The Three-Fund Portfolio

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Dialectical Investor
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Re: The Three-Fund Portfolio

Post by Dialectical Investor » Mon May 06, 2019 1:52 pm

Basel Hodge wrote:
Mon May 06, 2019 9:37 am
Thank you Taylor & Dialectical Investor for your thoughtful responses to my post. I’ve read the linked material and I think I understand the underlying rationale. It does prompt some follow up questions. First I think some additional information might be in order…
======
I do have a pension which is about 2.5 % the amount of my total current portfolio per year. I’m 61 years old.
My portfolio is allocated generally 65% Stock 35% bond
My portfolio has the following percentages:
IRA 34%
Roth 15%
Joint acct (Non tax advantaged) 39%
Cash 12%
My age based priority plan for withdrawal in retirement:
Before age 70.5
1. Taxable accounts first (joint acct)
2. Traditional IRA second (Taxable)
3. Roth IRA third
After 70.5
1. Traditional IRA first (RMD taxable)
2. Taxable accounts second (joint acct)
3. Roth IRA third

General principles
1. Use Joint taxable account to establish a yearly spend account. This should be an account that pays the highest interest rate possible yet remains liquid. Assets used for expenditures for that year. (Money Market?)
2. Direct dividends from Joint account to Spending account (currently being re-invested).
3. Set aside cash in rebalancing portfolio by reducing stock portion of joint account to meet spending.
=======
The questions:
1. Given the responses regarding dividends in my last post, I want to be certain regarding my plan (general principals section #2) to direct dividends from the joint act. (non taxed advantaged) to my spend account makes sense. Up to this point in my life all dividends in all accounts have been reinvested. Or have I misunderstood the answer to my previous post?

2. Is there anything in the description of my portfolio that raises any red flags or provides any reason for concern?
Again thank you for your thoughtful response.
Yes, I would not reinvest dividends in taxable if you need cash to spend. If you're not sure if you will need the cash, you could turn off auto-reinvest and then evaluate once or twice a year and reinvest manually or re-allocate if you determine you don't need the cash.

Withdrawal strategies can be complicated, as short-term and long-term tax implications need to be evaluated. For instance, you might consider doing Roth IRA conversions. You might also be interested in this Withdrawal Methods page in the Wiki.

You will likely get more (and better) responses if you start a new thread about withdrawal sequencing in retirement in the Personal Investments forum. You'll probably be asked for more info, such as marginal tax rate and spending needs.

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Taylor Larimore
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Re: Articles recommending The Three-Fund Portfolio

Post by Taylor Larimore » Wed May 08, 2019 9:48 pm

Taylor Larimore wrote:
Fri Apr 19, 2019 8:44 pm
Bogleheads:

I have updated articles recommending The Three-Fund Portfolio:

"A Boglehead Explains the Simplest Way to Manage Your Money--MarketWatch

"The Three-Fund Portfolio -- Morningstar

"Three-Fund Portfolio" -- Boglehead wiki

"The Arithmetic of Active Management" by William Sharpe, Nobel Laureate

"The BigLaw Investor Portfolio" by Joshua Hunt

"Efficient Investing with the Three Fund Portfolio" by Mr. Crazy Kicks

"From 28 Funds to 3: Simplifying to a Three-Fund Portfolio" by Physician On Fire

"How the Bogle (3-fund) Model Beats the Yale Model" by Ben Carlson

"He Has Read 250 Investing Books and Recommends the Three Fund Portfolio" by Physician on Fire

"How To Diversify With Just Three Mutual Funds" by Ambassador Laura Dogu, Forbes

"Most Investors Probably Won’t Outperform This Simple (three-fund) Portfolio" Morningstar

"The Only Three Vanguard Funds You Need to Build a Portfolio" by Kent Thune

"Investing Should Be Simple. A Three-Fund Portfolio Is All You Need." by Allan Roth, AARP

"Investing With A Three Fund Portfolio" by Financial Ramblings

"If You Can. How Millennials Can Get Rich Slowly" -- Free book by Wm. Bernstein

"Next to Nothing" by Jonathan Clements

"The Three Fund Portfolio: The Lazy Investing Strategy that Crushes the Pros" by The Money Wizard

"The Three-Fund Investment Portfolio: The Beauty of Simplicity" by Mama Fish Saves

"Three Fund Portfolio: Did Awesomeness Find Trinity?" by Portfolio Einstein

"Three Fund Portfolio – Investing Made Easy" by The Finance Twins

"3 Fund Portfolio Investment Strategy: The Only Time Lazy is Cool" by Dr Breathe Easy Investing

"Three Mutual Funds That End The Guesswork" by Jonathan Burton MarketWatch

"How To Simplify Your Investing Using Only Three Funds" by Debt Free Doctor

"Simplify Your Investments With The 3-Fund Portfolio" by Alicia Adamczyk

"Why (3) Index Portfolios Win" by M.P. Dunleavey

Best wishes.
Taylor
Last edited by Taylor Larimore on Wed May 08, 2019 10:20 pm, edited 1 time in total.
"Simplicity is the master key to financial success." -- Jack Bogle

Gary Guss
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Re: The Three-Fund Portfolio

Post by Gary Guss » Wed May 08, 2019 10:01 pm

Thanks Taylor!

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abuss368
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Re: The Three-Fund Portfolio

Post by abuss368 » Thu May 09, 2019 10:02 pm

Thanks 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

bizkitgto
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Re: The Three-Fund Portfolio

Post by bizkitgto » Mon May 13, 2019 11:40 pm

Taylor - what is your current portfolio asset allocation?
Keep it simple: 20% BND, 50% VTI and 30% VXUS

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Re: The Three-Fund Portfolio

Post by Taylor Larimore » Tue May 14, 2019 9:30 am

bizkitgto wrote:
Mon May 13, 2019 11:40 pm
Taylor - what is your current portfolio asset allocation?
bizkitgto:

Last I looked it was about 25% Vanguard Total Bond Market Index Fund and 75% Total Stock Market Index Fund (my income supports my modest lifestyle).

Thank you, Jack!

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

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abuss368
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Re: The Three-Fund Portfolio

Post by abuss368 » Wed May 15, 2019 8:07 am

Taylor Larimore wrote:
Tue May 14, 2019 9:30 am
bizkitgto wrote:
Mon May 13, 2019 11:40 pm
Taylor - what is your current portfolio asset allocation?
bizkitgto:

Last I looked it was about 25% Vanguard Total Bond Market Index Fund and 75% Total Stock Market Index Fund (my income supports my modest lifestyle).

Thank you, Jack!

Best wishes
Taylor
Hi Taylor -

Are those percentages reversed with 25% invested in Total Stock? Was not sure if you followed Jack's "age in bonds" guidance?
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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Short Term Asset Allocation

Post by Taylor Larimore » Wed May 15, 2019 9:34 am

abuss368:

My 25% bond and 75% stock allocation is carefully considered. At age 95, with a life expectancy of 3 years, planning is simplified. :wink:

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

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abuss368
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Re: Short Term Asset Allocation

Post by abuss368 » Thu May 16, 2019 7:33 pm

Taylor Larimore wrote:
Wed May 15, 2019 9:34 am
abuss368:

My 25% bond and 75% stock allocation is carefully considered. At age 95, with a life expectancy of 3 years, planning is simplified. :wink:

Best wishes.
Taylor
Thanks Taylor!

Hope you are well.
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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