Morningstar article [Bogleheads' Guide to the Three-Fund Portfolio]

Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.
Post Reply
Topic Author
Mr.BB
Posts: 1398
Joined: Sun May 08, 2016 10:10 am

Morningstar article [Bogleheads' Guide to the Three-Fund Portfolio]

Post by Mr.BB »

Good article about the 3 fund portfolio.
https://www.morningstar.com/articles/87 ... folio.html
"We are what we repeatedly do. Excellence, then, is not an act, but a habit."
User avatar
mickeyd
Posts: 4825
Joined: Fri Feb 23, 2007 3:19 pm
Location: Deep in the Heart of South Texas

Re: Morningstar article

Post by mickeyd »

Thanks for the post Mr BB.

Great review for Taylor's newest book.
Thus, for his book's audience--meaning me, and presumably you--Taylor's asset allocation is sufficient. Let's put it this way: It is a terrific starting point for novice investors and a perfectly sensible ending point for the experienced.
Part-Owner of Texas | | “The CMH-the Cost Matters Hypothesis -is all that is needed to explain why indexing must and will work… Yes, it is that simple.” John C. Bogle
User avatar
Mel Lindauer
Moderator
Posts: 31126
Joined: Mon Feb 19, 2007 8:49 pm
Location: Daytona Beach Shores, Florida
Contact:

Re: Morningstar article [Bogleheads' Guide to the Three-Fund Portfolio]

Post by Mel Lindauer »

I like John's recommendation for Vanguard to turn the three-fund portfolio into a one-fund portfolio, holding Taylor's three funds in market cap weighting in a single fund. Talk about the ultimate in simplification.
Best Regards - Mel | | Semper Fi
RadAudit
Posts: 3915
Joined: Mon May 26, 2008 10:20 am
Location: Second star on the right and straight on 'til morning

Re: Morningstar article [Bogleheads' Guide to the Three-Fund Portfolio]

Post by RadAudit »

I like the article pointing out we can't invest like Yale. (LBO and investment capital) So, the three find portfolio is sufficient. Seems like a good point.
FI is the best revenge. LBYM. Invest the rest. Stay the course. - PS: The cavalry isn't coming, kids. You are on your own.
WallStreetPhysician
Posts: 115
Joined: Tue Jan 17, 2017 12:09 pm
Contact:

Re: Morningstar article [Bogleheads' Guide to the Three-Fund Portfolio]

Post by WallStreetPhysician »

Mel Lindauer wrote: Wed Jul 04, 2018 1:48 pm I like John's recommendation for Vanguard to turn the three-fund portfolio into a one-fund portfolio, holding Taylor's three funds in market cap weighting in a single fund. Talk about the ultimate in simplification.
Interesting idea, but what would be the stock/bond ratio for this one-fund portfolio? Aren't Vanguard's Target Retirement funds three-fund portfolios combined into one fund, with a nominal amount of money in international bonds?

-WSP
retiredjg
Posts: 41918
Joined: Thu Jan 10, 2008 12:56 pm

Re: Morningstar article [Bogleheads' Guide to the Three-Fund Portfolio]

Post by retiredjg »

Mel Lindauer wrote: Wed Jul 04, 2018 1:48 pm I like John's recommendation for Vanguard to turn the three-fund portfolio into a one-fund portfolio, holding Taylor's three funds in market cap weighting in a single fund. Talk about the ultimate in simplification.
Does anybody know what that would look like?
User avatar
vineviz
Posts: 7833
Joined: Tue May 15, 2018 1:55 pm

Re: Morningstar article [Bogleheads' Guide to the Three-Fund Portfolio]

Post by vineviz »

Mel Lindauer wrote: Wed Jul 04, 2018 1:48 pm I like John's recommendation for Vanguard to turn the three-fund portfolio into a one-fund portfolio, holding Taylor's three funds in market cap weighting in a single fund. Talk about the ultimate in simplification.
They already do (well, four funds): Vanguard LifeStrategy Conservative Growth Fund (VSCGX) replicates global market weights pretty darn closely IIRC.
"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves." ~~ Peter Lynch
RadAudit
Posts: 3915
Joined: Mon May 26, 2008 10:20 am
Location: Second star on the right and straight on 'til morning

Re: Morningstar article [Bogleheads' Guide to the Three-Fund Portfolio]

Post by RadAudit »

retiredjg wrote: Wed Jul 04, 2018 2:31 pm
Mel Lindauer wrote: Wed Jul 04, 2018 1:48 pm I like John's recommendation for Vanguard to turn the three-fund portfolio into a one-fund portfolio, holding Taylor's three funds in market cap weighting in a single fund. Talk about the ultimate in simplification.
Does anybody know what that would look like?
I'm having a little difficulty visualizing it. Probably my fault.

International stocks would probably be set at 20%. But, a one fund approach might break down as different folks would probably like to vary their stock / bond ratio based on their individual circumstances, risk tolerances, etc. That would argue for a Life Strategy fund or a Target Date fund.
FI is the best revenge. LBYM. Invest the rest. Stay the course. - PS: The cavalry isn't coming, kids. You are on your own.
Fclevz
Posts: 482
Joined: Fri Mar 30, 2007 11:28 am

Re: Morningstar article [Bogleheads' Guide to the Three-Fund Portfolio]

Post by Fclevz »

retiredjg wrote: Wed Jul 04, 2018 2:31 pm
Mel Lindauer wrote: Wed Jul 04, 2018 1:48 pm I like John's recommendation for Vanguard to turn the three-fund portfolio into a one-fund portfolio, holding Taylor's three funds in market cap weighting in a single fund. Talk about the ultimate in simplification.
Does anybody know what that would look like?
viewtopic.php?f=10&t=207804&start=100#p3891874
User avatar
Taylor Larimore
Advisory Board
Posts: 29963
Joined: Tue Feb 27, 2007 8:09 pm
Location: Miami FL

Independence Day and "The Three-Fund Portfolio"

Post by Taylor Larimore »

[Thread merged into here, see below. --admin LadyGeek]

Bogleheads:

Today is a special day for me:

The Fourth of July Independence Day and a Morningstar article featuring my latest book,

Thank you Mr. Rekenthaler!

Taylor
"Simplicity is the master key to financial success." -- Jack Bogle
jevidon
Posts: 1
Joined: Wed Jul 04, 2018 3:20 pm

Re: Morningstar article [Bogleheads' Guide to the Three-Fund Portfolio]

Post by jevidon »

WallStreetPhysician wrote: Wed Jul 04, 2018 2:30 pm
Mel Lindauer wrote: Wed Jul 04, 2018 1:48 pm I like John's recommendation for Vanguard to turn the three-fund portfolio into a one-fund portfolio, holding Taylor's three funds in market cap weighting in a single fund. Talk about the ultimate in simplification.
Interesting idea, but what would be the stock/bond ratio for this one-fund portfolio? Aren't Vanguard's Target Retirement funds three-fund portfolios combined into one fund, with a nominal amount of money in international bonds?

-WSP
That's how I understand the Target Date Funds as well. Additionally, most people will have slightly different risk tolerances depending on age and net worth - leaving a bit of configuration available is appealing.
User avatar
1210sda
Posts: 1667
Joined: Wed Feb 28, 2007 8:31 am

Re: Morningstar article [Bogleheads' Guide to the Three-Fund Portfolio]

Post by 1210sda »

Mel Lindauer wrote: Wed Jul 04, 2018 1:48 pm I like John's recommendation for Vanguard to turn the three-fund portfolio into a one-fund portfolio, holding Taylor's three funds in market cap weighting in a single fund. Talk about the ultimate in simplification.
There would still be objection(by some) to this fund in a taxable account.

1210
invstar
Posts: 156
Joined: Tue Apr 25, 2017 1:20 pm

Re: Independence Day and "The Three-Fund Portfolio"

Post by invstar »

:thumbsup

Congrats Taylor. It's a great review of your book. Thank you for sharing..
User avatar
Mel Lindauer
Moderator
Posts: 31126
Joined: Mon Feb 19, 2007 8:49 pm
Location: Daytona Beach Shores, Florida
Contact:

Re: Morningstar article [Bogleheads' Guide to the Three-Fund Portfolio]

Post by Mel Lindauer »

RadAudit wrote: Wed Jul 04, 2018 3:11 pm
retiredjg wrote: Wed Jul 04, 2018 2:31 pm
Mel Lindauer wrote: Wed Jul 04, 2018 1:48 pm I like John's recommendation for Vanguard to turn the three-fund portfolio into a one-fund portfolio, holding Taylor's three funds in market cap weighting in a single fund. Talk about the ultimate in simplification.
Does anybody know what that would look like?
I'm having a little difficulty visualizing it. Probably my fault.

International stocks would probably be set at 20%. But, a one fund approach might break down as different folks would probably like to vary their stock / bond ratio based on their individual circumstances, risk tolerances, etc. That would argue for a Life Strategy fund or a Target Date fund.
While not quite a three-fund cap weighted portfolio, either of those fund families would certainly do the job.
Best Regards - Mel | | Semper Fi
LXEX55
Posts: 85
Joined: Fri Feb 12, 2016 9:12 am

Re: Independence Day and "The Three-Fund Portfolio"

Post by LXEX55 »

Well done, sir. I am 63 years old, will retire this December, and do not have the head nor nervous system for investing. I will probably follow your advice and move my money to a Vanguard IRA as soon as I retire and allocate the way you suggest. May I ask, do you recommend I invest 100% of my IRA money in this manner? Any advice would appreciated. Again, congratulations on your book. I know this topic is near and dear to your heart.
HippoSir
Posts: 133
Joined: Tue Jul 03, 2018 2:56 pm

Re: Independence Day and "The Three-Fund Portfolio"

Post by HippoSir »

I'm a relatively new poster, but have been reading for a long time and have moved to a 3 fund portfolio away from a (very expensive) financial adviser, largely based upon your recommendations. Your advice has literally changed my life!

I've recommended your book to a number of family members who have decided to move away from active management as well, and they've all found it simple, concise, and very helpful.
User avatar
danielc
Posts: 1068
Joined: Sun Dec 10, 2017 4:48 am
Location: Iowa, USA
Contact:

Re: Independence Day and "The Three-Fund Portfolio"

Post by danielc »

Taylor Larimore wrote: Wed Jul 04, 2018 3:23 pm Today is a special day for me:

The Fourth of July Independence Day and a Morningstar article featuring my latest book,
Happy American Day Taylor :-)

I bought your book. I'm reading it with my wife and we think it's a great book. Btw, I am immensely grateful that you, Mel, LadyGeek, and others have made the Bogleheads forum possible. We have also bought the most recent books from Bill Bernstein and Jack Bogle.

I am precisely the kind of person who would be prone to chasing investment fads. I like over-thinking everything and optimizing everything to the nth degree. Thanks to Dr. Bernstein, Mr. Bogle, you, and the Bogleheads, I have gradually learned the value of simplicity and my family's financial future is more secure as a result.
02nz
Posts: 5562
Joined: Wed Feb 21, 2018 3:17 pm

Re: Independence Day and "The Three-Fund Portfolio"

Post by 02nz »

Thanks to Taylor and other Bogleheads for contributing to so many people's financial independence.
User avatar
LadyGeek
Site Admin
Posts: 66392
Joined: Sat Dec 20, 2008 5:34 pm
Location: Philadelphia
Contact:

Re: Morningstar article [Bogleheads' Guide to the Three-Fund Portfolio]

Post by LadyGeek »

I merged Taylor Larimore's thread into the on-going discussion (Mr.BB posted about the article first).
Wiki To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.
User avatar
danielc
Posts: 1068
Joined: Sun Dec 10, 2017 4:48 am
Location: Iowa, USA
Contact:

Re: Morningstar article [Bogleheads' Guide to the Three-Fund Portfolio]

Post by danielc »

Mel Lindauer wrote: Wed Jul 04, 2018 1:48 pm I like John's recommendation for Vanguard to turn the three-fund portfolio into a one-fund portfolio, holding Taylor's three funds in market cap weighting in a single fund. Talk about the ultimate in simplification.
Don't the target date and lifestyle funds serve that purpose better? People need to adjust their stock/bond allocation according to their needs and preferences.
User avatar
Mel Lindauer
Moderator
Posts: 31126
Joined: Mon Feb 19, 2007 8:49 pm
Location: Daytona Beach Shores, Florida
Contact:

Re: Morningstar article [Bogleheads' Guide to the Three-Fund Portfolio]

Post by Mel Lindauer »

danielc wrote: Wed Jul 04, 2018 6:06 pm
Mel Lindauer wrote: Wed Jul 04, 2018 1:48 pm I like John's recommendation for Vanguard to turn the three-fund portfolio into a one-fund portfolio, holding Taylor's three funds in market cap weighting in a single fund. Talk about the ultimate in simplification.
Don't the target date and lifestyle funds serve that purpose better? People need to adjust their stock/bond allocation according to their needs and preferences.
Those funds offer a nicely-diversified portfolio in a single fund that rebalances automatically, and I'm a big fan of them.
Best Regards - Mel | | Semper Fi
User avatar
Taylor Larimore
Advisory Board
Posts: 29963
Joined: Tue Feb 27, 2007 8:09 pm
Location: Miami FL

"Wall Street Physician reviews The Bogleheads' Guide to the Three-Fund Portfolio"

Post by Taylor Larimore »

Bogleheads:

One of my favorite websites is The Wall Street Physician. This is a link to the latest article:

A REVIEW OF THE BOGLEHEADS GUIDE TO THE THREE-FUND PORTFOLIO

The Conclusion:
This book is perfect for the busy professional or novice investor who wants to get started with do-it-yourself investing using the three-fund portfolio. Experienced investors, or regular Bogleheads readers who are already well-versed in the benefits of index fund investing and the simplicity of the three-fund portfolio, will likely already be familiar with most of the content in this book. However, it may convince even experienced investors to simplify their more complicated index-fund portfolio to a three-fund portfolio.
Thank you Wall Street Physician
"Simplicity is the master key to financial success." -- Jack Bogle
wootwoot
Posts: 577
Joined: Tue Jan 27, 2009 7:37 pm

Re: "Wall Street Physician reviews The Bogleheads' Guide to the Three-Fund Portfolio"

Post by wootwoot »

Taylor Larimore wrote: Wed Jul 04, 2018 10:36 pm Bogleheads:

One of my favorite websites is The Wall Street Physician. This is a link to the latest article:

A REVIEW OF THE BOGLEHEADS GUIDE TO THE THREE-FUND PORTFOLIO

The Conclusion:
This book is perfect for the busy professional or novice investor who wants to get started with do-it-yourself investing using the three-fund portfolio. Experienced investors, or regular Bogleheads readers who are already well-versed in the benefits of index fund investing and the simplicity of the three-fund portfolio, will likely already be familiar with most of the content in this book. However, it may convince even experienced investors to simplify their more complicated index-fund portfolio to a three-fund portfolio.
Thank you Wall Street Physician
Good info. From the review it sounds like anyone already reading this forum would have little to no benefit from the book.
User avatar
Taylor Larimore
Advisory Board
Posts: 29963
Joined: Tue Feb 27, 2007 8:09 pm
Location: Miami FL

Re: Morningstar article [Bogleheads' Guide to the Three-Fund Portfolio]

Post by Taylor Larimore »

Good info. From the review it sounds like anyone already reading this forum would have little to no benefit from the book.
wootwoot:

Factor investors may find it helpful. :happy

Best wishes.
Taylor
"Simplicity is the master key to financial success." -- Jack Bogle
User avatar
1210sda
Posts: 1667
Joined: Wed Feb 28, 2007 8:31 am

Re: "Wall Street Physician reviews The Bogleheads' Guide to the Three-Fund Portfolio"

Post by 1210sda »

wootwoot wrote: Wed Jul 04, 2018 10:58 pm Good info. From the review it sounds like anyone already reading this forum would have little to no benefit from the book.
Yep, nothing really new, just a re-affirmation.

I like it because the principles behind a three fund portfolio are all presented very concisely in one place.

What I've done is highlight, underline, and make margin notes and then give the book to my kids.

Thanks Taylor

1210
Post Reply