The Three-Fund Portfolio

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SavageBrother
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Re: The Three-Fund Portfolio

Post by SavageBrother » Thu Apr 20, 2017 3:34 am

I did try to search for answers in this topic, but couldn't really find an answer to my question.

Why is a VT + VTI advised? And not, for example VTI + VXUS?
VT + VTI overlaps on North America afaik.

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Taylor Larimore
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Re: The Three-Fund Portfolio

Post by Taylor Larimore » Thu Apr 20, 2017 2:34 pm

SavageBrother wrote:I did try to search for answers in this topic, but couldn't really find an answer to my question.

Why is a VT + VTI advised? And not, for example VTI + VXUS?
VT + VTI overlaps on North America afaik.

SavageBrother:

I gave a reply to this question on the first page of this topic. I realize that reply is outdated, but I don't have time now to bring it up to date now.

Edit: It is updated now.

Best wishes
Taylor
Last edited by Taylor Larimore on Fri Apr 21, 2017 8:21 pm, edited 1 time in total.
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tj
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Re: The Three-Fund Portfolio

Post by tj » Fri Apr 21, 2017 8:18 pm

SavageBrother wrote:I did try to search for answers in this topic, but couldn't really find an answer to my question.

Why is a VT + VTI advised? And not, for example VTI + VXUS?
VT + VTI overlaps on North America afaik.



It's not. The Three Fund Portfolio would be VTI, VXUS and BND if you are using ETF's.

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Ohalawa
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Re: The Three-Fund Portfolio

Post by Ohalawa » Tue Apr 25, 2017 6:15 pm

3 fund portfolio, I'm a big fan, keep it simple!
"Our life is frittered away by detail. Simplify, simplify." -Thoreau

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Taylor Larimore
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Links to Morningstar Analysis of Vanguard's Three Total Market Index Funds

Post by Taylor Larimore » Tue Apr 25, 2017 9:45 pm

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

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HuckFinn
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Re: The Three-Fund Portfolio

Post by HuckFinn » Wed Apr 26, 2017 9:45 am

I'm going to once again vouch for the three fund portfolio and thank Taylor for helping us years ago which resulted in our restructuring our portfolio in this manner. I say this after having had conversations today with our tax accountant about 2016's return and 2017's projections. We are fortunate enough to have a significant taxable account in addition to our tax deferred accounts. Most of our equities are in the taxable accounts parked in The Total Stock Market Fund and Total International Fund. Our bonds are in our rollover IRA's. Any asset allocation rebalancing occurs on the tax deferred side. This drives so much tax efficiency!

What we have been saving in tax and expense ratio probably pays more than half our total living expenses for the year alone.

Thank you again!

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Taylor Larimore
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Three-Fund Portfolio Endorsement

Post by Taylor Larimore » Wed Apr 26, 2017 1:28 pm

HuckFinn:

Thank you for your endorsement of The Three-Fund Portfolio. I am always pleased when I learn of others who have benefited from this simple, sophisticated portfolio.

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

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Re: The Three-Fund Portfolio

Post by abuss368 » Wed Apr 26, 2017 3:05 pm

HuckFinn wrote:I'm going to once again vouch for the three fund portfolio and thank Taylor for helping us years ago which resulted in our restructuring our portfolio in this manner. I say this after having had conversations today with our tax accountant about 2016's return and 2017's projections. We are fortunate enough to have a significant taxable account in addition to our tax deferred accounts. Most of our equities are in the taxable accounts parked in The Total Stock Market Fund and Total International Fund. Our bonds are in our rollover IRA's. Any asset allocation rebalancing occurs on the tax deferred side. This drives so much tax efficiency!

What we have been saving in tax and expense ratio probably pays more than half our total living expenses for the year alone.

Thank you again!


Hi HuckFinn -

What a great post and feedback regarding the Three Fund Portfolio. I enjoy posts such as yours and the benefits of the Bogleheads way of investing.

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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Re: The Three-Fund Portfolio

Post by nervouswreck » Wed Apr 26, 2017 9:09 pm

Dear Bogleheads,
Especially Dear Mr. Larimore,

I have posted my investing story here. viewtopic.php?f=1&t=217492.
After getting burnt in 2008 and sitting on the sidelines since then, I have amassed a library of investing books, hundreds of bookmarks on my laptop and a spreadsheet with countless funds in various permutations and combinations on how to built a bulletproof portfolio.

Then I came upon this thread. I read all 36 pages of it. Deleted my bookmarks, revised my spreadsheet, and will be donating the books shortly. I am mostly in cash now and all of it will will go into the 3-fund portfolio over the next year. Yes, I know lump sum investing is superior to averaging, but I just can't bring myself to do it in this market

Anyway, thank you for the lessons in simplicity and humility.

Not-so-Nervouswreck

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Taylor Larimore
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Re: The Three-Fund Portfolio

Post by Taylor Larimore » Wed Apr 26, 2017 11:07 pm

Not-so-Nervouswreck

I am undergoing a (minor) cancer operation in the morning. I appreciate your post.

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

nervouswreck
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Re: The Three-Fund Portfolio

Post by nervouswreck » Wed Apr 26, 2017 11:08 pm

Taylor Larimore wrote:Not-so-Nervouswreck

I am undergoing a (minor) cancer operation in the morning. I appreciate your post.

Best wishes.
Taylor


Wish you a total and quick recovery.

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Re: The Three-Fund Portfolio

Post by selftalk » Thu Apr 27, 2017 6:25 am

Taylor, I wish you perfect health and a very successful outcome with your present malady.

ALinLI
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Re: The Three-Fund Portfolio

Post by ALinLI » Thu Apr 27, 2017 9:59 am

Feel Good Talyor. Thanks for all your generous sharing of time and knowledge to this community and the brilliance of the 3 fund portfolio

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Re: The Three-Fund Portfolio

Post by radiowave » Thu Apr 27, 2017 10:05 am

Taylor, my thoughts and prayers are with you and your family.

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Taylor Larimore
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Every day is a blessing

Post by Taylor Larimore » Fri Apr 28, 2017 2:37 pm

Not-so-Nervouswreck; selftalk; ALinLI; radiowave:

Thank you for your good wishes.

I had a recurrence of melanoma cancer on my cheek. The doctor removed the cancer while I was under anesthesia. Prognosis is good.

Every day is a blessing.

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

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Taylor Larimore
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"World's Largest Stock and Bond Funds Report Lower Expense Ratios"

Post by Taylor Larimore » Fri Apr 28, 2017 3:41 pm

Bogleheads:

Each of the three funds in The Three-Fund Portfolio are now the largest in their categories (investors are catching on). Today, Vanguard announced lower fees:

Vanguard: World's Largest Stock And Bond Funds Report Lower Expense Ratios

Thank you, Vanguard!

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

SavageBrother
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Re: The Three-Fund Portfolio

Post by SavageBrother » Mon May 01, 2017 6:38 am

Taylor Larimore wrote:
SavageBrother wrote:I did try to search for answers in this topic, but couldn't really find an answer to my question.

Why is a VT + VTI advised? And not, for example VTI + VXUS?
VT + VTI overlaps on North America afaik.

SavageBrother:

I gave a reply to this question on the first page of this topic. I realize that reply is outdated, but I don't have time now to bring it up to date now.

Edit: It is updated now.

Best wishes
Taylor


Thank you very much. Take care.

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Re: The Three-Fund Portfolio

Post by GunniNC » Mon May 01, 2017 7:42 pm

So as I'm about to venture into the 3 Fund Portfolio, can you tell me the Admiral,class equivalent to the Investor class of the 3 funds please.

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Taylor Larimore
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Re: The Three-Fund Portfolio

Post by Taylor Larimore » Mon May 01, 2017 8:30 pm

GunniNC wrote:So as I'm about to venture into the 3 Fund Portfolio, can you tell me the Admiral,class equivalent to the Investor class of the 3 funds please.

GunniNC:

Welcome to the Bogleheads Forum!

Admiral class ($10,000 minimum):

Total Stock Market (VTSAX)]
Total International Stock Market (VTIAX)
Total Bond Market (VBTLX)

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

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Re: Every day is a blessing

Post by abuss368 » Mon May 01, 2017 9:22 pm

Taylor Larimore wrote:Not-so-Nervouswreck; selftalk; ALinLI; radiowave:

Thank you for your good wishes.

I had a recurrence of melanoma cancer on my cheek. The doctor removed the cancer while I was under anesthesia. Prognosis is good.

Every day is a blessing.

Best wishes.
Taylor


Best of health and happiness Taylor!
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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Re: The Three-Fund Portfolio

Post by abuss368 » Mon May 01, 2017 9:24 pm

nervouswreck wrote:Dear Bogleheads,
Especially Dear Mr. Larimore,

I have posted my investing story here. viewtopic.php?f=1&t=217492.
After getting burnt in 2008 and sitting on the sidelines since then, I have amassed a library of investing books, hundreds of bookmarks on my laptop and a spreadsheet with countless funds in various permutations and combinations on how to built a bulletproof portfolio.

Then I came upon this thread. I read all 36 pages of it. Deleted my bookmarks, revised my spreadsheet, and will be donating the books shortly. I am mostly in cash now and all of it will will go into the 3-fund portfolio over the next year. Yes, I know lump sum investing is superior to averaging, but I just can't bring myself to do it in this market

Anyway, thank you for the lessons in simplicity and humility.

Not-so-Nervouswreck


Hi Not-so-Nervouswreck -

This post speaks to me and the beauty and simplicity of the Boglehead way of investing. You were wise to invest the time on this forum and specifically this thread. The Three Fund Portfolio is simple yet sophisticated.

Best.
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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Re: "World's Largest Stock and Bond Funds Report Lower Expense Ratios"

Post by abuss368 » Mon May 01, 2017 9:25 pm

Taylor Larimore wrote:Bogleheads:

Each of the three funds in The Three-Fund Portfolio are now the largest in their categories (investors are catching on). Today, Vanguard announced lower fees:

Vanguard: World's Largest Stock And Bond Funds Report Lower Expense Ratios

Thank you, Vanguard!

Best wishes.
Taylor


Hi Taylor -

Great news from Vanguard again!

The expense ratio for Total Stock Index is now 0.04 and Total Bond Index is 0.05.

Thank you Jack Bogle.
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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emp2b3
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Re: The Three-Fund Portfolio

Post by emp2b3 » Thu May 04, 2017 9:04 pm

Taylor,

Your posts and additional reading at the start of my investing career convinced me of the wisdom of the three fund portfolio. It has served my family well and has freed up time and energy for the more important things in life.

I feel so fortunate that others have fought for so long to lower the expenses and anxiety that are so often associated with investing. Anytime that I start thinking about wanting to tinker or slice and dice I can return to this thread and be reassured about our decision to keep it simple.

I have tried to pay it forward by offering to help out add any family members, friends, and colleagues that I can. Thank you for all that you have done and continue to do.

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Taylor Larimore
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Jonathan Clements endorses The Three-Fund Portfolio

Post by Taylor Larimore » Sat May 06, 2017 9:15 pm

Bogleheads:

Jonathan Clements may be the most knowledgeable financial writer in the business. He has written over 1,000 Personal Finance columns for The Wall Street Journal and he is the author of five personal finance books. This is what Jonathan wrote in a recent article:
YOU CAN BUILD A GREAT PORTFOLIO (Jonathan's caps) with just three index funds: a U.S. total stock market fund, an international fund that buys both developed and emerging stock markets, and a high-quality U.S. bond fund. Thanks to the ongoing price war among major index-fund providers, all three funds are now on offer at extraordinarily low annual expenses.

I have added a link to the full article (and similar articles), near the end of my Opening Post.

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

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Re: The Three Fund Portfolio

Post by bennettg » Sun May 07, 2017 12:27 pm

Taylor Larimore wrote:
macav933 wrote:Decided to go with a Schwab ETF version of the 3 Fund Portfolio. My question centers around the weighting of the 3 International funds. Your thoughts?

SCHB US Broad Market

SCHZ. US Aggregate Bond

SCHC International Small Cap Equity
SCHF international Equity
SCHE Emerging Market Equity

macav933:

In my opinion, ONE total international market index fund (SCHF) is all you should consider. Jack Bogle (who knows more than we do) believes you don't even need an international fund.

Are you aware that SCHC and SCHE expense ratios are about twice SCHF.

In the 2011 international bear market SCHC and SCHE both fell much more than SCHF. They offered no diversification benefit--only a bigger loss.

Strive for simplicity -- not complexity.

Best wishes
Taylor


Curious if with recent decreased fees if you still feel this way? I'm locked into Schwab from my retirement plan but was contemplating buying vanguard ETFs at Schwab ($4.95 fee each time I bought) to make my 3 fund.

Is it worth buying vanguard ETFs at Schwab with the $4.95 fee each time or are the Schwab versions good enough? And, if Schwab 3 fund version is good enough, do you still think schc and sche still aren't worth the extra expenses ratios after their recent decrease.

Many thanks for considering my questions

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Taylor Larimore
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Schwab vs. Vanguard

Post by Taylor Larimore » Sun May 07, 2017 1:18 pm

bennettg:

Be sure to read Jonathan Clement's article, above by using the link near the bottom of my Opening Post.

If you are a happy Schwab customer, I would use Schwab Total Market Index Funds which are now as low-cost as Vanguard.

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

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Re: Schwab vs. Vanguard

Post by bennettg » Sun May 07, 2017 2:54 pm

Taylor Larimore wrote:bennettg:

Be sure to read Jonathan Clement's article, above by using the link near the bottom of my Opening Post.

If you are a happy Schwab customer, I would use Schwab Total Market Index Funds which are now as low-cost as Vanguard.

Best wishes.
Taylor


Thanks....forgive me obtuseness....do I correctly interpret your response as meaning that you still believe that SCHE and SCHC are not worth adding to SWISX (SCHF when the question was originally posed)?

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Taylor Larimore
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Adding small funds?

Post by Taylor Larimore » Sun May 07, 2017 8:07 pm

Bennetg:

I'm the one who is obtuse:

If I understand correctly, you are asking if you should add small-cap and emerging market funds to the Schwab (total) International Equity Fund which contains only negligible amounts of these two asset-classes.

In my opinion, adding two small funds to a portfolio adds unnecessary cost and is not worth the added complexity in a small part of an overall portfolio. Read the "Simplicity" link below.

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

bennettg
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Re: Adding small funds?

Post by bennettg » Sun May 07, 2017 8:10 pm

Taylor Larimore wrote:Bennetg:

I'm the one who is obtuse:

If I understand correctly, you are asking if you should add small-cap and emerging market funds to the Schwab (total) International Equity Fund which contains only negligible amounts of these two asset-classes.

In my opinion, adding two small funds to a portfolio adds unnecessary cost and is not worth the added complexity in a small part of an overall portfolio. Read the "Simplicity" link below.

Best wishes.
Taylor


Many thanks for your response. Good karma to you.

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Taylor Larimore
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Charting The Three-Fund Portfolio

Post by Taylor Larimore » Tue May 09, 2017 8:12 am

Bogleheads:

The Portfolio Charts website is featuring The Three-Fund Portfolio. This is the authors' introduction:

"The Three-Fund Portfolio is an investing staple on the fantastic forums at Bogleheads.org. While the allocation percentages are not static and may vary by individual investor, the one represented here is perhaps the most popular starting point."

PORTFOLIO CHARTS

If you like charts -- Have fun.

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

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Taylor Larimore
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"He Has Read Over 250 Investing Books. He Recommends These Three Funds"

Post by Taylor Larimore » Tue May 09, 2017 8:29 am

Bogleheads:

This is an old post by Physician on Fire, but it explains one reason why I am an advocate of The Three-Fund Portfolio:

He Has Read Over 250 Investing Books. He Recommends These Three Funds

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

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Taylor Larimore
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"A Vanguard Three Fund Portfolio Just Got Cheaper"

Post by Taylor Larimore » Tue May 09, 2017 9:46 am

Bogleheads:

"Physician On Fire" posted this encouraging article:

A Vanguard Three Fund Portfolio Just Got Cheaper!

Stay the course.

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

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Re: Adding small funds?

Post by bennettg » Tue May 09, 2017 2:35 pm

Taylor Larimore wrote:Bennetg:

I'm the one who is obtuse:

If I understand correctly, you are asking if you should add small-cap and emerging market funds to the Schwab (total) International Equity Fund which contains only negligible amounts of these two asset-classes.

In my opinion, adding two small funds to a portfolio adds unnecessary cost and is not worth the added complexity in a small part of an overall portfolio. Read the "Simplicity" link below.

Best wishes.
Taylor


Would you be kind enough to opine on a follow-up question?

My retirement plan will soon be offering Collective Investment Trusts (CITs) from BlackRock. Specifically, they will offer:

Blackrock Equity Index Fund F (S&P 500) CIT (ER=0.0084)
Blackrock Russell 2500 Equity Index Fund CIT (ER=0.0225)
Blackrock US Debt Index Fund F Lending CIT (ER=0.0198)

In looking at the bogleheads wiki on approximating Total Stock Market (Schwab version is SWTSX; ER=0.03), I'd have to use 85% of the Blackrock 500 CIT and 15% of the Blackrock Russel CIT (weighted ER=0.011)....I know that would give me 4 funds instead of 3 funds and reduced transparency without the ticker symbol, etc.

My question: Do you think the lower weighted ER to approximate SWTSX (Blackrock's 500+Russell CITs) and the lower ER on the Blackrock US Debt Index Fund CIT (ER=0.0198) to approximate Schwab US Aggregate Bond Index Fund (SWAGX; ER=0.04) is worth the reduced oversight, decreased less transparency, loss of managing and viewing changes to the value due to the lack of a ticker symbol and the need to use 4 funds instead of 3 funds?

Thank you for considering my question and please let me know if it needs clarification. I'm new to all of this.

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Re: The Three-Fund Portfolio

Post by mister_sparkle » Tue May 09, 2017 3:52 pm

I have a minor dilemma facing me this week and was hoping to get opinions from others who follow the Three-Fund Portfolio route like I do.

I have received the proceeds from selling my house last summer. Proceeds are $231K, so my bond allocation from this will be 30% or $69K. Right now in my taxable account I only have $4K in Total Bond Fund (VBMFX -- investor shares due to not meeting the $10K minimum), the rest is Total Stock Market (VTSAX) and Total International Stock (VTIAX). I see my options as the following (this is assuming I'm investing the entire amount and not trying to DCA/time the market), given that I am in the 25% tax bracket currently:

1. Buy VBTLX, VTSAX and VTIAX in my desired allocation percentages in my taxable account and not worrying about the tax effects of the bond dividends.

2. Ditto, except substituting a tax-exempt bond fund (or funds) for VBTLX for tax-efficiency purposes.

3. Buying only VTSAX and VTIAX in my taxable account and selling these 2 funds in my tax-advantaged accounts to buy VBTLX to get to my desired allocation. This would leave my tax-advantaged accounts with roughly 90% bonds and 10% stocks.


Thoughts?

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Re: Adding small funds?

Post by LadyGeek » Tue May 09, 2017 4:17 pm

bennettg wrote:
Taylor Larimore wrote:Bennetg:

I'm the one who is obtuse:

If I understand correctly, you are asking if you should add small-cap and emerging market funds to the Schwab (total) International Equity Fund which contains only negligible amounts of these two asset-classes.

In my opinion, adding two small funds to a portfolio adds unnecessary cost and is not worth the added complexity in a small part of an overall portfolio. Read the "Simplicity" link below.

Best wishes.
Taylor


Would you be kind enough to opine on a follow-up question?

My retirement plan will soon be offering Collective Investment Trusts (CITs) from BlackRock. Specifically, they will offer:

Blackrock Equity Index Fund F (S&P 500) CIT (ER=0.0084)
Blackrock Russell 2500 Equity Index Fund CIT (ER=0.0225)
Blackrock US Debt Index Fund F Lending CIT (ER=0.0198)

In looking at the bogleheads wiki on approximating Total Stock Market (Schwab version is SWTSX; ER=0.03), I'd have to use 85% of the Blackrock 500 CIT and 15% of the Blackrock Russel CIT (weighted ER=0.011)....I know that would give me 4 funds instead of 3 funds and reduced transparency without the ticker symbol, etc.

My question: Do you think the lower weighted ER to approximate SWTSX (Blackrock's 500+Russell CITs) and the lower ER on the Blackrock US Debt Index Fund CIT (ER=0.0198) to approximate Schwab US Aggregate Bond Index Fund (SWAGX; ER=0.04) is worth the reduced oversight, decreased less transparency, loss of managing and viewing changes to the value due to the lack of a ticker symbol and the need to use 4 funds instead of 3 funds?

Thank you for considering my question and please let me know if it needs clarification. I'm new to all of this.

Don't worry about being new to this. You'll get a much better answer by updating your current thread: Help: Vanguard Total International Stock Market vs. Schwab International Index and ask your question there.

Or, start a new thread in the Investing - Help with Personal Investments and post your info using the Asking Portfolio Questions format. It will help you think about the "big picture" while giving us the info we need to point you in the right direction.

BTW, funds without ticker symbols are private funds. You can get an idea of the fund's underlying composition by the index it tracks.
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.

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Re: The Three-Fund Portfolio

Post by LadyGeek » Tue May 09, 2017 4:20 pm

mister_sparkle wrote:I have a minor dilemma facing me this week and was hoping to get opinions from others who follow the Three-Fund Portfolio route like I do.

I have received the proceeds from selling my house last summer. Proceeds are $231K, so my bond allocation from this will be 30% or $69K. Right now in my taxable account I only have $4K in Total Bond Fund (VBMFX -- investor shares due to not meeting the $10K minimum), the rest is Total Stock Market (VTSAX) and Total International Stock (VTIAX). I see my options as the following (this is assuming I'm investing the entire amount and not trying to DCA/time the market), given that I am in the 25% tax bracket currently:

1. Buy VBTLX, VTSAX and VTIAX in my desired allocation percentages in my taxable account and not worrying about the tax effects of the bond dividends.

2. Ditto, except substituting a tax-exempt bond fund (or funds) for VBTLX for tax-efficiency purposes.

3. Buying only VTSAX and VTIAX in my taxable account and selling these 2 funds in my tax-advantaged accounts to buy VBTLX to get to my desired allocation. This would leave my tax-advantaged accounts with roughly 90% bonds and 10% stocks.


Thoughts?

Some additional information is needed (like desired asset allocation). Why don't you start a new thread in the Investing - Help with Personal Investments forum and post your info using the Asking Portfolio Questions format? As I stated earlier, the format will make you think about the "big picture" while giving us the info we need to point you in the right direction.
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.

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Re: Adding small funds?

Post by bennettg » Thu May 11, 2017 12:12 pm

LadyGeek wrote:
bennettg wrote:
Taylor Larimore wrote:Bennetg:

I'm the one who is obtuse:

If I understand correctly, you are asking if you should add small-cap and emerging market funds to the Schwab (total) International Equity Fund which contains only negligible amounts of these two asset-classes.

In my opinion, adding two small funds to a portfolio adds unnecessary cost and is not worth the added complexity in a small part of an overall portfolio. Read the "Simplicity" link below.

Best wishes.
Taylor


Would you be kind enough to opine on a follow-up question?

My retirement plan will soon be offering Collective Investment Trusts (CITs) from BlackRock. Specifically, they will offer:

Blackrock Equity Index Fund F (S&P 500) CIT (ER=0.0084)
Blackrock Russell 2500 Equity Index Fund CIT (ER=0.0225)
Blackrock US Debt Index Fund F Lending CIT (ER=0.0198)

In looking at the bogleheads wiki on approximating Total Stock Market (Schwab version is SWTSX; ER=0.03), I'd have to use 85% of the Blackrock 500 CIT and 15% of the Blackrock Russel CIT (weighted ER=0.011)....I know that would give me 4 funds instead of 3 funds and reduced transparency without the ticker symbol, etc.

My question: Do you think the lower weighted ER to approximate SWTSX (Blackrock's 500+Russell CITs) and the lower ER on the Blackrock US Debt Index Fund CIT (ER=0.0198) to approximate Schwab US Aggregate Bond Index Fund (SWAGX; ER=0.04) is worth the reduced oversight, decreased less transparency, loss of managing and viewing changes to the value due to the lack of a ticker symbol and the need to use 4 funds instead of 3 funds?

Thank you for considering my question and please let me know if it needs clarification. I'm new to all of this.

Don't worry about being new to this. You'll get a much better answer by updating your current thread: Help: Vanguard Total International Stock Market vs. Schwab International Index and ask your question there.

Or, start a new thread in the Investing - Help with Personal Investments and post your info using the Asking Portfolio Questions format. It will help you think about the "big picture" while giving us the info we need to point you in the right direction.

BTW, funds without ticker symbols are private funds. You can get an idea of the fund's underlying composition by the index it tracks.


Thanks....I realize that you are the admin and I am not trying to be disrespectful, but do think my question about cobbling together an approximation of the 3 fund strategy with CITs is a reasonable question in this thread and I hope that Taylor will consider answering.

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Taylor Larimore
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Collective Investment Trusts (CITs)

Post by Taylor Larimore » Fri May 12, 2017 8:11 am

bennettg:

Sorry, I don't know enough about CITs (Collective Investment Trusts) to give you a reliable reply.

Lady Geek is right. Please ask your question on the forum where you will get more and better replies.

Thank you and best wishes.
Taylor
"Simplicity is the master key to financial success." -- Jack Bogle

bennettg
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Re: Collective Investment Trusts (CITs)

Post by bennettg » Fri May 12, 2017 8:55 am

Taylor Larimore wrote:bennettg:

Sorry, I don't know enough about CITs (Collective Investment Trusts) to give you a reliable reply.

Lady Geek is right. Please ask your question on the forum where you will get more and better replies.

Thank you and best wishes.
Taylor


Appreciate your response and that of Lady Geek.

Have a good day.

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Re: Adding small funds?

Post by dbr » Fri May 12, 2017 9:08 am

bennettg wrote:Blackrock Equity Index Fund F (S&P 500) CIT (ER=0.0084)
Blackrock Russell 2500 Equity Index Fund CIT (ER=0.0225)
Blackrock US Debt Index Fund F Lending CIT (ER=0.0198)

In looking at the bogleheads wiki on approximating Total Stock Market (Schwab version is SWTSX; ER=0.03), I'd have to use 85% of the Blackrock 500 CIT and 15% of the Blackrock Russel CIT (weighted ER=0.011)....I know that would give me 4 funds instead of 3 funds and reduced transparency without the ticker symbol, etc.

My question: Do you think the lower weighted ER to approximate SWTSX (Blackrock's 500+Russell CITs) and the lower ER on the Blackrock US Debt Index Fund CIT (ER=0.0198) to approximate Schwab US Aggregate Bond Index Fund (SWAGX; ER=0.04) is worth the reduced oversight, decreased less transparency, loss of managing and viewing changes to the value due to the lack of a ticker symbol and the need to use 4 funds instead of 3 funds?


ERs as low as what you mention are low enough that there is no longer much point in worrying about how low they are. In my judgement the answer would be no, it isn't worth shifting things around for even lower ER. The decision could be based on other factors, whatever might apply in the case at hand. On the other hand I don't think things like not having a ticker symbol and using 4 funds instead of 3 should be much of an issue either. As to other differences between retail mutual funds and CITs, I would not be qualified to give advice.

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Re: The Three-Fund Portfolio

Post by hovbuild » Tue May 16, 2017 5:21 am

I know this has been asked before so forgive me. I am invested at Fidelity and trying to figure out to get the pf % I desire in a lot less funds over multiple accounts. I can figure what is close to the vanguard choices most of you love but I would like some other suggestions on funds that compare with the vanguard funds I can buy at fidelity without having to pay the fee they ask.

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Re: The Three-Fund Portfolio

Post by gvsucavie03 » Tue May 16, 2017 6:52 am

hovbuild wrote:I know this has been asked before so forgive me. I am invested at Fidelity and trying to figure out to get the pf % I desire in a lot less funds over multiple accounts. I can figure what is close to the vanguard choices most of you love but I would like some other suggestions on funds that compare with the vanguard funds I can buy at fidelity without having to pay the fee they ask.


Probably best to start a new thread on this question so we can look specifically at your ER's and other fees. Also, read this page - https://www.bogleheads.org/wiki/Three-fund_portfolio#Other_than_Vanguard.2C_Boglehead-style.

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Re: The Three-Fund Portfolio

Post by sanfran2015 » Sun May 28, 2017 11:53 pm

Is there a 3-fund portfolio equivalent of using muni bonds instead of total bond?

My guess is it would be:
VTSMX Total US stock
VGTSX Total Intl stock
VWITX Intermediate Term Tax Exempt

Is this inline with Boglehead 3-fund approach?

Thanks

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Muni fund vs. taxable bond fund ?

Post by Taylor Larimore » Mon May 29, 2017 12:37 pm

sanfran2015 wrote:Is there a 3-fund portfolio equivalent of using muni bonds instead of total bond?

My guess is it would be:
VTSMX Total US stock
VGTSX Total Intl stock
VWITX Intermediate Term Tax Exempt

Is this inline with Boglehead 3-fund approach?

sanfran2015:

In the opening post (OP) I wrote:
Fund Placement For Maximum Tax-Efficiency: Place Total Bond Market in tax-advantaged account(s). If full, use a tax-exempt bond fund in a taxable account. Place Total Stock Market and Total International Stock Market in either a tax-advantaged account (best) or a taxable account.


Vanguard Intermediate-Term Tax-Exempt Bond Fund is an excellent substitute in a taxable account IF your tax-advantaged accounts are filled with bonds.

VWITX is probably not the best choice in a tax-advantaged account because tax-exempt bonds generally have lower returns or more risk than taxable bonds of the same quality and maturity.

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

abhinav23
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Re: The Three Fund Portfolio--Location.

Post by abhinav23 » Tue May 30, 2017 6:50 am

How much can I put in the tax advantaged account? If I put it in a 403(b) will it not be just 18k early (because that is the upper limit of annual contributions)? Sorry have not really started delving into the nuances of the 403(b) itself.

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Re: The Three-Fund Portfolio

Post by GunniNC » Tue May 30, 2017 12:04 pm

Would VWALX be more suitable than VBTLX for bonds?

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Adding a Hi-Yield Bond Fund ?

Post by Taylor Larimore » Tue May 30, 2017 3:48 pm

GunniNC wrote:Would VWALX be more suitable than VBTLX for bonds?

GunniNC:

Welcome to the Bogleheads Forum!

Few of us have memorized the fund tickers. These are the funds:

* VWALX is Vanguard High-Yield Tax-Exempt Admiral Fund.

* VBTLX is Vanguard Total Bond Market Admiral Fund.

Bonds are primarily for portfolio safety. In the 2008 bear market, VWALK declined -21.3%. (VBTLX) gained +5.0%.

In my opinion, a junk bond fund is not suitable for most portfolios.

If you seek higher return (and more risk of loss) it is more efficient to increase your stock stock allocation. Diversified, low-cost, Total Bond Market Index Fund is a superior choice. I have been happy owning it for over 20 years.

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

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Re: The Three-Fund Portfolio

Post by LadyGeek » Tue May 30, 2017 4:35 pm

GunniNC wrote:Would VWALX be more suitable than VBTLX for bonds?

Welcome! To explain what Taylor Larimore said in detail about VWALX (Vanguard High-Yield Tax-Exempt Admiral Fund), see the wiki: High yield bonds

Vanguard High-Yield Tax-Exempt Fund Admiral Shares (VWALX) - Note that a lot of those bonds carry an "A" credit rating or lower. This fund is definitely not a replacement for VBTLX.

- Vanguard Total Bond Market Index Fund Admiral Shares (VBTLX) - The Portfolio and Management tab shows the credit ratings of the bonds held in the fund. Compare to VWALX. Do you see how different they are?
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Re: The Three-Fund Portfolio

Post by GunniNC » Tue May 30, 2017 7:31 pm

Thanks Taylor, LadyGeek! Appreciate it.

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Re: The Three-Fund Portfolio

Post by LadyGeek » Sat Jun 10, 2017 6:19 pm

^^^ You're welcome.

New member bossballer41 has a question which I've moved into a stand-alone post, see: Starting a Three-Fund Portfolio - which funds?
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.

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