The Three-Fund Portfolio

Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.
bossballer41
Posts: 9
Joined: Sat Jun 10, 2017 4:57 pm

Re: The Three-Fund Portfolio

Postby bossballer41 » Sun Jun 11, 2017 3:11 pm

LadyGeek wrote:^^^ 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?


Thanks LadyGeek :happy , I wasn't sure where to post it

User avatar
SacredSword93
Posts: 4
Joined: Wed Jun 14, 2017 4:08 pm

Re: The Three-Fund Portfolio

Postby SacredSword93 » Thu Jun 15, 2017 1:17 am

Thank you Taylor for keeping things simple! :!:

LXEX55
Posts: 7
Joined: Fri Feb 12, 2016 9:12 am

Re: The Three-Fund Portfolio

Postby LXEX55 » Sun Jun 18, 2017 5:33 am

May I ask what would be the suggested allocation of these three funds for a person who retires at age 63? Would you just do 33% each or go heavier on one fund?

User avatar
TheTimeLord
Posts: 4207
Joined: Fri Jul 26, 2013 2:05 pm

Re: The Three-Fund Portfolio

Postby TheTimeLord » Sun Jun 18, 2017 7:43 am

Taylor Larimore wrote:After a lifetime of investing since 1950 trying to "beat the market," I am convinced that a simple 3-fund (or ETF) portfolio of Total Stock Market, Total International, and Total Bond Market, properly allocated, is an ideal portfolio for most investors.


The more I struggle to perfect and tilt my portfolio with ever smaller adjustments the more apparent the inherent wisdom of the 3 fund portfolio becomes. It is a a marvelous straightforward solution to a complex issue, dare I say it is a supremely elegant solution. Thank you.
Run, You Clever Boy!

User avatar
tsturbo
Posts: 137
Joined: Sat Nov 29, 2008 7:27 pm

Re: The Three-Fund Portfolio

Postby tsturbo » Sun Jun 18, 2017 8:09 am

LXEX55 wrote:May I ask what would be the suggested allocation of these three funds for a person who retires at age 63? Would you just do 33% each or go heavier on one fund?

I think you are looking for information on how to determine your AA, based on your age. Once you decide what your AA should be, 80/20; 50/50; 40/60 etc. then allocate as follows:

For example, 50% of my portfolio is bonds, the other 50% is equities which 2/3 is TSM and 1/3 International

User avatar
Taylor Larimore
Advisory Board
Posts: 25523
Joined: Tue Feb 27, 2007 8:09 pm
Location: Miami FL

Re: The Three-Fund Portfolio

Postby Taylor Larimore » Sun Jun 18, 2017 2:38 pm

LXEX55 wrote:May I ask what would be the suggested allocation of these three funds for a person who retires at age 63? Would you just do 33% each or go heavier on one fund?

LXEX55:

Please read the part about "Asset-Allocation" in my opening post (OP).

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

User avatar
abuss368
Posts: 11264
Joined: Mon Aug 03, 2009 2:33 pm
Location: Where the water is warm, the drinks are cold, and I don't know the names of the players!

Re: The Three-Fund Portfolio

Postby abuss368 » Sun Jun 18, 2017 2:52 pm

LXEX55 wrote:May I ask what would be the suggested allocation of these three funds for a person who retires at age 63? Would you just do 33% each or go heavier on one fund?


Jack Bogle will typically recommend "age in bonds" to start. An investors asset allocation is dependent on timeframe, tolerance for risk, and goals.
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

User avatar
Taylor Larimore
Advisory Board
Posts: 25523
Joined: Tue Feb 27, 2007 8:09 pm
Location: Miami FL

Allan Roth: One advisor to another.

Postby Taylor Larimore » Thu Jun 22, 2017 10:54 pm

Bogleheads:

Below are excerpts from an article by Allan Roth in the Financial Planning publication written for financial advisors:

"As an example of simplicity, over a decade ago I taught my son how to invest using just three index funds:

· A total stock index fund such as VTSMX
· A total international stock index fund such as VGTSX
· A total bond fund such as VBTLX

With these funds (or better yet, lower cost share classes of these funds), my son owned virtually every publicly held company on the planet, as well as an approximation of nearly every fixed-rate investment grade bond in the U.S."


"Noble Laureate William Sharpe’s paper "Arithmetic and Active Management" proved that owning the entire market at the lowest costs must beat the majority of investors."

"Owning even one other stock fund will actually decrease diversification since it will be making specific bets on industries, styles, or other factors."

"Over the years, I’ve benchmarked hundreds of portfolios against the equivalent weighted three-fund portfolio and can count on one hand the number of portfolios I’ve seen that bested this benchmark."

"The simple three-fund portfolio with a target and tolerance range for each fund sends the client on their way without them needing me in the future."

https://www.financial-planning.com/slid ... ury-so-far

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

LXEX55
Posts: 7
Joined: Fri Feb 12, 2016 9:12 am

Re: The Three-Fund Portfolio

Postby LXEX55 » Sat Jun 24, 2017 4:26 am

This is very similar to what Ben Stein recommends in YES, YOU CAN STILL RETIRE COMFORTABLY. Only difference is, Stein includes Inflation Indexed Bond fund, along with the other three mentioned. He recommends 25% for each fund, no matter what your age. I am not sure I am going to go with the 50% in stocks. I know at 63 I am a long term investor, but, that still seems a little high for me.


Return to “Investing - Theory, News & General”

Who is online

Users browsing this forum: avalpert, dawg, MnD, Outafter20, TropikThunder, ValueInvestor99 and 65 guests