Jack Bogle - Two Fund Portfolio

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ruralavalon
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Re: Jack Bogle - Two Fund Portfolio

Post by ruralavalon »

Triple digit golfer wrote: Wed May 05, 2021 1:17 pm None of the two funders, to my knowledge, have really answered the very simple question of why exclude international equities?

Cost isn't a good reason. It's a few basis points higher.

Currency risk isn't a good reason. Actually, it's a very bad reason.

Tax inefficiency isn't a good reason. International index funds are very tax efficient.

So why purposely and intentionally exclude them?

Is it really just because Jack and Warren said so?
I have an allocation to international stocks, but still think that a two fund approach is within reason.

The correlation between U.S. and international stocks is high and has been rising, and the diversification benefit has been modest. There are slightly higher expenses in international investing. Investing in other countries can involve political risk and risk of corporate governance deficiencies.
Last edited by ruralavalon on Wed May 05, 2021 2:36 pm, edited 1 time in total.
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Re: Jack Bogle - Two Fund Portfolio

Post by DSBH »

Triple digit golfer wrote: Wed May 05, 2021 1:17 pm None of the two funders, to my knowledge, have really answered the very simple question of why exclude international equities?

Cost isn't a good reason. It's a few basis points higher.

Currency risk isn't a good reason. Actually, it's a very bad reason.

Tax inefficiency isn't a good reason. International index funds are very tax efficient.

So why purposely and intentionally exclude them?

Is it really just because Jack and Warren said so?
Not for me. When I moved from a 3-fund to a 2-fund portfolio, my primary reason is the not so great performance of my International mutual fund during my time investing in the market (since early/mid 90's - not counting mostly company stocks since early/mid 80's). Also, since I limited International to 10% of my portfolio, the additional diversification benefit was not too great.

In fact, around 2010 or so I took out a 15-yr 80% home equity loan at a very low interest rate and invested the proceed in VG International Stock Index, thinking back then that it must be time for International to outperform US. I cashed out in 2019 and made some pretty good money but nowhere near what could have been with the US stock Index. I am not complaining about the still significant profit, just stating what happened.

Now that I am in my 4th year of retirement, I am very satisfied with my 50/50 AA of Total Stock Index and Total Bond Index. Yes I could have been more diversified with International Stocks and even International Bonds for that matter, but I believe that what I have is "good enough" for me and that I can sleep well. Who knows, may be I'll come back in 20 years and sing a different song.
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Re: Jack Bogle - Two Fund Portfolio

Post by bertilak »

DSBH wrote: Wed May 05, 2021 2:35 pm When I moved from a 3-fund to a 2-fund portfolio, my primary reason is the not so great performance of my International mutual fund ..
I didn't move from 3 to 2 funds but I am letting my international stew in its own juices. So far it has declined from 1/3 to just over 1/4 of my equity.

If it does well it will grow to a larger percentage. If it tanks I will gladly see it drop below 1/4. At that point, I might buy back in, but the worse it does, the less it matters.
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Re: Jack Bogle - Two Fund Portfolio

Post by abuss368 »

absolute zero wrote: Wed May 05, 2021 2:09 pm
bgf wrote: Wed May 05, 2021 1:56 pm
Northern Flicker wrote: Wed May 05, 2021 12:31 pm I don't think Mr. Bogle actually held a 2-fund portfolio himself.
Warren Buffett never has and never will hold the 2-fund portfolio.

The "Astrid Menks Portfolio" just doesn't have the same rhetorical force, so we're unfortunately force-fed the "Warren Buffett and Jack Bogle Two Fund Portfolio" several times a day whenever this thread is inevitably 'bumped.'
The "Astrid Menks Portfolio." That's funny. I like it.

This thread occasionally dies for a month at a time, but then the OP always feels the need to revive the thread by bumping it. Not sure why. I think he wants it to build up to a high post-count. Either way this is basically just another US vs exUS thread.
Thank you for sharing and contributing. You may be pleased to know that The Three Fund Portfolio thread (which is another excellent strategy), may be more fitting for your responses.

Tony
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Re: Jack Bogle - Two Fund Portfolio

Post by Northern Flicker »

bgf wrote: Wed May 05, 2021 1:56 pm
Northern Flicker wrote: Wed May 05, 2021 12:31 pm I don't think Mr. Bogle actually held a 2-fund portfolio himself.
Warren Buffett never has and never will hold the 2-fund portfolio.

The "Astrid Menks Portfolio" just doesn't have the same rhetorical force, so we're unfortunately force-fed the "Warren Buffett and Jack Bogle Two Fund Portfolio" several times a day whenever this thread is inevitably 'bumped.'
It also is not correct that Buffett recommends a 2-fund portfolio of the S&P500 and treasury bonds. He recommends the S&P500 and t-bills. Mr. Buffett never recommends bonds.
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Re: Jack Bogle - Two Fund Portfolio

Post by wesgreen »

Reading some of the posts here, the old saying "Misery Loves Company" springs to mind. It's easy to understand why international investors may be angry. I believe the OP is performing a public service by publicizing Mr. Bogle's advice and the portfolio he recommended. The record speaks for itself.
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Re: Jack Bogle - Two Fund Portfolio

Post by abuss368 »

wesgreen wrote: Wed May 05, 2021 8:21 pm Reading some of the posts here, the old saying "Misery Loves Company" springs to mind. It's easy to understand why international investors may be angry. I believe the OP is performing a public service by publicizing Mr. Bogle's advice and the portfolio he recommended. The record speaks for itself.
Hi wesgreen -

Thank you for the kind words and support to keep this thread going and growing based on investing advice inspired by Jack Bogle!

Tony
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Re: Jack Bogle - Two Fund Portfolio

Post by Nathan Drake »

wesgreen wrote: Wed May 05, 2021 8:21 pm Reading some of the posts here, the old saying "Misery Loves Company" springs to mind. It's easy to understand why international investors may be angry. I believe the OP is performing a public service by publicizing Mr. Bogle's advice and the portfolio he recommended. The record speaks for itself.
Nobody is angry, a person with both US and Intl has done very well this decade.

It is not a public service to provide information that can lead to suboptimal outcomes with increased risk of prolonged periods of very poor performance.
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Re: Jack Bogle - Two Fund Portfolio

Post by Triple digit golfer »

wesgreen wrote: Wed May 05, 2021 8:21 pm Reading some of the posts here, the old saying "Misery Loves Company" springs to mind. It's easy to understand why international investors may be angry. I believe the OP is performing a public service by publicizing Mr. Bogle's advice and the portfolio he recommended. The record speaks for itself.
If we're excluding half of the world's market cap and just investing based on "the record," it would be most prudent to hold a portfolio full of small value stocks.

Over what time period are we looking at to determine the record? Bitcoin has a good record. Why don't we start a one fund portfolio thread based on Bitcoin's record?

Pointing people to only U.S. stocks is irresponsible. Pure performance chasing. Where were all of these recommendations 10-15 years ago?
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Re: Jack Bogle - Two Fund Portfolio

Post by Northern Flicker »

wesgreen wrote: Wed May 05, 2021 8:21 pm Reading some of the posts here, the old saying "Misery Loves Company" springs to mind. It's easy to understand why international investors may be angry. I believe the OP is performing a public service by publicizing Mr. Bogle's advice and the portfolio he recommended. The record speaks for itself.
Yes, the record speaks for itself. Templeton Global Growth (total world fund) vs the S&P500:

http://quotes.morningstar.com/chart/fun ... A%5B%5D%7D

But your assessment that misery loves company is just wrong. Most of us have non-US equity allocations at a level where significant US underperformance would be a mediocre outcome. We hold non-US equities not because we believe it will enhance return, but because outcomes with significant US underperformance will not be as problematic. It is about trying to have good enough outcomes across a wider range of market outcomes.
Last edited by Northern Flicker on Thu May 06, 2021 12:10 am, edited 1 time in total.
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Re: Jack Bogle - Two Fund Portfolio

Post by Da5id »

wesgreen wrote: Wed May 05, 2021 8:21 pm Reading some of the posts here, the old saying "Misery Loves Company" springs to mind. It's easy to understand why international investors may be angry. I believe the OP is performing a public service by publicizing Mr. Bogle's advice and the portfolio he recommended. The record speaks for itself.
I believe you are seeing anger rather than disagreement. It is certainly easier to dismiss if you perceive it that way. I'm not convinced by citing Bogle or Buffett (appeals to authority I find weakish personally), but I see that there are those who are persuaded by such.

I believe in the US for some of the reasons US only investors cite. But that doesn't mean I don't think that the positive features of the US aren't largely baked into US valuations. Ratio of CAPE of US:EAFE has almost doubled in the past 15 years or so. Maybe that will continue forever. But Int'l will have its day I expect. And the US will again as well. I'd rather invest so I don't care which of those phases we are in personally. Recently increased my int'l holdings to be in line with the Vanguard Life Strategy, which is where I plan to leave it.

People can do as they like, and will likely end up fine either way. But for me, I'll "Buy the haystack".
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Re: Jack Bogle - Two Fund Portfolio

Post by oldzey »

wesgreen wrote: Wed May 05, 2021 8:21 pm Reading some of the posts here, the old saying "Misery Loves Company" springs to mind. It's easy to understand why international investors may be angry. I believe the OP is performing a public service by publicizing Mr. Bogle's advice and the portfolio he recommended. The record speaks for itself.
Mr. Bogle often gave advice to U.S. investors about not investing ex-US:

https://www.youtube.com/watch?v=hvgptl5-Kcc

https://www.youtube.com/watch?v=nWI64TKU64o#t=1h06m17s

https://www.youtube.com/watch?v=vMj4sHjF_kA#t=02m43s

https://www.morningstar.com/videos/3556 ... rseas.html

https://www.morningstar.com/videos/7186 ... sting.html
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Re: Jack Bogle - Two Fund Portfolio

Post by ruralavalon »

Northern Flicker wrote: Wed May 05, 2021 8:13 pm
bgf wrote: Wed May 05, 2021 1:56 pm
Northern Flicker wrote: Wed May 05, 2021 12:31 pm I don't think Mr. Bogle actually held a 2-fund portfolio himself.
Warren Buffett never has and never will hold the 2-fund portfolio.

The "Astrid Menks Portfolio" just doesn't have the same rhetorical force, so we're unfortunately force-fed the "Warren Buffett and Jack Bogle Two Fund Portfolio" several times a day whenever this thread is inevitably 'bumped.'
It also is not correct that Buffett recommends a 2-fund portfolio of the S&P500 and treasury bonds. He recommends the S&P500 and t-bills. Mr. Buffett never recommends bonds.
No. Not 10% T-bills, short-term government bonds.

"My advice to the trustee could not be more simple: Put 10% of the cash in short-term government bonds and 90% in a very low-cost S&P 500 index fund. (I suggest Vanguard’s.)" 2013 letter.
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Re: Jack Bogle - Two Fund Portfolio

Post by abuss368 »

ruralavalon wrote: Thu May 06, 2021 10:55 am
Northern Flicker wrote: Wed May 05, 2021 8:13 pm
bgf wrote: Wed May 05, 2021 1:56 pm
Northern Flicker wrote: Wed May 05, 2021 12:31 pm I don't think Mr. Bogle actually held a 2-fund portfolio himself.
Warren Buffett never has and never will hold the 2-fund portfolio.

The "Astrid Menks Portfolio" just doesn't have the same rhetorical force, so we're unfortunately force-fed the "Warren Buffett and Jack Bogle Two Fund Portfolio" several times a day whenever this thread is inevitably 'bumped.'
It also is not correct that Buffett recommends a 2-fund portfolio of the S&P500 and treasury bonds. He recommends the S&P500 and t-bills. Mr. Buffett never recommends bonds.
No. Not 10% T-bills, short-term government bonds.

"My advice to the trustee could not be more simple: Put 10% of the cash in short-term government bonds and 90% in a very low-cost S&P 500 index fund. (I suggest Vanguard’s.)" 2013 letter.
Thank you for clarifying. That is how I remember it and was in the process of looking up the annual report.

Tony
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Re: Jack Bogle - Two Fund Portfolio

Post by AlwaysLearningMore »

This is obvious, but one can incorporate international funds in a two-fund portfolio by using Vanguard Balanced Fund (60/40) and an international fund. https://tinyurl.com/yvp7n9v9
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Re: Jack Bogle - Two Fund Portfolio

Post by abuss368 »

AlwaysLearningMore wrote: Thu May 06, 2021 5:11 pm This is obvious, but one can incorporate international funds in a two-fund portfolio by using Vanguard Balanced Fund (60/40) and an international fund. https://tinyurl.com/yvp7n9v9
You may want to consider checking out the Three Fund Portfolio thread. That has a lot of useful information for any investor interested in international.

The best part? Both the Two Fund Portfolio and the Three Fund Portfolio will never be below average.

Tony
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Re: Jack Bogle - Two Fund Portfolio

Post by Triple digit golfer »

abuss368 wrote: Thu May 06, 2021 5:18 pmThe best part? Both the Two Fund Portfolio and the Three Fund Portfolio will never be below average
You've said this a zillion times and I still don't know how to quantify, prove, or disprove it.

It's essentially meaningless.
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Re: Jack Bogle - Two Fund Portfolio

Post by absolute zero »

AlwaysLearningMore wrote: Thu May 06, 2021 5:11 pm This is obvious, but one can incorporate international funds in a two-fund portfolio by using Vanguard Balanced Fund (60/40) and an international fund. https://tinyurl.com/yvp7n9v9
That’s right. There are many ways to build a simple 2 fund portfolio that don’t involve completely ditching 6,000 of the 9,000 investable equities around the world. The argument that holding 100% of equities in VTSAX is done “in the name of simplicity” is false.
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Re: Jack Bogle - Two Fund Portfolio

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Re: Jack Bogle - Two Fund Portfolio

Post by abuss368 »

Triple digit golfer wrote: Thu May 06, 2021 5:37 pm
abuss368 wrote: Thu May 06, 2021 5:18 pmThe best part? Both the Two Fund Portfolio and the Three Fund Portfolio will never be below average
You've said this a zillion times and I still don't know how to quantify, prove, or disprove it.

It's essentially meaningless.
Both portfolios are excellent strategies. Neither of which will ever be below average!

Perhaps you may consider the Three Fund Portfolio thread. That strategy may better align with your strategy.

This thread is to discuss the Jack Bogle & Warren Buffett Two Fund Portfolio.

Best.
Tony
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Re: Jack Bogle - Two Fund Portfolio

Post by abuss368 »

absolute zero wrote: Thu May 06, 2021 5:46 pm The argument that holding 100% of equities in VTSAX is done “in the name of simplicity” is false.
Not really! It is most important to select a strategy that one can stay with over the long term. For some, that is the Two Fund Portfolio, others may select the Three Fund Portfolio. A Target or LifeStrategy fund is another option. There are countless ways to Rome. Any of them will be fine. MOST important? Finding the one that works for you.

Tony
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Re: Jack Bogle - Two Fund Portfolio

Post by Nathan Drake »

:twisted:
abuss368 wrote: Thu May 06, 2021 6:58 pm
absolute zero wrote: Thu May 06, 2021 5:46 pm The argument that holding 100% of equities in VTSAX is done “in the name of simplicity” is false.
Not really! It is most important to select a strategy that one can stay with over the long term. For some, that is the Two Fund Portfolio, others may select the Three Fund Portfolio. A Target or LifeStrategy fund is another option. There are countless ways to Rome. Any of them will be fine. MOST important? Finding the one that works for you.

Tony
Would you stick to a strategy that had many examples of prolonged underperformance due to lack of diversification?
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Re: Jack Bogle - Two Fund Portfolio

Post by Da5id »

abuss368 wrote: Thu May 06, 2021 6:56 pm
Triple digit golfer wrote: Thu May 06, 2021 5:37 pm
abuss368 wrote: Thu May 06, 2021 5:18 pmThe best part? Both the Two Fund Portfolio and the Three Fund Portfolio will never be below average
You've said this a zillion times and I still don't know how to quantify, prove, or disprove it.

It's essentially meaningless.
Both portfolios are excellent strategies. Neither of which will ever be below average!

Perhaps you may consider the Three Fund Portfolio thread. That strategy may better align with your strategy.

This thread is to discuss the Jack Bogle & Warren Buffett Two Fund Portfolio.

Best.
Tony
Threads are for the creator to create and the commenters to comment. Negative comments about the idea of the Two Fund Portfolio seem topical. Or else the whole thread could be "Two fund is swell. Gee, yeah it is. I agree. And Buffett and Bogle said so, q.e.d!". IMO of course.

And I agree that the statement that "they will never be below average" isn't very meaningful. Average of what? And "never"? Active funds occasionally win, so surely the "never" has qualifications. Per the SPIVA scoresheet (https://www.spglobal.com/spdji/en/docum ... d-2020.pdf), over half the actively managed funds beat the S&P 1500 6 times over the past 20 years. While most active funds are losers compared to the index over the longer haul, I distrust use of "never' in most discussions.
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Re: Jack Bogle - Two Fund Portfolio

Post by Triple digit golfer »

Nathan Drake wrote: Thu May 06, 2021 7:00 pm :twisted:
abuss368 wrote: Thu May 06, 2021 6:58 pm
absolute zero wrote: Thu May 06, 2021 5:46 pm The argument that holding 100% of equities in VTSAX is done “in the name of simplicity” is false.
Not really! It is most important to select a strategy that one can stay with over the long term. For some, that is the Two Fund Portfolio, others may select the Three Fund Portfolio. A Target or LifeStrategy fund is another option. There are countless ways to Rome. Any of them will be fine. MOST important? Finding the one that works for you.

Tony
Would you stick to a strategy that had many examples of prolonged underperformance due to lack of diversification?
So far he hasn't stuck to any strategy. He has only been doing this a few years. Prior to that, he had international equities, REITs, and maybe other equities or bonds.

I wish he would just admit that he made a mistake in picking an allocation that he couldn't stick with, so he decided to chase performance and become less diversified. We all make mistakes. So be it. Learn, find what works for you, admit its shortcomings, and move on.

I hold 20% in bonds and have since I started investing at age 22. I realize it wasn't optimal, but it helped me sleep at night. Now at 36 with a $1.1 million portfolio, hoping to call it quits by 50, with markets at high valuations, I am happy to have bonds. If I could do it all over again, I'd tell my 22 year old self to only have in bonds or cash enough to withstand an emergency or period of unemployment. Perhaps six months. But I don't regret having them because perhaps they allowed me less stress.
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Re: Jack Bogle - Two Fund Portfolio

Post by Triple digit golfer »

Da5id wrote: Thu May 06, 2021 7:25 pm
abuss368 wrote: Thu May 06, 2021 6:56 pm
Triple digit golfer wrote: Thu May 06, 2021 5:37 pm
abuss368 wrote: Thu May 06, 2021 5:18 pmThe best part? Both the Two Fund Portfolio and the Three Fund Portfolio will never be below average
You've said this a zillion times and I still don't know how to quantify, prove, or disprove it.

It's essentially meaningless.
Both portfolios are excellent strategies. Neither of which will ever be below average!

Perhaps you may consider the Three Fund Portfolio thread. That strategy may better align with your strategy.

This thread is to discuss the Jack Bogle & Warren Buffett Two Fund Portfolio.

Best.
Tony
Threads are for the creator to create and the commenters to comment. Negative comments about the idea of the Two Fund Portfolio seem topical. Or else the whole thread could be "Two fund is swell. Gee, yeah it is. I agree. And Buffett and Bogle said so, q.e.d!". IMO of course.

And I agree that the statement that "they will never be below average" isn't very meaningful. Average of what? And "never"? Active funds occasionally win, so surely the "never" has qualifications. Per the SPIVA scoresheet (https://www.spglobal.com/spdji/en/docum ... d-2020.pdf), over half the actively managed funds beat the S&P 1500 6 times over the past 20 years. While most active funds are losers compared to the index over the longer haul, I distrust use of "never' in most discussions.
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Re: Jack Bogle - Two Fund Portfolio

Post by anon_investor »

Triple digit golfer wrote: Thu May 06, 2021 7:26 pm
Nathan Drake wrote: Thu May 06, 2021 7:00 pm :twisted:
abuss368 wrote: Thu May 06, 2021 6:58 pm
absolute zero wrote: Thu May 06, 2021 5:46 pm The argument that holding 100% of equities in VTSAX is done “in the name of simplicity” is false.
Not really! It is most important to select a strategy that one can stay with over the long term. For some, that is the Two Fund Portfolio, others may select the Three Fund Portfolio. A Target or LifeStrategy fund is another option. There are countless ways to Rome. Any of them will be fine. MOST important? Finding the one that works for you.

Tony
Would you stick to a strategy that had many examples of prolonged underperformance due to lack of diversification?
So far he hasn't stuck to any strategy. He has only been doing this a few years. Prior to that, he had international equities, REITs, and maybe other equities or bonds.

I wish he would just admit that he made a mistake in picking an allocation that he couldn't stick with, so he decided to chase performance and become less diversified. We all make mistakes. So be it. Learn, find what works for you, admit its shortcomings, and move on.

I hold 20% in bonds and have since I started investing at age 22. I realize it wasn't optimal, but it helped me sleep at night. Now at 36 with a $1.1 million portfolio, hoping to call it quits by 50, with markets at high valuations, I am happy to have bonds. If I could do it all over again, I'd tell my 22 year old self to only have in bonds or cash enough to withstand an emergency or period of unemployment. Perhaps six months. But I don't regret having them because perhaps they allowed me less stress.
So you do wish you had an emergency fund! :sharebeer

Welcome to the darkside, all you need to do is dump your international equities! :twisted:
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Re: Jack Bogle - Two Fund Portfolio

Post by Triple digit golfer »

anon_investor wrote: Thu May 06, 2021 7:31 pm
Triple digit golfer wrote: Thu May 06, 2021 7:26 pm
Nathan Drake wrote: Thu May 06, 2021 7:00 pm :twisted:
abuss368 wrote: Thu May 06, 2021 6:58 pm
absolute zero wrote: Thu May 06, 2021 5:46 pm The argument that holding 100% of equities in VTSAX is done “in the name of simplicity” is false.
Not really! It is most important to select a strategy that one can stay with over the long term. For some, that is the Two Fund Portfolio, others may select the Three Fund Portfolio. A Target or LifeStrategy fund is another option. There are countless ways to Rome. Any of them will be fine. MOST important? Finding the one that works for you.

Tony
Would you stick to a strategy that had many examples of prolonged underperformance due to lack of diversification?
So far he hasn't stuck to any strategy. He has only been doing this a few years. Prior to that, he had international equities, REITs, and maybe other equities or bonds.

I wish he would just admit that he made a mistake in picking an allocation that he couldn't stick with, so he decided to chase performance and become less diversified. We all make mistakes. So be it. Learn, find what works for you, admit its shortcomings, and move on.

I hold 20% in bonds and have since I started investing at age 22. I realize it wasn't optimal, but it helped me sleep at night. Now at 36 with a $1.1 million portfolio, hoping to call it quits by 50, with markets at high valuations, I am happy to have bonds. If I could do it all over again, I'd tell my 22 year old self to only have in bonds or cash enough to withstand an emergency or period of unemployment. Perhaps six months. But I don't regret having them because perhaps they allowed me less stress.
So you do wish you had an emergency fund! :sharebeer

Welcome to the darkside, all you need to do is dump your international equities! :twisted:
Not an emergency fund. An AA that has some cash or bonds included. :wink:
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Re: Jack Bogle - Two Fund Portfolio

Post by snailderby »

abuss368 wrote: Thu May 06, 2021 6:58 pm It is most important to select a strategy that one can stay with over the long term. For some, that is the Two Fund Portfolio, others may select the Three Fund Portfolio. A Target or LifeStrategy fund is another option. There are countless ways to Rome. Any of them will be fine.
I'd generally agree with this.

A global portfolio may be more diversified than a two-fund portfolio. But most investors should be fine as long as they live below their means, establish a healthy savings rate, invest early and often, stay the course, and use low-cost, broadly-diversified index funds. After that, if you want to debate about topics such as currency risk, foreign governance, global economics, and international diversification...that's what this forum is for, I suppose. :)
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Re: Jack Bogle - Two Fund Portfolio

Post by abuss368 »

snailderby wrote: Thu May 06, 2021 7:46 pm
abuss368 wrote: Thu May 06, 2021 6:58 pm It is most important to select a strategy that one can stay with over the long term. For some, that is the Two Fund Portfolio, others may select the Three Fund Portfolio. A Target or LifeStrategy fund is another option. There are countless ways to Rome. Any of them will be fine.
I'd generally agree with this.

A global portfolio may be more diversified than a two-fund portfolio. But most investors should be fine as long as they live below their means, establish a healthy savings rate, invest early and often, stay the course, and use low-cost, broadly-diversified index funds. After that, if you want to debate about topics such as currency risk, foreign governance, global economics, and international diversification...that's what this forum is for, I suppose. :)
Exactly. We are dancing on the head of a pin.

If an investor does not get the macro items correct, US v. International is meaningless.

* Save and build cash
* Invest in low cost index funds
* Keep costs low
* Keep taxes low
* Spend less than you make
* Hold just enough insurance
* Pay down / off debt
* Always look for ways to improve cash flows
* Keep both financial and non-financial live simple

THE REST? Won’t matter over the long run......

Best.
Tony
John C. Bogle: “Simplicity is the master key to financial success."
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Re: Jack Bogle - Two Fund Portfolio

Post by Triple digit golfer »

abuss368 wrote: Thu May 06, 2021 7:51 pm
snailderby wrote: Thu May 06, 2021 7:46 pm
abuss368 wrote: Thu May 06, 2021 6:58 pm It is most important to select a strategy that one can stay with over the long term. For some, that is the Two Fund Portfolio, others may select the Three Fund Portfolio. A Target or LifeStrategy fund is another option. There are countless ways to Rome. Any of them will be fine.
I'd generally agree with this.

A global portfolio may be more diversified than a two-fund portfolio. But most investors should be fine as long as they live below their means, establish a healthy savings rate, invest early and often, stay the course, and use low-cost, broadly-diversified index funds. After that, if you want to debate about topics such as currency risk, foreign governance, global economics, and international diversification...that's what this forum is for, I suppose. :)
Exactly. We are dancing on the head of a pin.

If an investor does not get the macro items correct, US v. International is meaningless.

* Save and build cash
* Invest in low cost index funds
* Keep costs low
* Keep taxes low
* Spend less than you make
* Hold just enough insurance
* Pay down / off debt
* Always look for ways to improve cash flows
* Keep both financial and non-financial live simple

THE REST? Won’t matter over the long run......

Best.
Tony
If it won't matter then why did you sell all your international index funds?
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Re: Jack Bogle - Two Fund Portfolio

Post by abuss368 »

Bogleheads -

An excellent site on regarding our mentor Jack Bogle and the Two Fund Portfolio:

https://www.portfolioeinstein.com/john- ... portfolio/

Enjoy.
Tony
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Re: Jack Bogle - Two Fund Portfolio

Post by snailderby »

ruralavalon wrote: Wed May 05, 2021 2:24 pm
Triple digit golfer wrote: Wed May 05, 2021 1:17 pm None of the two funders, to my knowledge, have really answered the very simple question of why exclude international equities?

Cost isn't a good reason. It's a few basis points higher.

Currency risk isn't a good reason. Actually, it's a very bad reason.

Tax inefficiency isn't a good reason. International index funds are very tax efficient.

So why purposely and intentionally exclude them?

Is it really just because Jack and Warren said so?
I have an allocation to international stocks, but still think that a two fund approach is within reason.

The correlation between U.S. and international stocks is high and has been rising, and the diversification benefit has been modest. There are slightly higher expenses in international investing. Investing in other countries can involve political risk and risk of corporate governance deficiencies.
Agreed, and well put. A globally-diversified portfolio should probably be the default recommendation for most people. That's my current thinking, at least. But it's not like there aren't any rational reasons to hold a two-fund portfolio.
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Re: Jack Bogle - Two Fund Portfolio

Post by Triple digit golfer »

abuss368 wrote: Thu May 06, 2021 7:56 pm Bogleheads -

An excellent site on regarding our mentor Jack Bogle and the Two Fund Portfolio:

https://www.portfolioeinstein.com/john- ... portfolio/

Enjoy.
Tony
Thanks for posting. I especially like #s 1, 5, and 8 as they relate to this thread.
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Re: Jack Bogle - Two Fund Portfolio

Post by abuss368 »

snailderby wrote: Thu May 06, 2021 7:57 pmAgreed, and well put. A globally-diversified portfolio should probably be the default recommendation for most people. That's my current thinking, at least. But it's not like there aren't any rational reasons to hold a two-fund portfolio.
Reasonable. Different strategies for different folks. Finding what works best personally is key to long term!

Tony
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Re: Jack Bogle - Two Fund Portfolio

Post by Taylor Larimore »

abuss368 wrote: Thu May 06, 2021 7:56 pm Bogleheads -

An excellent site on regarding our mentor Jack Bogle and the Two Fund Portfolio:

https://www.portfolioeinstein.com/john- ... portfolio/

Enjoy.
Tony
Tony:

Thank you for this excellent article explaining the advantages of the Bogle, Buffett, & Tony, Two-Fund Portfolio.

Best wishes
Taylor
Jack Bogle's Words of Wisdom: "Deep down, I remain absolutely confident that the vast majority of American families would be well served by owning their equity holdings in a Standard & Poor's 500 Index fund (or a total stock market index fund) and holding their bonds in a total bond market index fund."

"Simplicity is the master key to financial success." -- Jack Bogle
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Re: Jack Bogle - Two Fund Portfolio

Post by abuss368 »

Taylor Larimore wrote: Thu May 06, 2021 8:48 pm
abuss368 wrote: Thu May 06, 2021 7:56 pm Bogleheads -

An excellent site on regarding our mentor Jack Bogle and the Two Fund Portfolio:

https://www.portfolioeinstein.com/john- ... portfolio/

Enjoy.
Tony
Tony:

Thank you for this excellent article explaining the advantages of the Bogle, Buffett, & Tony, Two-Fund Portfolio.

Best wishes
Taylor
Jack Bogle's Words of Wisdom: "Deep down, I remain absolutely confident that the vast majority of American families would be well served by owning their equity holdings in a Standard & Poor's 500 Index fund (or a total stock market index fund) and holding their bonds in a total bond market index fund."

Wow! Thanks Taylor. I think many investors on the forum are learning, catching on, and making changes towards simplicity.

Mr. Bogle would be proud.

Tony

Tony
John C. Bogle: “Simplicity is the master key to financial success."
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Re: Jack Bogle - Two Fund Portfolio

Post by Nathan Drake »

Taylor Larimore wrote: Thu May 06, 2021 8:48 pm
abuss368 wrote: Thu May 06, 2021 7:56 pm Bogleheads -

An excellent site on regarding our mentor Jack Bogle and the Two Fund Portfolio:

https://www.portfolioeinstein.com/john- ... portfolio/

Enjoy.
Tony
Tony:

Thank you for this excellent article explaining the advantages of the Bogle, Buffett, & Tony, Two-Fund Portfolio.

Best wishes
Taylor
Jack Bogle's Words of Wisdom: "Deep down, I remain absolutely confident that the vast majority of American families would be well served by owning their equity holdings in a Standard & Poor's 500 Index fund (or a total stock market index fund) and holding their bonds in a total bond market index fund."

And if Americans could stay the course in other areas of the markets (international, factors), they’d be better served.

Bogle would agree with this. The average American temperament is wildly different from a more sophisticated and informed investor willing to stay the course in a well diversified approach
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Re: Jack Bogle - Two Fund Portfolio

Post by oldzey »

abuss368 wrote: Thu May 06, 2021 7:56 pm Bogleheads -

An excellent site on regarding our mentor Jack Bogle and the Two Fund Portfolio:

https://www.portfolioeinstein.com/john- ... portfolio/

Enjoy.
Tony
Thanks for sharing! :beer
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Re: Jack Bogle - Two Fund Portfolio

Post by AlwaysLearningMore »

abuss368 wrote: Thu May 06, 2021 5:18 pm
AlwaysLearningMore wrote: Thu May 06, 2021 5:11 pm This is obvious, but one can incorporate international funds in a two-fund portfolio by using Vanguard Balanced Fund (60/40) and an international fund. https://tinyurl.com/yvp7n9v9
You may want to consider checking out the Three Fund Portfolio thread. That has a lot of useful information for any investor interested in international.

The best part? Both the Two Fund Portfolio and the Three Fund Portfolio will never be below average.

Tony
If the goal is "simplicity," then adding an international fund to Vanguard Balanced Index solves the "we only want 2 funds" requirement. If the investor intentionally wants to eschew international equities, then Balanced Index (1 fund) or TSM + TBM (2 funds) solves that requirement.

Tony, precisely what to you mean by "never be below average?" If you mean the individual funds (TSM, TBM, or indexed international equities fund) then it's axiomatic that they track their benchmark and hardly worth mentioning.

But average is a statistical term. When you state "Both the Two Fund Portfolio and the Three Fund Portfolio will never be below average" to what set of funds have you compared these portfolios? What was the average 5- or 10- year returns for those portfolios? Which database did you consult to determine the average returns for those funds?

"I often say that when you can measure what you are speaking about, and express it in numbers, you know something about it; but when you cannot express it in numbers, your knowledge is of a meager and unsatisfactory kind; it may be the beginning of knowledge, but you have scarcely, in your thoughts, advanced to the stage of science, whatever the matter may be." Sir William Thomson, Baron Kelvin
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Re: Jack Bogle - Two Fund Portfolio

Post by GoneOnTilt »

abuss368 wrote: Thu May 06, 2021 9:05 pm
Taylor Larimore wrote: Thu May 06, 2021 8:48 pm
abuss368 wrote: Thu May 06, 2021 7:56 pm Bogleheads -

An excellent site on regarding our mentor Jack Bogle and the Two Fund Portfolio:

https://www.portfolioeinstein.com/john- ... portfolio/

Enjoy.
Tony
Tony:

Thank you for this excellent article explaining the advantages of the Bogle, Buffett, & Tony, Two-Fund Portfolio.

Best wishes
Taylor
Jack Bogle's Words of Wisdom: "Deep down, I remain absolutely confident that the vast majority of American families would be well served by owning their equity holdings in a Standard & Poor's 500 Index fund (or a total stock market index fund) and holding their bonds in a total bond market index fund."

Wow! Thanks Taylor. I think many investors on the forum are learning, catching on, and making changes towards simplicity.

Mr. Bogle would be proud.

Tony

Tony
Dear Sir,

My primary journey as an investor and on this forum has been a journey from complexity to simplicity. Thanks to people like you, Mr. Larimore and others, this old man has reached the Promised Land of Simplicity, four years from retirement.

Thank you.
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Re: Jack Bogle - Two Fund Portfolio

Post by abuss368 »

bck63 wrote: Fri May 07, 2021 3:37 pm
abuss368 wrote: Thu May 06, 2021 9:05 pm
Taylor Larimore wrote: Thu May 06, 2021 8:48 pm
abuss368 wrote: Thu May 06, 2021 7:56 pm Bogleheads -

An excellent site on regarding our mentor Jack Bogle and the Two Fund Portfolio:

https://www.portfolioeinstein.com/john- ... portfolio/

Enjoy.
Tony
Tony:

Thank you for this excellent article explaining the advantages of the Bogle, Buffett, & Tony, Two-Fund Portfolio.

Best wishes
Taylor
Jack Bogle's Words of Wisdom: "Deep down, I remain absolutely confident that the vast majority of American families would be well served by owning their equity holdings in a Standard & Poor's 500 Index fund (or a total stock market index fund) and holding their bonds in a total bond market index fund."

Wow! Thanks Taylor. I think many investors on the forum are learning, catching on, and making changes towards simplicity.

Mr. Bogle would be proud.

Tony

Tony
Dear Sir,

My primary journey as an investor and on this forum has been a journey from complexity to simplicity. Thanks to people like you, Mr. Larimore and others, this old man has reached the Promised Land of Simplicity, four years from retirement.

Thank you.
Thank you so much for the kind words! I am so happy and thankful that you have reached the “Promised Land of Simplicity”. Taylor has taught me so much in terms of simplifying both our portfolio and life! It works.

Jack Bogle has always said “simplicity is the master key to financial success”.

The Two Fund Portfolio provides a wealth of benefits.

Stay the course and cruise into retirement!
Tony
John C. Bogle: “Simplicity is the master key to financial success."
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Re: Jack Bogle - Two Fund Portfolio

Post by RJC »

My 100% VTSAX and EF two-fund portfolio has been good to me. High savings rate with a simple, efficient asset allocation is what matters most IMO.

One more year until we reach our number at this rate. :beer
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Re: Jack Bogle - Two Fund Portfolio

Post by abuss368 »

RJC wrote: Sat May 08, 2021 8:36 am My 100% VTSAX and EF two-fund portfolio has been good to me. High savings rate with a simple, efficient asset allocation is what matters most IMO.

One more year until we reach our number at this rate. :beer
Another excellent success story! Jack Bogle’s and Warren Buffett’s Two Fund Portfolio work!

Congrats!

Tony
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Re: Jack Bogle - Two Fund Portfolio

Post by 1789 »

RJC wrote: Sat May 08, 2021 8:36 am My 100% VTSAX and EF two-fund portfolio has been good to me. High savings rate with a simple, efficient asset allocation is what matters most IMO.

One more year until we reach our number at this rate. :beer
This is our strategy as well. Glad to see its working for you.
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Re: Jack Bogle - Two Fund Portfolio

Post by Nathan Drake »

RJC wrote: Sat May 08, 2021 8:36 am My 100% VTSAX and EF two-fund portfolio has been good to me. High savings rate with a simple, efficient asset allocation is what matters most IMO.

One more year until we reach our number at this rate. :beer
Would hate to reach the number and call it quits only to be so highly concentrated into two asset classes incredibly overpriced/valued that your SORR is extremely high. You can't rely on savings rate when you are no longer earning income.

What was good for you in the very recent past may not be so in the future.
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Re: Jack Bogle - Two Fund Portfolio

Post by abuss368 »

1789 wrote: Sat May 08, 2021 12:38 pm
RJC wrote: Sat May 08, 2021 8:36 am My 100% VTSAX and EF two-fund portfolio has been good to me. High savings rate with a simple, efficient asset allocation is what matters most IMO.

One more year until we reach our number at this rate. :beer
This is our strategy as well. Glad to see its working for you.
Hi 1789 -

You have a winning strategy. Your portfolio will never be below average!

Bogleheads are learning and it is exciting to see the number of posts moving to a simple strategy as Mr. Bogle recommended!

Best.
Tony
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Re: Jack Bogle - Two Fund Portfolio

Post by Nathan Drake »

abuss368 wrote: Sat May 08, 2021 12:49 pm
1789 wrote: Sat May 08, 2021 12:38 pm
RJC wrote: Sat May 08, 2021 8:36 am My 100% VTSAX and EF two-fund portfolio has been good to me. High savings rate with a simple, efficient asset allocation is what matters most IMO.

One more year until we reach our number at this rate. :beer
This is our strategy as well. Glad to see its working for you.
Hi 1789 -

You have a winning strategy. Your portfolio will never be below average!

Bogleheads are learning and it is exciting to see the number of posts moving to a simple strategy as Mr. Bogle recommended!

Best.
Tony
Your portfolio will never be below average! Except when it underperforms and is below average.

Why do you keep spouting something that is demonstrably false?
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Re: Jack Bogle - Two Fund Portfolio

Post by anon_investor »

Nathan Drake wrote: Sat May 08, 2021 12:46 pm
RJC wrote: Sat May 08, 2021 8:36 am My 100% VTSAX and EF two-fund portfolio has been good to me. High savings rate with a simple, efficient asset allocation is what matters most IMO.

One more year until we reach our number at this rate. :beer
Would hate to reach the number and call it quits only to be so highly concentrated into two asset classes incredibly overpriced/valued that your SORR is extremely high. You can't rely on savings rate when you are no longer earning income.

What was good for you in the very recent past may not be so in the future.
International equities is not going to save your butt, bonds might. You need some bonds to help avoid SORR.

With enough bonds by retirement SORR is never going to be an issue.
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Re: Jack Bogle - Two Fund Portfolio

Post by Nathan Drake »

anon_investor wrote: Sat May 08, 2021 1:03 pm
Nathan Drake wrote: Sat May 08, 2021 12:46 pm
RJC wrote: Sat May 08, 2021 8:36 am My 100% VTSAX and EF two-fund portfolio has been good to me. High savings rate with a simple, efficient asset allocation is what matters most IMO.

One more year until we reach our number at this rate. :beer
Would hate to reach the number and call it quits only to be so highly concentrated into two asset classes incredibly overpriced/valued that your SORR is extremely high. You can't rely on savings rate when you are no longer earning income.

What was good for you in the very recent past may not be so in the future.
International equities is not going to save your butt, bonds might. You need some bonds to help avoid SORR.

With enough bonds by retirement SORR is never going to be an issue.
International equities could "save his butt". The type of SORR risk we are discussing is not short term market shocks that correlate market performance. It's the long-term divergence of returns. Again, 2000-2009 was a horrible period for US TSM only investors. It was quite fine for international or SCV.

Bonds, I'm afraid, are unlikely to save you either given where we currently stand. That's a huge risk for someone investing in this two fund portfolio when yields are so ridiculously low. Yields were a lot higher during the early 00s which made the SORR not quite so bad.

But yes....if you have enough bonds and your SWR is obscenely low, maybe this strategy will work fine. I would rather not have a 2% SWR or less when a more diversified portfolio will be more in line with historical averages.
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Re: Jack Bogle - Two Fund Portfolio

Post by anon_investor »

Nathan Drake wrote: Sat May 08, 2021 1:07 pm
anon_investor wrote: Sat May 08, 2021 1:03 pm
Nathan Drake wrote: Sat May 08, 2021 12:46 pm
RJC wrote: Sat May 08, 2021 8:36 am My 100% VTSAX and EF two-fund portfolio has been good to me. High savings rate with a simple, efficient asset allocation is what matters most IMO.

One more year until we reach our number at this rate. :beer
Would hate to reach the number and call it quits only to be so highly concentrated into two asset classes incredibly overpriced/valued that your SORR is extremely high. You can't rely on savings rate when you are no longer earning income.

What was good for you in the very recent past may not be so in the future.
International equities is not going to save your butt, bonds might. You need some bonds to help avoid SORR.

With enough bonds by retirement SORR is never going to be an issue.
International equities could "save his butt". The type of SORR risk we are discussing is not short term market shocks that correlate market performance. It's the long-term divergence of returns. Again, 2000-2009 was a horrible period for US TSM only investors. It was quite fine for international or SCV.

Bonds, I'm afraid, are unlikely to save you either given where we currently stand. That's a huge risk for someone investing in this two fund portfolio when yields are so ridiculously low. Yields were a lot higher during the early 00s which made the SORR not quite so bad.

But yes....if you have enough bonds and your SWR is obscenely low, maybe this strategy will work fine. I would rather not have a 2% SWR or less when a more diversified portfolio will be more in line with historical averages.
2000-2009 was not great for any US TSM or Int'l. While it is true that Int'l had a CAGR that 2% higher, it was not gangbusters.

While Bond yields are low, they are not zero. I Bonds pay a nice 3.54% APY now. Long term treasuries pay over 2% for someone who has saved a fortune and expects to live another 30+ years, bonds can help avoid SORR.

I am not against international, but I think ones asset allocation to bonds will have a greater importance when trying to avoid SORR than your US to Int'l equity ratio. To say otherwise is overselling the diversification value of international equities.
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