualify for Admiral shares then splitting the LifeStrategy fund into individual components will result in a lower ER than the LifeStrategy fund. (Of course that obviously adds some complexity which some folks do not want). This leads me to my question; Even with the higher ER I wonder if the LifeStategy fund has better perfomance than using individual Admiral share funds given missed opportunities to rebalance by the individual investor?
Assuming you don't mean the inability of an individual investor to rebalance daily, I imagine it's rather behavioral whether an investor fails to rebalance at the bottom of a bear market. In that case, it could pay enormous benefits to be in a LS type fund. This kind of thing is hard to quantify, though.
"To play the stock market is to play musical chairs under the chord progression of a bid-ask spread."

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David Jay
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Re: Jack Bogle - Two Fund Portfolio

Post by David Jay » Wed Aug 02, 2017 12:47 pm

Gort wrote:
siamond wrote:
abuss368 wrote:How many Bogleheads invest in the Jack Bogle Two Fund Portfolio?
Seems to me that the folks seeking such level of simplicity would be much better off with a single LifeStrategy fund (pick the one you like based on your tolerance for volatility, and be done with it). This is the recommendation I make to many people I speak with, when I sense that they really don't want to hear much more than that.

PS. I would *not* recommend a Target-Date fund though. Definitely not.

If you qualify for Admiral shares then splitting the LifeStrategy fund into individual components will result in a lower ER than the LifeStrategy fund. (Of course that obviously adds some complexity which some folks do not want).
Gort:

This is exactly my case.

I have a 6-fund portfolio (started with Coffeehouse, then simplified some of the stock funds into Total Stock Market), but I want to leave my spouse with the simplest possible portfolio. So at age 70 I intend to transition to one LifeStrategy fund (likely "moderate" at 60/40) inside a Roth. I will be spending down my tIRA to delay SS to age 70 and also doing some conversions as part of the plan.
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius

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siamond
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Re: Jack Bogle - Two Fund Portfolio

Post by siamond » Wed Aug 02, 2017 1:00 pm

triceratop wrote:
Gort wrote:
siamond wrote:
abuss368 wrote:How many Bogleheads invest in the Jack Bogle Two Fund Portfolio?
Seems to me that the folks seeking such level of simplicity would be much better off with a single LifeStrategy fund (pick the one you like based on your tolerance for volatility, and be done with it). This is the recommendation I make to many people I speak with, when I sense that they really don't want to hear much more than that. [..]
If you qualify for Admiral shares then splitting the LifeStrategy fund into individual components will result in a lower ER than the LifeStrategy fund. (Of course that obviously adds some complexity which some folks do not want). This leads me to my question; Even with the higher ER I wonder if the LifeStategy fund has better perfomance than using individual Admiral share funds given missed opportunities to rebalance by the individual investor?
Assuming you don't mean the inability of an individual investor to rebalance daily, I imagine it's rather behavioral whether an investor fails to rebalance at the bottom of a bear market. In that case, it could pay enormous benefits to be in a LS type fund. This kind of thing is hard to quantify, though.
Yes, completely agreed. I was primarily suggesting LifeStrategy funds for people who want to keep their (financial) life very simple, and/or to protect themselves against behavioral mistakes. As a side note, the ER is 0.15% for LifeStrategy funds, that's pretty cool, and savings a few basis points on that might be nice, but will not go very far.

KarenC
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Re: Jack Bogle - Two Fund Portfolio

Post by KarenC » Wed Aug 02, 2017 1:02 pm

siamond wrote:
Incendiary wrote:
siamond wrote:
abuss368 wrote:How many Bogleheads invest in the Jack Bogle Two Fund Portfolio?
Seems to me that the folks seeking such level of simplicity would be much better off with a single LifeStrategy fund (pick the one you like based on your tolerance for volatility, and be done with it). This is the recommendation I make to many people I speak with, when I sense that they really don't want to hear much more than that.

PS. I would *not* recommend a Target-Date fund though. Definitely not.
Why not?
Because aiming at a 30/70 portfolio by the time you retire has a very good chance of badly backfiring after a couple of decades of retirement, as backtesting with retirement calculators clearly shows. Let me suggest you play around with Firecalc or cFIREsim in this respect, and you'll probably appreciate my point. I am not saying that 30/70 is bad for everybody, it all depends on your personal circumstances, but it certainly doesn't appear to be a great starting point for the average retiree.
To be precise, the Vanguard Target Retirement Funds glide path aims for 50/50 at retirement and 30/70 7 years after that.
"How much you know is less important than how clearly you understand where the borders of your ignorance begin." — Jason Zweig

Kennyt7
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Re: Jack Bogle - Two Fund Portfolio

Post by Kennyt7 » Wed Aug 02, 2017 1:08 pm

thought the gold standard is MPT

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saltycaper
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Re: Jack Bogle - Two Fund Portfolio

Post by saltycaper » Wed Aug 02, 2017 1:30 pm

Kennyt7 wrote:thought the gold standard is MPT
Nawww... Ignorance is the gold standard. :)
Quod vitae sectabor iter?

azanon
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Re: Jack Bogle - Two Fund Portfolio

Post by azanon » Wed Aug 02, 2017 1:45 pm

It might have already been touched on to some degree, but I would say the Bogle portfolio would be roughly some mix of Total US stock market and VG Intermediate-Term Bond Index Fund (as opposed to Total Bond Index), depending on your age/how far along in your career.

Bogle said numerous times he prefers a 50/50 mix of treasuries and non-treasures (Total Bond has 70% Treasuries), and I also believe he prefers Intermediate- term duration bonds, whereas Total Bond Index is a mixture of short, medium, and long duration bonds, so VG's Intermediate-Term Bond Index fits this preference of his to a "T".

azanon
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Re: Jack Bogle - Two Fund Portfolio

Post by azanon » Wed Aug 02, 2017 1:46 pm

[quote="azanon"]It might have already been touched on to some degree, but I would say the Bogle portfolio would be roughly some mix of Total US stock market and VG Intermediate-Term Bond Index Fund (as opposed to Total Bond Index), depending on your age/how far along in your career.

Bogle said numerous times he prefers a 50/50 mix of treasuries and non-treasures (Total Bond has 70% Treasuries), and I also believe he prefers Intermediate- term duration bonds, whereas Total Bond Index is a mixture of short, medium, and long duration bonds, so VG's Intermediate-Term Bond Index fits this preference of his to a "T".

azanon
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Re: Jack Bogle - Two Fund Portfolio

Post by azanon » Wed Aug 02, 2017 1:46 pm

It might have already been touched on to some degree, but I would say the Bogle portfolio would be roughly some mix of Total US stock market and VG Intermediate-Term Bond Index Fund (as opposed to Total Bond Index), depending on your age/how far along in your career.

Bogle said numerous times he prefers a 50/50 mix of treasuries and non-treasures (Total Bond has 70% Treasuries), and I also believe he prefers Intermediate- term duration bonds, whereas Total Bond Index is a mixture of short, medium, and long duration bonds, so VG's Intermediate-Term Bond Index fits this preference of his to a "T".

Incendiary
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Re: Jack Bogle - Two Fund Portfolio

Post by Incendiary » Wed Aug 02, 2017 5:47 pm

azanon, you can say that again! And again! :D

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Gort
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Re: Jack Bogle - Two Fund Portfolio

Post by Gort » Wed Aug 02, 2017 6:45 pm

Incendiary wrote:azanon, you can say that again! And again! :D
+3 :happy

rattlenap
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Re: Jack Bogle - Two Fund Portfolio

Post by rattlenap » Thu Aug 03, 2017 10:33 pm

stemikger wrote:
rattlenap wrote:I do the Vanguard Balanced Index fund and plan on being in that for the rest of my life.
Awesome!! Same here!

Unfortunately, my 401K does not have the balanced index fund, so I hold two funds, but it comes to the same AA (60/40).

I do hold the Balanced Index in my TIRA and upon retirement, it will all go in the balanced index fund (for life).

:sharebeer
How long have you been doing the Balanced Index Fund?

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stemikger
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Re: Jack Bogle - Two Fund Portfolio

Post by stemikger » Fri Aug 04, 2017 12:37 am

rattlenap wrote:
stemikger wrote:
rattlenap wrote:I do the Vanguard Balanced Index fund and plan on being in that for the rest of my life.
Awesome!! Same here!

Unfortunately, my 401K does not have the balanced index fund, so I hold two funds, but it comes to the same AA (60/40).

I do hold the Balanced Index in my TIRA and upon retirement, it will all go in the balanced index fund (for life).

:sharebeer
How long have you been doing the Balanced Index Fund?
I just have a small amount in it in my TIRA. I look at it as a placeholder for when I switch my entire 401K into it. I jumped in and out of it, at one point it was all in the Vanguard Total Market Index, but that was a lapse in judgment.
Choose Simplicity ~ Stay the Course!! ~ Press on Regardless!!!

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abuss368
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Re: Jack Bogle - Two Fund Portfolio

Post by abuss368 » Mon Aug 07, 2017 6:29 pm

stemikger wrote:
I just have a small amount in it in my TIRA. I look at it as a placeholder for when I switch my entire 401K into it. I jumped in and out of it, at one point it was all in the Vanguard Total Market Index, but that was a lapse in judgment.
Keep investing simple!
John C. Bogle: "You simply do not need to put your money into 8 different mutual funds!" | | Disclosure: Three Fund Portfolio + U.S. & International REITs

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