The Three-Fund Portfolio

Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.
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Taylor Larimore
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Personal Portfolio Questions

Post by Taylor Larimore » Wed Jun 12, 2019 8:41 pm

LadyGeek wrote:
Wed Jun 12, 2019 7:41 pm
LXEX55 has asked several questions in this thread. I moved the questions and replies into a new thread. See: [Help me select a Three-Fund Portfolio for my retirement]
LadyGeek:

In order to keep this thread from become unwieldy, we must confine Three-Fund Portfolio topics to this portfolio only.

Thank you for moving threads about Personal Portfolios to the Personal Investment forum.

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

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Re: Short Term Asset Allocation

Post by bltn » Sun Jun 16, 2019 4:40 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
Taylor
Many thanks for the years of advice.
I m trying to pass these BH recommendations on to my kids. This knowledge is an important part of their education which I consider the most important component of my legacy for them.
Be well.

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Total Bond Market

Post by Taylor Larimore » Tue Jun 18, 2019 9:51 pm

Bogleheads:

Nice article by Morningstar supporting plain-vanilla, high-quality Total Bond Market Index Fund.

What's the Best Diversifier for Equity Risk?

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

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Re: Total Bond Market

Post by abuss368 » Wed Jun 19, 2019 4:31 pm

Taylor Larimore wrote:
Tue Jun 18, 2019 9:51 pm
Bogleheads:

Nice article by Morningstar supporting plain-vanilla, high-quality Total Bond Market Index Fund.

What's the Best Diversifier for Equity Risk?

Best wishes.
Taylor
Thanks for sharing Taylor. Total Bond Index is the biggest bond fund in the world and for good reason.
John C. Bogle: Two Fund Portfolio - Total Stock & Total Bond - “Simplicity is the master key to financial success."

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Re: The Three-Fund Portfolio

Post by Dargo » Tue Jun 25, 2019 4:46 pm

Long time lurker finally delurking. Over the past decade or so I have been simplifying my portfolio. Not at the stage of 3 funds and not sure I ever will be but I appreciate all I have learned here.
Life is what happens to you when you are busy making other plans..John Lennon

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Re: The Three-Fund Portfolio

Post by ruralavalon » Tue Jun 25, 2019 5:54 pm

Welcome to the forum :) .

Dargo wrote:
Tue Jun 25, 2019 4:46 pm
Long time lurker finally delurking. Over the past decade or so I have been simplifying my portfolio. Not at the stage of 3 funds and not sure I ever will be but I appreciate all I have learned here.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

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Re: The Three-Fund Portfolio

Post by abuss368 » Tue Jun 25, 2019 10:01 pm

Dargo wrote:
Tue Jun 25, 2019 4:46 pm
Long time lurker finally delurking. Over the past decade or so I have been simplifying my portfolio. Not at the stage of 3 funds and not sure I ever will be but I appreciate all I have learned here.
Welcome to the forum. The Three Fund Portfolio is a great and very educational thread. Consider investing the time to read the thread. You will learn much.
John C. Bogle: Two Fund Portfolio - Total Stock & Total Bond - “Simplicity is the master key to financial success."

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Re: The Three-Fund Portfolio

Post by LadyGeek » Thu Jun 27, 2019 1:41 pm

pidgynerd has a question which I've moved into an existing thread. See: Am I doing this right so far?
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Re: The Three-Fund Portfolio

Post by phatpodo » Thu Jun 27, 2019 8:01 pm

I read most of the pages on the three-fund portfolio over the past couple weeks, and I have become a believer. I converted my 457 yesterday, using VBTIX, VTSNX, and SCHB. My IRAs are next. I would like to thank everyone who contributed to this post for helping me to see the light! And a special thank you to Taylor Larimore for starting the post and your thoughtful responses.

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Re: The Three-Fund Portfolio

Post by Benjamin Buffett » Thu Jul 04, 2019 8:19 pm

Whenever people I know be them family, friends, colleagues, or people I know elsewhere ask me about investing or setting up a retirement account I loan them one book: that book is my hardback copy of The Boglehead's Guide to the Three Fund Portfolio. It really is the best book I have ever read on the subject.

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Re: Short Term Asset Allocation

Post by Highlandbeach » Wed Jul 10, 2019 4:26 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
Hi Taylor,

Do you still hold/recommend 25% international? Thanks for all of your help and enjoy the summer!

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Re: The Three-Fund Portfolio

Post by cashboy » Wed Jul 10, 2019 4:51 pm

Taylor,

i just wanted to say thank you for this thread and sharing your depth of knowledge and experience.

post #1 in this thread changed my financial management life for the better, and has given me a brighter financial future.

i now have a 3-fund portfolio.

i manage it myself,
save thousands in fees,
enjoy lower ERs,
have a solid portfolio,
'understand' my finances,
and sleep well at night.

again, thanks

:happy
Three-Fund Portfolio: FSPSX - FXAIX - FXNAX (with slight tilt of CDs - CASH - Canned Beans - Rice - Bottled Water)

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Re: Short Term Asset Allocation

Post by Taylor Larimore » Wed Jul 10, 2019 9:28 pm

Highlandbeach wrote:
Wed Jul 10, 2019 4:26 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
Hi Taylor,

Do you still hold/recommend 25% international? Thanks for all of your help and enjoy the summer!
highlandbeach:

A few years ago I wanted to sell stock in my taxable account for gifts. I had two funds there: S&P 500 and Total International. I decided to sell my Total International because its capital-gains were significantly less.

You may ask, why do I hold the S&P 500 Index when I prefer Total Stock Market? Again, taxes were the reason. Total Stock Market was (and is) my U.S. stock fund. When a bear market came along (I forget which one) I took a tax-loss using Vanguard S&P Fund as a 30-day alternate. Unfortunately (or maybe fortunately) the S&P fund almost immediately had a sharp increase in value and I didn't want to pay a capital gain tax to switch back so I no longer own my favorite TSM fund.

If I were to start over, I would own The Three-Fund Portfolio with 20% of equity in Vanguard Total International Index Fund.

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

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Re: The Three-Fund Portfolio

Post by c_is_for_cow » Wed Jul 10, 2019 9:46 pm

Taylor,

I also want to say thanks to you. I read your 3-fund portfolio book and it changed the investing lives for my wife and I. We transitioned from a commissioned advisor, to a fee only advisor, to a 3-fund portfolio in the past 5 years. We manage our 3-fund portfolio now and sleep well at night. The portfolio diversification and simplicity is simply brilliant.

Thanks,

Cow

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Re: Short Term Asset Allocation

Post by abuss368 » Fri Jul 12, 2019 7:24 pm

Taylor Larimore wrote:
Wed Jul 10, 2019 9:28 pm
Highlandbeach wrote:
Wed Jul 10, 2019 4:26 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
Hi Taylor,

Do you still hold/recommend 25% international? Thanks for all of your help and enjoy the summer!
highlandbeach:

A few years ago I wanted to sell stock in my taxable account for gifts. I had two funds there: S&P 500 and Total International. I decided to sell my Total International because its capital-gains were significantly less.

You may ask, why do I hold the S&P 500 Index when I prefer Total Stock Market? Again, taxes were the reason. Total Stock Market was (and is) my U.S. stock fund. When a bear market came along (I forget which one) I took a tax-loss using Vanguard S&P Fund as a 30-day alternate. Unfortunately (or maybe fortunately) the S&P fund almost immediately had a sharp increase in value and I didn't want to pay a capital gain tax to switch back so I no longer own my favorite TSM fund.

If I were to start over, I would own The Three-Fund Portfolio with 20% of equity in Vanguard Total International Index Fund.

Best wishes.
Taylor
Thanks Taylor.
John C. Bogle: Two Fund Portfolio - Total Stock & Total Bond - “Simplicity is the master key to financial success."

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Re: Short Term Asset Allocation

Post by abuss368 » Sat Jul 13, 2019 12:34 pm

Taylor Larimore wrote:
Wed Jul 10, 2019 9:28 pm
Highlandbeach wrote:
Wed Jul 10, 2019 4:26 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
Hi Taylor,

Do you still hold/recommend 25% international? Thanks for all of your help and enjoy the summer!
highlandbeach:

A few years ago I wanted to sell stock in my taxable account for gifts. I had two funds there: S&P 500 and Total International. I decided to sell my Total International because its capital-gains were significantly less.

You may ask, why do I hold the S&P 500 Index when I prefer Total Stock Market? Again, taxes were the reason. Total Stock Market was (and is) my U.S. stock fund. When a bear market came along (I forget which one) I took a tax-loss using Vanguard S&P Fund as a 30-day alternate. Unfortunately (or maybe fortunately) the S&P fund almost immediately had a sharp increase in value and I didn't want to pay a capital gain tax to switch back so I no longer own my favorite TSM fund.

If I were to start over, I would own The Three-Fund Portfolio with 20% of equity in Vanguard Total International Index Fund.

Best wishes.
Taylor
Taylor - you probably have a close enough portfolio to Mr. Bogle's Two Fund Portfolio - S&P 500 and Total Bond Index.

Appears you have reduced the number of funds you invested in over the years.
John C. Bogle: Two Fund Portfolio - Total Stock & Total Bond - “Simplicity is the master key to financial success."

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Changing from 15 funds to 2

Post by Taylor Larimore » Sat Jul 13, 2019 1:19 pm

abuss368 wrote:Appears you have reduced the number of funds you invested in over the years.
abuss368:

When we moved to Vanguard in 1986 we started with a portfolio of 15 Vanguard funds. I foolishly believed that more funds meant more diversification. I also wrongly believed in market-timing.

Fortunately, In 1993 I read Mr. Bogle's book, "Bogle on Mutual Funds" and Burton Malkiel's book, "A Random Walk Down Wall Street." These two books opened my eyes to the advantages of broad market index funds that could be held forever.

So "yes" abuss368, I reduced our number of funds from 15 to 2. Result: Performance (risk and return) has improved, and we enjoy the benefits of simplicity which are very important at this stage of my life (I'm 95).

Please read my "Simplicity" link below.
Jack Bogle's Words of Wisdom: "There is a critical difference between designing a product that sells, and creating an investment that serves."
Best wishes.
Taylor
"Simplicity is the master key to financial success." -- Jack Bogle

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Re: Changing from 15 funds to 2

Post by abuss368 » Sat Jul 13, 2019 1:22 pm

Taylor Larimore wrote:
Sat Jul 13, 2019 1:19 pm
abuss368 wrote:Appears you have reduced the number of funds you invested in over the years.
abuss368:

When we moved to Vanguard in 1986 we started with a portfolio of 15 Vanguard funds. I foolishly believed that more funds meant more diversification. I also wrongly believed in market-timing.

Fortunately, In 1993 I read Mr. Bogle's book, "Bogle on Mutual Funds" and Burton Malkiel's book, "A Random Walk Down Wall Street." These two books opened my eyes to the advantages of broad market index funds that could be held forever.

So "yes" abuss368, I reduced our number of funds from 15 to 2. Result: Performance (risk and return) has improved, and we enjoy the benefits of simplicity which are very important at this stage of my life (I'm 95).

Please read my "Simplicity" link below.
Jack Bogle's Words of Wisdom: "There is a critical difference between designing a product that sells, and creating an investment that serves."
Best wishes.
Taylor
Many thanks Taylor! That puts a lot in perspective. Mr Bogle has always been right about "simplicity is the master key to financial success".
John C. Bogle: Two Fund Portfolio - Total Stock & Total Bond - “Simplicity is the master key to financial success."

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Re: The Three-Fund Portfolio

Post by epd3 » Wed Jul 17, 2019 11:29 am

Mr. Larimore,
Five years ago, when I initially considered using Vanguard's PAS, their recommended INDEX approach included four funds, including TOTAL STOCK MARKET, TOTAL INTERNATIONAL STOCK MARKET, TOTAL BOND MARKET, and TOTAL INTERNATIONAL BOND MARKET. It seemed too simple, and too conservative, so I gave it a miss. Alternatively, I became an avid reader of the Independent Advisor by Dan Weiner, and over time I embraced his model portfolio approach. After reading your books, I am starting to think, "Wait a minute, maybe the simple and conservative approach was right all along."

Let me ask why you omit the TOTAL INTERNATIONAL BOND MARKET INDEX?

Thank you for writing your books!

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Vanguard Total International Index Fund

Post by Taylor Larimore » Wed Jul 17, 2019 2:28 pm

epd3"

Welcome to the Bogleheads Forum!

Your question is not uncommon. This is a reply I gave to the same question in an earlier post (page 17):
It is always tempting to add additional funds to the Three Fund Portfolio and overlook their additional costs and complexity. International bonds represent a large asset class which Vanguard added to their Target and Life-Strategy funds so their new Total International Bond Fund deserves a look.

It is notable that Vanguard added only a small amount of the new bond fund to their Target and Life Strategy funds. Total International Bond fund represents only 2.0% of the 2060 Target Fund and only 4.0% of the Life Strategy Growth Fund. It's largest allocation is 14% in the Target Retirement Income fund. These allocations are nearly meaningless.

Adding another fund inside a single Target or Life-Strategy fund adds no complexity to the investor. However, I doubt if it is worth complicating The Three Fund Portfolio with another small fund containing several disadvantages: More political risk; higher expense ratios (.23% and .20% Adm.); longer duration (6.6 years) and relatively week credit quality compared with Total Bond Market which is already in The Three Fund Portfolio to provide safety and income.
Best wishes.
Taylor
John Bogle's Words of Wisdom: "When confronted with multiple solutions to a complex problem, choose the simplest one." (Occam's Razor quote)
"Simplicity is the master key to financial success." -- Jack Bogle

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Re: The Three-Fund Portfolio

Post by abuss368 » Sat Jul 20, 2019 2:25 pm

The Three Fund Portfolio keeps investing simple. Adding additional funds results in complexity and possibly higher costs.
John C. Bogle: Two Fund Portfolio - Total Stock & Total Bond - “Simplicity is the master key to financial success."

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Re: The Three-Fund Portfolio

Post by hagridshut » Sat Jul 20, 2019 5:51 pm

My current primary investment account for the past few years is a company 401(k) plan with the majority of choices being lousy, active, high-ER funds.

By some miracle however there are a small number of low-cost index funds, including: S&P500, International Index, and U.S. Bond Index. I just use these 3 funds. It’s not the totally comprehensive coverage I get in my IRA, but the performance is virtually the same. There doesn’t seem to be much if any divergence between S&P500 and Total U.S. Index funds.
First Principles: (1) Diversify (2) Low Cost (3) Stay the Course | 3-Fund Index Portfolio

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Re: The Three-Fund Portfolio

Post by ruralavalon » Sat Jul 20, 2019 6:17 pm

hagridshut wrote:
Sat Jul 20, 2019 5:51 pm
My current primary investment account for the past few years is a company 401(k) plan with the majority of choices being lousy, active, high-ER funds.

By some miracle however there are a small number of low-cost index funds, including: S&P500, International Index, and U.S. Bond Index. I just use these 3 funds. It’s not the totally comprehensive coverage I get in my IRA, but the performance is virtually the same. There doesn’t seem to be much if any divergence between S&P500 and Total U.S. Index funds.
You don't need a comprehensive menu of funds in a 401k, just a few decent funds are necessary to make it work for you. You are right that a S&P 500 fund and a total stock market fund are near duplicates.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

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Re: The Three-Fund Portfolio

Post by takingcontrol » Sun Jul 21, 2019 8:35 am

Hey all,

Forgive my ignorance but please answer the following for me.
I'm looking at the price of VTIAX and here is what I see:
12/3/2010 $26.12
6/21/2019 $28.29

When looking at the graphics over the last almost decade, there's a few ups and downs, but it doesn't look like the index has really shown great growth.

Sure YTD growth is 13.27%, but when looking at the history it seems that it's jump a good bit and then go right back down to where it was previously.

What's the benefit of the 3-fund portfolio where you plow a good amount into this index if you just gained a total of less than $2 in 10 years?

Thanks in advance.

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Re: The Three-Fund Portfolio

Post by abuss368 » Sun Jul 21, 2019 9:05 am

takingcontrol wrote:
Sun Jul 21, 2019 8:35 am
Hey all,

Forgive my ignorance but please answer the following for me.
I'm looking at the price of VTIAX and here is what I see:
12/3/2010 $26.12
6/21/2019 $28.29

When looking at the graphics over the last almost decade, there's a few ups and downs, but it doesn't look like the index has really shown great growth.

Sure YTD growth is 13.27%, but when looking at the history it seems that it's jump a good bit and then go right back down to where it was previously.

What's the benefit of the 3-fund portfolio where you plow a good amount into this index if you just gained a total of less than $2 in 10 years?

Thanks in advance.
No one knows what the future may bring. You are looking in the rear view mirror. Unsure of the fund ticker symbols you noted. Is that international? If so international could outperform US going forward.
John C. Bogle: Two Fund Portfolio - Total Stock & Total Bond - “Simplicity is the master key to financial success."

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Re: The Three-Fund Portfolio

Post by bertilak » Sun Jul 21, 2019 9:09 am

takingcontrol wrote:
Sun Jul 21, 2019 8:35 am
Hey all,

Forgive my ignorance but please answer the following for me.
I'm looking at the price of VTIAX and here is what I see:
12/3/2010 $26.12
6/21/2019 $28.29

When looking at the graphics over the last almost decade, there's a few ups and downs, but it doesn't look like the index has really shown great growth.

Sure YTD growth is 13.27%, but when looking at the history it seems that it's jump a good bit and then go right back down to where it was previously.

What's the benefit of the 3-fund portfolio where you plow a good amount into this index if you just gained a total of less than $2 in 10 years?

Thanks in advance.
Price does not tell the whole story. Growth ALSO includes reinvested dividends. Most places that show stock prices cater to traders/speculators who don't care much about dividends.

As the adage goes, "Be careful out there!" or you will get misled.
May neither drought nor rain nor blizzard disturb the joy juice in your gizzard. -- Squire Omar Barker (aka S.O.B.), the Cowboy Poet

takingcontrol
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Re: The Three-Fund Portfolio

Post by takingcontrol » Sun Jul 21, 2019 9:35 am

Thank you for the reply.

When I look at dividends though, the payout is really just a few cents or dollars here and there on a quarterly basis.

Can someone who has had a position in VTIAX post about how this has performed in their 3-fund portfolio in the last 10 years?

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Re: The Three-Fund Portfolio

Post by AerialWombat » Sun Jul 21, 2019 9:45 am

takingcontrol wrote:
Sun Jul 21, 2019 9:35 am
Thank you for the reply.

When I look at dividends though, the payout is really just a few cents or dollars here and there on a quarterly basis.

Can someone who has had a position in VTIAX post about how this has performed in their 3-fund portfolio in the last 10 years?
I would encourage you to read any of the countless threads debating US vs International. Mr. Bogle didn’t believe it was necessary to hold any international at all. Some Bogleheads push total global market weight. Some folks suggest a 20% allocation to international as a compromise for diversification.

If you choose not to include international, your three fund can easily become a two fund. Total US Stock Market and Total US Bond Market and done.

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Re: The Three-Fund Portfolio

Post by bertilak » Sun Jul 21, 2019 9:46 am

takingcontrol wrote:
Sun Jul 21, 2019 9:35 am
Thank you for the reply.

When I look at dividends though, the payout is really just a few cents or dollars here and there on a quarterly basis.

Can someone who has had a position in VTIAX post about how this has performed in their 3-fund portfolio in the last 10 years?
Morningstar is the best place I know to get this kind of information: https://www.morningstar.com/funds/xnas/vtiax/quote
(Scroll down.)
May neither drought nor rain nor blizzard disturb the joy juice in your gizzard. -- Squire Omar Barker (aka S.O.B.), the Cowboy Poet

takingcontrol
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Re: The Three-Fund Portfolio

Post by takingcontrol » Sun Jul 21, 2019 10:00 am

Darn, they want $30 per year for me to read the analysis. Thanks though.

takingcontrol
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Re: The Three-Fund Portfolio

Post by takingcontrol » Sun Jul 21, 2019 10:01 am

AerialWombat wrote:
Sun Jul 21, 2019 9:45 am
takingcontrol wrote:
Sun Jul 21, 2019 9:35 am
Thank you for the reply.

When I look at dividends though, the payout is really just a few cents or dollars here and there on a quarterly basis.

Can someone who has had a position in VTIAX post about how this has performed in their 3-fund portfolio in the last 10 years?
I would encourage you to read any of the countless threads debating US vs International. Mr. Bogle didn’t believe it was necessary to hold any international at all. Some Bogleheads push total global market weight. Some folks suggest a 20% allocation to international as a compromise for diversification.

If you choose not to include international, your three fund can easily become a two fund. Total US Stock Market and Total US Bond Market and done.
Cool. Currently my port is a 2-fund between Total US Stock Market and Total US Bond Market but with concerns about a market correction the 3-fund portfolio with inclusion of VTIAX became of interest to me.

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Re: The Three-Fund Portfolio

Post by spdoublebass » Sun Jul 21, 2019 12:40 pm

takingcontrol wrote:
Sun Jul 21, 2019 8:35 am
Hey all,

Forgive my ignorance but please answer the following for me.
I'm looking at the price of VTIAX and here is what I see:
12/3/2010 $26.12
6/21/2019 $28.29

When looking at the graphics over the last almost decade, there's a few ups and downs, but it doesn't look like the index has really shown great growth.

Sure YTD growth is 13.27%, but when looking at the history it seems that it's jump a good bit and then go right back down to where it was previously.

What's the benefit of the 3-fund portfolio where you plow a good amount into this index if you just gained a total of less than $2 in 10 years?

Thanks in advance.
Use portfolio visualizer.

If you put $10,000 in VTIAX in Dec 2010, in June 2019 it would be worth $14,953
CAGR of 4.8%
I'm trying to think, but nothing happens

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Re: The Three-Fund Portfolio

Post by ruralavalon » Sun Jul 21, 2019 1:09 pm

takingcontrol wrote:
Sun Jul 21, 2019 9:35 am
Thank you for the reply.

When I look at dividends though, the payout is really just a few cents or dollars here and there on a quarterly basis.

Can someone who has had a position in VTIAX post about how this has performed in their 3-fund portfolio in the last 10 years?
Vanguard Total International Stock Index Fund (VTIAX), total return of $10k invested over last 10 years.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

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Re: The Three-Fund Portfolio

Post by hagridshut » Mon Jul 22, 2019 12:22 pm

AerialWombat wrote:
Sun Jul 21, 2019 9:45 am
If you choose not to include international, your three fund can easily become a two fund. Total US Stock Market and Total US Bond Market and done.
There is a 2-fund way to include international. Use (1) Total World Stock Index and (2) Total US Bond Market.

This will global weight one’s equity holdings, which some may not want. There is also the trade off of modestly higher Expense Ratio.

One could also bring this solution back to a Three-Fund portfolio by adding International Bond Index. Given the current controversy over this asset class, I shall say no more :o
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Re: The Three-Fund Portfolio

Post by sleepysurf » Thu Jul 25, 2019 11:09 am

I'm surprised nobody posted this yet. Christine Benz gives a nice "shoutout" to the Bogleheads and Taylor, in this video discussing options for supplementing the "Three Fund Portfolio"... https://www.morningstar.com/articles/93 ... re-missing
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Re: The Three-Fund Portfolio

Post by Leesbro63 » Thu Jul 25, 2019 11:31 am

I’d like to show someone the three fund portfolio in summary. Might there be a short YouTube video somewhere that can be used as a quick teaching tool?

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Re: The Three-Fund Portfolio

Post by Taylor Larimore » Thu Jul 25, 2019 1:46 pm

Leesbro63 wrote:
Thu Jul 25, 2019 11:31 am
I’d like to show someone the three fund portfolio in summary. Might there be a short YouTube video somewhere that can be used as a quick teaching tool?
Leesbro63:

There have been many articles praising The Three-Fund Portfolio:

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

"The Bogleheads Guide to the Three-Fund Portfolio" by Rick Van Ness

"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
Jack Bogle's Words of Wisdom: "The beauty of owning the market is that you eliminate individual stock risk, you eliminate market sector risk, and you eliminate manager risk. -- In my view, owning the market and holding it forever is the ultimate strategy for winners." -- "My preferred index fund happens to be the total stock market which includes large, medium, and small stocks."
"Simplicity is the master key to financial success." -- Jack Bogle

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Re: The Three-Fund Portfolio

Post by Leesbro63 » Thu Jul 25, 2019 2:29 pm

Taylor Larimore wrote:
Thu Jul 25, 2019 1:46 pm
Leesbro63 wrote:
Thu Jul 25, 2019 11:31 am
I’d like to show someone the three fund portfolio in summary. Might there be a short YouTube video somewhere that can be used as a quick teaching tool?
Leesbro63:

There have been many articles praising The Three-Fund Portfolio:

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

"The Bogleheads Guide to the Three-Fund Portfolio" by Rick Van Ness

"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
Jack Bogle's Words of Wisdom: "The beauty of owning the market is that you eliminate individual stock risk, you eliminate market sector risk, and you eliminate manager risk. -- In my view, owning the market and holding it forever is the ultimate strategy for winners." -- "My preferred index fund happens to be the total stock market which includes large, medium, and small stocks."
These are great...thank you Taylor. Any in video format?

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Re: Three-Fund Portfolio Videos?

Post by Taylor Larimore » Thu Jul 25, 2019 4:55 pm

These are great...thank you Taylor. Any in video format?
I apologize for not responding directly to your question. I am unaware of any Three-Fund Portfolio videos.

Best wishes.
Taylor
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Re: The Three-Fund Portfolio

Post by rossington » Fri Jul 26, 2019 4:20 am

Taylor,
Given the lackluster performance of VTIAX do you still feel it should still be a component of the 3 fund portfolio?
The global economy will always be dependent on the direction of the US economy.
Since VTIAX has historically under performed the US (ie:VTSAX) why not modify to a 2 fund of VTSAX and VBTLX only?
"Success is going from failure to failure without loss of enthusiasm." Winston Churchill.

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Re: The Three-Fund Portfolio

Post by Taylor Larimore » Fri Jul 26, 2019 9:04 am

Rossington:

I would stick to a 20% International Allocation using VTIAX. Here's why:

How Much International Stock? A Suggestion

Best wishes.
Taylor
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Re: The Three-Fund Portfolio

Post by LadyGeek » Fri Jul 26, 2019 9:32 am

Taylor Larimore wrote:
Fri Jul 26, 2019 9:04 am
Rossington:

I would stick to a 20% International Allocation using VTIAX. Here's why:

How Much International Stock? A Suggestion

Best wishes.
Taylor
Jack Bogle's Words of Wisdom: "The biggest mistake investors make is looking backward at performance and thinking it’ll recur in the future."
Based on past experience, "US vs. International" is a highly contentious topic and will derail the thread.

Further discussion should be posted in: What is your allocation to U.S. and International?

(Taylor Larimore's linked thread is locked.)
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Re: The Three-Fund Portfolio

Post by abuss368 » Fri Jul 26, 2019 11:13 am

rossington wrote:
Fri Jul 26, 2019 4:20 am
Taylor,
Given the lackluster performance of VTIAX do you still feel it should still be a component of the 3 fund portfolio?
The global economy will always be dependent on the direction of the US economy.
Since VTIAX has historically under performed the US (ie:VTSAX) why not modify to a 2 fund of VTSAX and VBTLX only?
Vanguard investment experts recommend that 20% - 50% of equity be allocated to International and use a 40% allocation in their funds. Further they recommend the same allocation to international bonds and use a 30% allocation to their funds.

An alternative is Jack Bogle’s Two Fund Portfolio of Total Stock and Total Bond as Mr. Bogle often discusses in his many books and interviews.

Believe Warren Buffett has also recommended a Two Fund Portfolio of the S&P 500 and Treasury Bonds.

Both of these gentlemen and investment experts know more about investing than any of us ever will.
John C. Bogle: Two Fund Portfolio - Total Stock & Total Bond - “Simplicity is the master key to financial success."

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Re: The Three-Fund Portfolio

Post by bertilak » Fri Jul 26, 2019 11:25 am

rossington wrote:
Fri Jul 26, 2019 4:20 am
Taylor,
Given the lackluster performance of VTIAX do you still feel it should still be a component of the 3 fund portfolio?
The global economy will always be dependent on the direction of the US economy.
Since VTIAX has historically under performed the US (ie:VTSAX) why not modify to a 2 fund of VTSAX and VBTLX only?
When you are investing in multiple asset classes, some will do worse than others. That is no reason to change your strategy. Bonds didn't do as well either. That doesn't mean you should drop bonds from your portfolio.

There are reasons to (re)think your portfolio but dropping an asset class due to disappointing performance is short-sighted, or perhaps "wrong-sighted" is a better term.
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Re: The Three-Fund Portfolio

Post by hagridshut » Sun Jul 28, 2019 9:09 pm

rossington wrote:
Fri Jul 26, 2019 4:20 am
Given the lackluster performance of VTIAX do you still feel it should still be a component of the 3 fund portfolio?
In the decade prior to the Great Recession, I believe that International stocks actually outperformed U.S. stocks. While the U.S. markets have outperformed since 2009, largely due to the rise of a new generation of technology giants, there is never any guarantee that a trend like this will continue.

I believe that inclusion of International assets also provides a hedge against any future currency problems with the U.S. Dollar.

In situations where:

1. USD inflation is severe, Vanguard's International index funds, which are currency un-hedged, will provide some shelter. International bond funds will also provide some shelter, even if they are hedged, because the currency Forward Exchange contracts used by such funds operate on a short 1-3 month horizon, and are dependent on interest rate differentials between countries. Inflation would have to unexpectedly and noticeably outpace the predicted interest rate differentials to damage hedged bond holdings.

2. USD inflation is moderate, both U.S. stocks and International stocks have room to grow.

3. USD is experiencing deflation, both US and International bonds should provide good returns to counterbalance lower earnings (and probable resulting lower share prices) in equities.

4. the US Federal Reserve rate hikes, International bonds may provide some counterbalance against U.S. bonds that lose value due to rising interest rates. Central banks in different areas (like ECB, England, and Japan) rarely raise and lower rates in lockstep.

International assets are insurance against problems with local currency. That's why I maintain a 3-Fund portfolio. I might even go Core-4 with International bonds in the future, but I currently do not have this option in my retirement plan.

Some people advocating using gold as a hedge against currency problems, particularly inflation, but gold's record on this is not very good: https://www.inflationdata.com/inflation ... lation.asp. Gold is a hedge against widespread societal disruption or collapse. I don't advocate using it in a growth-oriented investment portfolio. However, I think it could be a complement to one's emergency fund as a last-ditch asset in a SHTF scenario, such as escape from a war zone like Syria, where use of currency and other paper/data-based assets becomes difficult or impossible.
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Re: The Three-Fund Portfolio

Post by rossington » Mon Jul 29, 2019 1:45 am

hagridshut ,
I am replying here as directed by the Moderators:viewtopic.php?f=10&t=264693
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Re: The Three-Fund Portfolio

Post by TimM » Mon Jul 29, 2019 10:12 am

I read somewhere in this thread that REIT's are included in the three fund portfolio. Am I right in thinking REIT's are considered stocks, not bonds, and thus are included in the Total Stock Market fund?
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Re: The Three-Fund Portfolio

Post by dbr » Mon Jul 29, 2019 10:17 am

TimM wrote:
Mon Jul 29, 2019 10:12 am
I read somewhere in this thread that REIT's are included in the three fund portfolio. Am I right in thinking REIT's are considered stocks, not bonds, and thus are included in the Total Stock Market fund?
REITs are stocks albeit with some different properties and are already held in a total market fund. The usual discussion about REITs is whether or not one might hold an additional concentration in REITs above what is already there.

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Re: The Three-Fund Portfolio

Post by ruralavalon » Mon Jul 29, 2019 1:23 pm

TimM wrote:
Mon Jul 29, 2019 10:12 am
I read somewhere in this thread that REIT's are included in the three fund portfolio. Am I right in thinking REIT's are considered stocks, not bonds, and thus are included in the Total Stock Market fund?
REITs are stocks, not bonds.

REITs are included in a total stock market index fund.
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Re: The Three-Fund Portfolio

Post by abuss368 » Mon Jul 29, 2019 5:37 pm

TimM wrote:
Mon Jul 29, 2019 10:12 am
I read somewhere in this thread that REIT's are included in the three fund portfolio. Am I right in thinking REIT's are considered stocks, not bonds, and thus are included in the Total Stock Market fund?
You can certainly invest in REITs (or anything for that matter), but the simplicity and beauty of the Three Fund Portfolio is that is holds market weight and is easy to manage.
John C. Bogle: Two Fund Portfolio - Total Stock & Total Bond - “Simplicity is the master key to financial success."

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