The Three-Fund Portfolio

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WhiteMaxima
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Re: The Three-Fund Portfolio

Post by WhiteMaxima » Wed Jan 10, 2018 7:50 pm

VTI/VXUS/BND

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Re: The Three-Fund Portfolio

Post by LadyGeek » Thu Jan 11, 2018 4:52 pm

Can you provide a little more detail, such as why you've selected those funds?

What asset allocation percentages have you chosen?
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Re: The Three-Fund Portfolio

Post by bg5 » Mon Jan 15, 2018 12:17 pm

Wow....what an amazing thread! This has really been helpful and it appears to really simply things.

Thanks in advance for all of the information on this thread. I have spent the last we days reading the entire thread and my wife and I have decided to move our retirement into these accounts with 1 exception. We will not be adding any bonds so we plan to eliminate VBTLX. Our plan is as follows:

80% VTSMX (Vanguard Total Stock Market)
20% VGTSX (Vanguard Total International)

This will also leave us 80% domestic and 20% international.

The reason we dont want bonds is we are both teachers and will be able to comfortable be able to live off of both of our pensions. The money we have in our retirement will likely be left to our kids and grand kids and we have around 40-50 years before we need it. The plan for now is to allow that money to grow and we know from previous markets that 100% will have better returns over the long hall. There will be a time in the future that we will add bonds but we are comfortable now with going super aggressive as to us this money is almost "free money".

I have read the bond readings but if we truly dont plan to touch this money for 40-50 years shouldnt we be aggressive? We understand that any any market when you are 100% you can lose 75% or more at any time in a bad market. But our thought is......you dont lose it until you sell it so we are willing to ride the ups and downs and plan to stay true to the long term vision of this money. Eventually we will be adding bonds but I dont see that happening for at least 20 years.


Thoughts?

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Re: The Three-Fund Portfolio

Post by dbr » Mon Jan 15, 2018 1:33 pm

bg5 wrote:
Mon Jan 15, 2018 12:17 pm
.....you dont lose it until you sell it so we are willing to ride the ups and downs and plan to stay true to the long term vision of this money.

Thoughts?
I don't like that expression about "until you sell it." The value is lost when it is lost, period. A much better expression is the second half of your sentence about riding the ups and downs. The operative factor in the selling is that you are no longer invested for the future and that is where the difference lies.

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Taylor Larimore
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A 100% stock portfolio

Post by Taylor Larimore » Mon Jan 15, 2018 1:59 pm

bg5 wrote: The reason we don't want bonds is we are both teachers and will be able to comfortable be able to live off of both of our pensions.
bg5:

In my opinion, it is acceptable to have a 100% stock portfolio when the investor is reasonably certain the portfolio will not be needed for personal retirement or other critical needs.

I do something similar: Money that I cannot afford to lose is in Total Bond Market--the rest is in stocks.

Best wishes.

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

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Re: The Three-Fund Portfolio

Post by bubbadog » Mon Jan 15, 2018 3:44 pm

What are your ages?

What if one of you can no longer work and contribute to your pension vesting? Can you live off of one pension in retirement?

Planning 40-50 years in advance is nearly impossible.

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Re: The Three-Fund Portfolio

Post by bg5 » Mon Jan 15, 2018 3:55 pm

I am 37 and my wife is 33. To date we have $190,000 in those 2 funds. We have 20k in bank for our emergency fund and have zero debt other than our house. We owe 247k on a home that we could sell tomorrow for 500k.

When we retire we will get 50% of our last 3 years salary for life. The pension increases 3% a year and if my wife or I die the other will still remain to get the other spouses for the rest of their lives.

We live in the Midwest and with a rediculously low cost of living. We both contribute 10% of our income to this fund.

Yes we could live off just 1 persons pension. Worst case scenario we would sell our home which is on lake and it will continue to go up.

My wife wants more international stock but I feel more comfortable at only 20% international. We continue to discuss this

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Re: The Three-Fund Portfolio

Post by bubbadog » Mon Jan 15, 2018 4:13 pm

bg5 wrote:
Mon Jan 15, 2018 3:55 pm
I am 37 and my wife is 33. To date we have $190,000 in those 2 funds. We have 20k in bank for our emergency fund and have zero debt other than our house. We owe 247k on a home that we could sell tomorrow for 500k.

When we retire we will get 50% of our last 3 years salary for life. The pension increases 3% a year and if my wife or I die the other will still remain to get the other spouses for the rest of their lives.

We live in the Midwest and with a rediculously low cost of living. We both contribute 10% of our income to this fund.

Yes we could live off just 1 persons pension. Worst case scenario we would sell our home which is on lake and it will continue to go up.

My wife wants more international stock but I feel more comfortable at only 20% international. We continue to discuss this
Sounds reasonable to me.

#2 teacher pensions gives you a lot of flexibility to be more aggressive with your portfolio.

Best of luck with your plans!
:sharebeer :moneybag

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Re: The Three-Fund Portfolio

Post by desiBogleHeads » Wed Jan 17, 2018 12:58 pm

Hi Taylor and other investment Gurus in this forum,
I am new to this forum. I have been Vanguard index investor for more than 20 years.

I have been with the 2 fund Portfolio

Vanguard Total Stock Market (VTSMX) 80%
Vanguard Total Bond Market (VBTLX) 20%

My 2 cents:
I have always felt that
Vanguard Total International (VGTSX)
is very volatile and in the long run ( assuming you are a very long term investor) I don't see it having any performance advantage over Vanguard Total Stock Market (VTSMX), assuming you are a buy and hold long term investor like me who invests each month in the above 2 index funds.

Also, most of the top companies in Vanguard Total Stock Market (VTSMX) are truely global anyways.

That is just my thought.

I am finding a lot of valuable education in this forum threads.

Thanks again for your post.

Regards.

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"Simplicity Vs. Schwab's Robo Portfolio"

Post by Taylor Larimore » Fri Jan 19, 2018 4:27 pm

Boglehead Allan Roth, CPA, CFP, has written an important article comparing Vanguard's 3-Fund Portfolio and Schwab's 16-Fund Robo Portfolio.

Quotes:

"Since March 27, 2015, the date I bought it, my Schwab statement indicates a very handsome 7.7% annualized return. However, the equivalent three-fund broad index portfolio returned an even more handsome 9.4% annually, as did the Vanguard Target Date Fund, returning 9.1% annually."

"There are several reasons the sophisticated portfolio badly lagged the simple one, but a few are key. First, fees are much higher—and fees matter."

"For those wanting a set-it-and-forget-it portfolio where no rebalancing is required, consider the original robo platform—a Vanguard Target Date Retirement Fund that meets your need and willingness to take on risk." (note: Target Funds are tax-inefficient and therefore usually unsuitable for taxable accounts.)
Simplicity Vs. Schwab's Robo Portfolio

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

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Re: "Simplicity Vs. Schwab's Robo Portfolio"

Post by abuss368 » Sat Jan 20, 2018 3:14 pm

Taylor Larimore wrote:
Fri Jan 19, 2018 4:27 pm
Boglehead Allan Roth, CPA, CFP, has written an important article comparing Vanguard's 3-Fund Portfolio and Schwab's 16-Fund Robo Portfolio.

Quotes:

"Since March 27, 2015, the date I bought it, my Schwab statement indicates a very handsome 7.7% annualized return. However, the equivalent three-fund broad index portfolio returned an even more handsome 9.4% annually, as did the Vanguard Target Date Fund, returning 9.1% annually."

"There are several reasons the sophisticated portfolio badly lagged the simple one, but a few are key. First, fees are much higher—and fees matter."

"For those wanting a set-it-and-forget-it portfolio where no rebalancing is required, consider the original robo platform—a Vanguard Target Date Retirement Fund that meets your need and willingness to take on risk." (note: Target Funds are tax-inefficient and therefore usually unsuitable for taxable accounts.)
Simplicity Vs. Schwab's Robo Portfolio

Best wishes.
Taylor
Simplicity is the master key of financial success!
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"Three-Fund vs. Target Date Fund Portfolios"

Post by Taylor Larimore » Mon Jan 22, 2018 9:43 am

Bogleheads:

The Wall Street Physician is the name of a newsletter edited by a physician who formerly worked as a trader at an investment bank. He is "A huge proponent of the three-fund portfolio." This article explains:

Three-Fund vs. Target Date Fund Portfolios

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

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Re: The Three-Fund Portfolio

Post by yardarm » Mon Jan 22, 2018 8:48 pm

Taylor, I have enjoyed this Three-Fund Portfolio thread and the reasoning and logic you set forth in your January 2012 post, certainly make a compelling case. During the most recent Boglehead convention where JB took questions from the attendees (on video), he was asked by one person if having all his assets in the Balanced Index Fund (VBIAX) would in JB's opinion work for a person already retired. Mr. Bogle replied with a "yes". I thought this was both interesting and thought provoking. I suppose the most glaring challenge of this solution is the inability to re-balance asset allocations if your goals change from the 60/40 solution. I mention this because I have formed the opinion that this one fund might be efficient and well-suited for my goals going forward. Thanks again for staying with this thread and providing more background information as it becomes available. Of course, a lot always depends on where a person is in their investment timeline. Cheers, Roger

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Re: The Three-Fund Portfolio vs VBIAX

Post by Taylor Larimore » Mon Jan 22, 2018 10:06 pm

Roger:

This is not the place to have a lengthy discussion about a single balanced index fund (VBIAX) for retirees vs. The Three-Fund Portfolio. There are many variables including the one you mentioned: "The inability to re-balance asset allocations if your goals change from the 60/40 solution." There is also the fact that, if you have both a taxable and tax-advantaged account, one fund will be in the wrong type account. Also VBIAX has no international stocks.

Mr. Bogle has written a long Introduction for my upcoming book, "The Bogleheads' Three-Fund Portfolio," so we can assume he endorses it also.

I believe that in most cases The Three-Fund Portfolio is the better choice.

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

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Re: The Three-Fund Portfolio

Post by yardarm » Tue Jan 23, 2018 10:44 am

Thanks again Taylor. My focus to date has been on tax-advantaged accounts. I do have a personal problem with trust of international stocks and I need to give that more consideration. I look forward to reading your book and assume that the book would provide information regarding both taxable and tax-advantaged accounts. Have a good day. Regards, Roger

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Re: The Three-Fund Portfolio vs VBIAX

Post by PuddlesTheDuck » Tue Jan 23, 2018 12:54 pm

yardarm wrote:
Mon Jan 22, 2018 8:48 pm
During the most recent Boglehead convention where JB took questions from the attendees (on video), he was asked by one person if having all his assets in the Balanced Index Fund (VBIAX) would in JB's opinion work for a person already retired. Mr. Bogle replied with a "yes".
If you believe that you only need US exposure, and you believe that a 60:40 stock:bond ratio is in line with your goals, then VBIAX is 100% sufficient for anyone, not just a retiree. Running your own 2-fund portfolio of VTSAX and VBTLX cuts down a tiny bit on the already tiny expense ratio, but with VBIAX you can set it and forget it, so for people who don't want to bother tracking their fund values and rebalancing, VBIAX is perfectly suitable.

The question, of course, is "why no international?"
Taylor Larimore wrote:
Mon Jan 22, 2018 10:06 pm
I believe that in most cases The Three-Fund Portfolio is the better choice.
I agree, but there are a few things I'd like clarified because I believe that the four fund portfolio (Three-Fund Portfolio plus international bonds) is strictly more desirable than either option.
  • Why are 3 funds better than 1? If this person believes that a 60:40 stock:bond ratio is their desired asset allocation, and they are only invested in the US, what are the reasons for trying to get them away from one fund?
  • Following that, if you convince said person that they should be investing in international stocks, why should they not invest in international bonds? This thread has been vehemently against international bonds for various reasons that I find silly (it adds complexity, bonds are for safety and the US debt is the safest debt, to name the most common). If you've convinced a person that international diversification is good, why isn't the logical step to invest in international debt?

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Re: The Three-Fund Portfolio vs VBIAX

Post by Taylor Larimore » Tue Jan 23, 2018 1:53 pm

Taylor Larimore wrote:
Mon Jan 22, 2018 10:06 pm
I believe that in most cases The Three-Fund Portfolio is the better choice.
Puddles The Duck wrote:I agree, but there are a few things I'd like clarified because I believe that the four fund portfolio (Three-Fund Portfolio plus international bonds) is strictly more desirable.."
Puddles the Duck:

You may be right although Total Bond Market Index Fund has an excellent record of providing safety when stocks (international and domestic) decline. Mr. Bogle has stated that he would not invest in international bonds.

If you are convinced that adding an international bond fund is worth the additional cost and complexity--then do it.

There is more than one road to Dublin

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

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Re: The Three-Fund Portfolio

Post by cegibbs » Tue Jan 23, 2018 2:15 pm

Hi Taylor,

Thank you so much for all of your extraordinary contributions to investors.

Do you still recommend 20 percent of equities be international? Also, do you see any value in indexing maybe ten percent of the US bond allocation to a HY index??

Charles

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Answer to questions

Post by Taylor Larimore » Tue Jan 23, 2018 4:16 pm

cegibbs wrote:
Tue Jan 23, 2018 2:15 pm
Hi Taylor,

Thank you so much for all of your extraordinary contributions to investors.
Thank you.

Do you still recommend 20 percent of equities be international?
Yes, you can read my thinking here: How Much International Stock? A Suggestion

Do you see any value in indexing maybe ten percent of the US bond allocation to a HY index??
No. Bonds are for safety. In the 2008 bear market Vanguard Hi-Yield Bond Fund (VWEHX) plunged -21.3%. Meanwhile, Total Bond Market gained +5% (a 26.3% difference). If you are seeking higher return (and more risk) it is more efficient to increase your stock allocation.

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 » Tue Jan 23, 2018 7:43 pm

cegibbs wrote:
Tue Jan 23, 2018 2:15 pm
Hi Taylor,

Thank you so much for all of your extraordinary contributions to investors.

Do you still recommend 20 percent of equities be international? Also, do you see any value in indexing maybe ten percent of the US bond allocation to a HY index??

Charles
Hi Charles -

In my opinion bonds are for safety and income. Vanguard Total Bond Index does just that. No wonder it is now the largest bond fund in the world. I had family who invested in Vanguard High Yield during the financial crisis and rode the value down from $5.50 +- to $3.50+- a share.

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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Taylor Larimore
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"International Stocks"

Post by Taylor Larimore » Tue Jan 23, 2018 9:19 pm

yardarm wrote:
Tue Jan 23, 2018 10:44 am
Thanks again Taylor. My focus to date has been on tax-advantaged accounts. I do have a personal problem with trust of international stocks and I need to give that more consideration. I look forward to reading your book and assume that the book would provide information regarding both taxable and tax-advantaged accounts. Have a good day. Regards, Roger
Roger:

The best argument for U.S. investors that I have read to not hold international stocks is Chapter 8 (25 pages) in Mr. Bogle's 10th anniversary edition of "Common Sense on Mutual Funds." I strongly suggest reading it if you are planning to invest a large percentage of your portfolio in international stocks.

So far, Mr. Bogle has been right. In his first book written in 1994, he wrote in part: "investors should limit their international holdings to 20% of their stock portfolio." Since then, the U.S. S&P 500 Index has risen approx 750% while the EAFE index has risen about 250%. (Exact figures are in his lengthy "Introduction" in my new book, "The Bogleheads' Guide to The Three-Fund Portfolio.")

"Past performance does not guarantee future performance."

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

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Re: The Three-Fund Portfolio vs VBIAX

Post by MichaelRpdx » Tue Jan 23, 2018 9:25 pm

PuddlesTheDuck wrote:
Tue Jan 23, 2018 12:54 pm
yardarm wrote:
Mon Jan 22, 2018 8:48 pm
During the most recent Boglehead convention where JB took questions from the attendees (on video), he was asked by one person if having all his assets in the Balanced Index Fund (VBIAX) would in JB's opinion work for a person already retired. Mr. Bogle replied with a "yes".
If you believe that you only need US exposure, and you believe that a 60:40 stock:bond ratio is in line with your goals, then VBIAX is 100% sufficient for anyone, not just a retiree. Running your own 2-fund portfolio of VTSAX and VBTLX cuts down a tiny bit on the already tiny expense ratio, but with VBIAX you can set it and forget it, so for people who don't want to bother tracking their fund values and rebalancing, VBIAX is perfectly suitable.

The question, of course, is "why no international?"
Taylor Larimore wrote:
Mon Jan 22, 2018 10:06 pm
I believe that in most cases The Three-Fund Portfolio is the better choice.
I agree, but there are a few things I'd like clarified because I believe that the four fund portfolio (Three-Fund Portfolio plus international bonds) is strictly more desirable than either option. [snip of the rest of the post]
And you can implement it very simply with the Life Strategy Funds, VSMGX for those wishing for a 60/40 allocation. One might think of it as VBIAX with international stirred in.
Be Appropriate && Follow Your Curiosity

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Re: "International Stocks"

Post by abuss368 » Tue Jan 23, 2018 11:23 pm

Taylor Larimore wrote:
Tue Jan 23, 2018 9:19 pm
yardarm wrote:
Tue Jan 23, 2018 10:44 am
Thanks again Taylor. My focus to date has been on tax-advantaged accounts. I do have a personal problem with trust of international stocks and I need to give that more consideration. I look forward to reading your book and assume that the book would provide information regarding both taxable and tax-advantaged accounts. Have a good day. Regards, Roger
Roger:

The best argument for U.S. investors that I have read to not hold international stocks is Chapter 8 (25 pages) in Mr. Bogle's 10th anniversary edition of "Common Sense on Mutual Funds." I strongly suggest reading it if you are planning to invest a large percentage of your portfolio in international stocks.

So far, Mr. Bogle has been right. In his first book written in 1994, he wrote in part: "investors should limit their international holdings to 20% of their stock portfolio." Since then, the U.S. S&P 500 Index has risen approx 750% while the EAFE index has risen about 250%. (Exact figures are in his lengthy "Introduction" in my new book, "The Bogleheads' Guide to The Three-Fund Portfolio.")

"Past performance does not guarantee future performance."

Best wishes.
Taylor
Incredible.
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Re: "International Stocks"

Post by saltycaper » Tue Jan 23, 2018 11:34 pm

abuss368 wrote:
Tue Jan 23, 2018 11:23 pm

Incredible.
Not really. Fidelity Contrafund outperformed both US and EAFE indices by a significant margin. So did a bunch of other funds. Someone in 1994 recommended those funds too. It's really a meaningless data point, and definitely not something an investor should rely on to make asset allocation decisions.
Quod vitae sectabor iter?

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Re: The Three-Fund Portfolio

Post by A440 » Wed Jan 24, 2018 7:56 am

I'm ready to move to the Three-Fund Portfolio. Do I post the details of my portfolio here or somewhere else on the forum for advice on how to allocate in the different types of accounts? I also plan to ask my Flagship rep to ask my Vanguard CFP the same question. It should be interesting to see the similarities/differences in the suggestions.

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Moving to The Three-Fund Portfolio

Post by Taylor Larimore » Wed Jan 24, 2018 8:14 am

A440 wrote:
Wed Jan 24, 2018 7:56 am
I'm ready to move to the Three-Fund Portfolio. Do I post the details of my portfolio here or somewhere else on the forum for advice on how to allocate in the different types of accounts? I also plan to ask my Flagship rep to ask my Vanguard CFP the same question. It should be interesting to see the similarities/differences in the suggestions.
A440:

You should post details of your personal portfolio"on the Help with Personal Investments Forum.

Use the format for Asking Portfolio Questions.

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

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Re: The Three-Fund Portfolio

Post by AllTheFries » Fri Feb 02, 2018 2:56 pm

Hi, what are the latest opinions on VFWIX vs VGTSX in a taxable account? Most stuff I’ve found through searching comparing these two is probably out of date.

Comparing them at Morningstar, it looks like VFWIX might be slightly more tax efficient, while VGTSX offers slightly higher returns and exposure to many more stocks while also covering a bit more small caps. Both have the same expense ratio.

If Ive been contributing to VFWIX (VFWAX) for years, is it worth stopping that contribution and starting with VGTSX?

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Re: The Three-Fund Portfolio

Post by Taylor Larimore » Fri Feb 02, 2018 4:36 pm

AllTheFries wrote:
Fri Feb 02, 2018 2:56 pm
Hi, what are the latest opinions on VFWIX vs VGTSX in a taxable account? Most stuff I’ve found through searching comparing these two is probably out of date.

Comparing them at Morningstar, it looks like VFWIX might be slightly more tax efficient, while VGTSX offers slightly higher returns and exposure to many more stocks while also covering a bit more small caps. Both have the same expense ratio.

If Ive been contributing to VFWIX (VFWAX) for years, is it worth stopping that contribution and starting with VGTSX?
AllTheFries:

Both VFWIX (FTSE All-World ex-US) and VGTSX (Total International) are excellent broad market index funds in taxable accounts. They have similar tax-efficiency and similar expected returns. I sometimes wonder why Vanguard offers two such similar funds. They can sometimes be useful as an alternate fund for tax-loss harvesting.

Inasmuch as you have been contributing to VFWIX "for years" in a taxable account, you must have large capital-gains. Therefore, it would be foolish to exchange funds which would probably result in a large capital-gain tax.

Stay-the-course.

If you have more questions about your personal portfolio, please post on the Help With Personal Portfolio Forum.

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

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Re: The Three-Fund Portfolio

Post by AllTheFries » Fri Feb 02, 2018 5:25 pm

Thanks for the response Taylor. Instead of selling VFWAX, which I agree would be foolish in this situation, would it be worth it to just stop buying into VFWAX and add another fund (VGTSX), and contribute to just VGTSX from here on out? I suppose if I couldn’t directly go with VTIAX, there’d be a bit more of a disadvantage for some period of time until I reach admiral status.

But assuming I could get right into VTIAX and maintain my desired allocation, would it be preferred to leave VFWAX alone and just continue with VTIAX?

Also is there a reason why VFWAX in particular is useful for tax loss harvesting?

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Switching funds?

Post by Taylor Larimore » Fri Feb 02, 2018 5:52 pm

AllTheFries:
would it be worth it to just stop buying into VFWAX and add another fund (VGTSX), and contribute to just VGTSX from here on out?
No. Three funds is enough. Resist the temptation to add more funds and more complexity. Read my "Simplicity" link below.
Also is there a reason why VFWAX in particular is useful for tax loss harvesting?
The reason is that the fund is similiar (but not identical) to the fund you would sell for tax-loss harvesting.
The enemy of a good plan is the dream of a perfect plan. -- Jack Bogle.
Stay the course. There is more than one road to Dublin.

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

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Re: The Three-Fund Portfolio

Post by saltycaper » Fri Feb 02, 2018 6:11 pm

AllTheFries wrote:
Fri Feb 02, 2018 5:25 pm

But assuming I could get right into VTIAX and maintain my desired allocation, would it be preferred to leave VFWAX alone and just continue with VTIAX?
If you do this--own both funds at once in a taxable account--you might make tax-loss harvesting more complicated, requiring the use of a third fund or limiting the amount you can TLH.

(If you had the opportunity to get rid of VFWAX entirely and tax-efficiently, I myself do prefer VTIAX.)
Quod vitae sectabor iter?

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Re: The Three-Fund Portfolio

Post by cegibbs » Fri Feb 02, 2018 6:59 pm

Hi Taylor,

My understanding is Mr. Bogle does not recommend international equities and says that he wouldn’t do it. He goes on to say that if you must invest internationally because of personal preference, you should limit your international equities to 20 percent of your equity holdings. Is that still accurate or has he changed his position?

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International Allocation

Post by Taylor Larimore » Sat Feb 03, 2018 8:37 am

My understanding is Mr. Bogle does not recommend international equities and says that he wouldn’t do it. He goes on to say that if you must invest internationally because of personal preference, you should limit your international equities to 20 percent of your equity holdings. Is that still accurate or has he changed his position?
cegibbs:

Mr. Bogle has written a lengthy Introduction to my new book, "The Bogleheads' Guide to The Three-Fund Portfolio." We discussed my "20% International" recommendation in the book. He told me almost exactly what you said, "I do not recommend international equities, but that up to 20% is acceptable."

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

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Re: The Three-Fund Portfolio

Post by mepcotterell » Tue Feb 06, 2018 7:36 pm

I'm new. Would SPTM/CWI/SPAB at 60/20/20 work?

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Re: The Three-Fund Portfolio

Post by LadyGeek » Tue Feb 06, 2018 8:00 pm

Welcome! That would work, but more info is needed.

I recommend you post your portfolio in the Investing - Help with Personal Investments forum using the Asking Portfolio Questions format. It will make you think about the "big picture" while giving us the info we need to point you in the right direction.
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Re: International Allocation

Post by abuss368 » Tue Feb 06, 2018 8:10 pm

Taylor Larimore wrote:
Sat Feb 03, 2018 8:37 am
My understanding is Mr. Bogle does not recommend international equities and says that he wouldn’t do it. He goes on to say that if you must invest internationally because of personal preference, you should limit your international equities to 20 percent of your equity holdings. Is that still accurate or has he changed his position?
cegibbs:

Mr. Bogle has written a lengthy Introduction to my new book, "The Bogleheads' Guide to The Three-Fund Portfolio." We discussed my "20% International" recommendation in the book. He told me almost exactly what you said, "I do not recommend international equities, but that up to 20% is acceptable."

Best wishes
Taylor
Hi Taylor -

Thank you for the clarification from Mr. Bogle. I can not wait to read the new book.
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: International Allocation

Post by abuss368 » Tue Feb 06, 2018 8:17 pm

Taylor Larimore wrote:
Sat Feb 03, 2018 8:37 am

Mr. Bogle has written a lengthy Introduction to my new book, "The Bogleheads' Guide to The Three-Fund Portfolio." We discussed my "20% International" recommendation in the book. He told me almost exactly what you said, "I do not recommend international equities, but that up to 20% is acceptable."

Best wishes
Taylor
Hi Taylor -

Looking at the book on Amazon, it appears the available date moved from April to June. Is the publisher behind?
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 Taylor Larimore » Tue Feb 06, 2018 11:23 pm

Looking at the book on Amazon, it appears the available date moved from April to June. Is the publisher behind?

A Wiley executive took a personal interest in the book and has made several improvements which I greatly appreciate--but it has delayed publication as you noted.

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 » Tue Feb 06, 2018 11:52 pm

Taylor Larimore wrote:
Tue Feb 06, 2018 11:23 pm
Looking at the book on Amazon, it appears the available date moved from April to June. Is the publisher behind?

A Wiley executive took a personal interest in the book and has made several improvements which I greatly appreciate--but it has delayed publication as you noted.

Best wishes.
Taylor
Thank you for the update Taylor. Excited to read it!
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 mepcotterell » Wed Feb 07, 2018 4:59 pm

LadyGeek wrote:
Tue Feb 06, 2018 8:00 pm
Welcome! That would work, but more info is needed.

I recommend you post your portfolio in the Investing - Help with Personal Investments forum using the Asking Portfolio Questions format. It will make you think about the "big picture" while giving us the info we need to point you in the right direction.
Thanks!

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Re: The Three-Fund Portfolio

Post by TheQuietMan » Wed Feb 07, 2018 5:01 pm

I’m looking forward to reading the book Taylor! Thank you.

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Re: The Three-Fund Portfolio

Post by Strummer » Thu Feb 08, 2018 1:26 am

Taylor, would you indulge a question about the book?

I'm curious if, in addition to covering ideas like "why the three-fund portfolio is a smart option," it also covers the long-term management, both pre- and post-retirement, of the three-fund portfolio? I'm thinking specifically about details like the use of taxable vs. non-taxable accounts, rebalancing, distributions, tax-loss harvesting, and similar issues.

In other words, I don't need to be convinced that the three-fund portfolio is a good way forward — I just want to make sure I manage it as efficiently as possible.

Thanks for any info you can provide and best of luck with the book!

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Re: The Three-Fund Portfolio

Post by Taylor Larimore » Thu Feb 08, 2018 10:54 am

Strummer:

All I can tell you is that all royalties go directly to "The John C. Bogle Center for Financial Literacy" and the book's description on Amazon:
Twenty benefits from the three-fund total market index portfolio.

The Bogleheads’ Guide to The Three-Fund Portfolio describes the most popular portfolio on the Bogleheads forum. This all-indexed portfolio contains over 15,000 worldwide securities, in just three easily-managed funds, that has outperformed the vast majority of both professional and amateur investors.

If you are a new investor, or an experienced investor who wants to simplify and improve your portfolio, The Bogleheads’ Guide to The Three-Fund Portfolio is a short, easy-to-read guide to show you how.
https://www.amazon.com/Bogleheads-Guide ... 1119487331

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

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Re: The Three-Fund Portfolio

Post by Strummer » Thu Feb 08, 2018 12:24 pm

Taylor Larimore wrote:
Thu Feb 08, 2018 10:54 am
Strummer:

All I can tell you is that all royalties go directly to "The John C. Bogle Center for Financial Literacy" and the book's description on Amazon:
Twenty benefits from the three-fund total market index portfolio.
No relief from my suspense, then! Understood.

I guess I'll just have to wait for the publication date…

Thanks again.

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Re: The Three-Fund Portfolio

Post by CABob » Thu Feb 08, 2018 12:51 pm

Strummer wrote:
Thu Feb 08, 2018 1:26 am
I'm curious if, in addition to covering ideas like "why the three-fund portfolio is a smart option," it also covers the long-term management, both pre- and post-retirement, of the three-fund portfolio? I'm thinking specifically about details like the use of taxable vs. non-taxable accounts, rebalancing, distributions, tax-loss harvesting, and similar issues.
I can't imagine that these aspects would not be addressed, but they certainly have been addressed in the two prior Boglehead books.
https://www.amazon.com/Bogleheads-Guide ... bogleheads
https://www.amazon.com/Bogleheads-Guide ... R50WQVW0EP
Bob

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Re: The Three-Fund Portfolio

Post by Strummer » Thu Feb 08, 2018 5:18 pm

CABob wrote:
Thu Feb 08, 2018 12:51 pm
Strummer wrote:
Thu Feb 08, 2018 1:26 am
I'm curious if, in addition to covering ideas like "why the three-fund portfolio is a smart option," it also covers the long-term management, both pre- and post-retirement, of the three-fund portfolio? I'm thinking specifically about details like the use of taxable vs. non-taxable accounts, rebalancing, distributions, tax-loss harvesting, and similar issues.
I can't imagine that these aspects would not be addressed, but they certainly have been addressed in the two prior Boglehead books.
https://www.amazon.com/Bogleheads-Guide ... bogleheads
https://www.amazon.com/Bogleheads-Guide ... R50WQVW0EP
That's true, but in strict adherence to Boglehead doctrine, I'm hoping to get all the info I need by purchasing just one book. :wink:
(I've read the second — checked it out of the library.)

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Re: The Three-Fund Portfolio

Post by cutebean » Fri Feb 09, 2018 1:14 am

Hi, I have invested in FSITX, FSTVX, and FTIPX via Fidelity over the past several years and the return has been good. But recently I'm a bit concerned about the potential upcoming correction esp. after witnessing the crashing of the VIX products such as XIV and SVXY. Will any of these three funds disappear or suffer a 90% loss overnight?

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Re: The Three-Fund Portfolio

Post by dbr » Fri Feb 09, 2018 8:42 am

cutebean wrote:
Fri Feb 09, 2018 1:14 am
Hi, I have invested in FSITX, FSTVX, and FTIPX via Fidelity over the past several years and the return has been good. But recently I'm a bit concerned about the potential upcoming correction esp. after witnessing the crashing of the VIX products such as XIV and SVXY. Will any of these three funds disappear or suffer a 90% loss overnight?
That would be extraordinarily unlikely and would be accompanied by so much other financial disaster that losing those assets might be the least of one's problems. A more difficult question to answer would be what amount of loss at some point, with recovery over some period of time, should a person be prepared to tolerate. 50% ifor stocks is often mooted here, but obviously there is a continuum.

NB: I am commenting on the stock market. I don't know what the funds you listed are just by seeing ticker symbols. If you have bonds in there the answer is different and probably less alarming.

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Re: The Three-Fund Portfolio

Post by cegibbs » Fri Feb 09, 2018 11:42 am

Hi Taylor,

In my tax deferred account I want to replace Wellington with either the Three Fund Portfolio or Mr. Bogle’s Two Fund. My hesitation is that value stocks have trailed the overall market for sometime and Wellington tilts toward value. The concern is soon as I switch, Wellington will outperform because value starts to outperform growth and the overall market

Would it be prudent to wait, or should I just rip the band-aid off and make the switch? Also, when I used the Vanguard asset allocation link you provided it suggested I go with a 70/30 portfolio. I’m currently 65/35. Should I make that change at the same time? I’m 62 and retired. No pension and will wait until 70 to take SS.

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Re: The Three-Fund Portfolio

Post by Taylor Larimore » Fri Feb 09, 2018 2:44 pm

cegibbs:

My answers to your questions are in red.

"Would it be prudent to wait, or should I just rip the band-aid off and make the switch? The concern is soon as I switch, Wellington will outperform because value starts to outperform growth and the overall market." There will always be funds that outperform your fund(s) during specific periods. Don't worry about it. No one knows which funds will outperform in the future.
Make the switch to the asset-allocation you have decided upon. The enemy of a good plan is the dream of a perfect plan.


"When I used the Vanguard asset allocation link you provided it suggested I go with a 70/30 portfolio. I’m currently 65/35. Should I make that change at the same time? I’m 62 and retired." Read my above response above about waiting.

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

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