The Three-Fund Portfolio

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ruralavalon
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Re: The Three-Fund Portfolio

Post by ruralavalon »

tres arcenes wrote: Sun Apr 04, 2021 1:23 pm I've decided to simplify things using the three-fund portfolio. I'll use I-shares ETF's. ITOT for Total U.S. Market and IXUS for Total International Stock.
I'm struggling on the Bond fund. My thinking and research leads me to believe that the Bond fund should be oriented to short term bonds in nature with high credit quality bonds. IGSB is "1 to 5 year Investment Grade Corp" with an average bond duration of 2.77 years. IEI is "3-7 year Treasury Bond Fund" with obviously the best credit ratings (AAA) with an average bond duration of 4.60 years. I am avoiding a typical "Total Bond Fund" to eliminate exposure to long-term bonds since (in theory) the risk of owning long-term bonds outweighs the minimal benefits of better returns. Any thoughts on my funds/logic would be greatly appreciated.
I think you may be overestimating the possible impact of long bonds in a total bond market index fund.

For a bond fund look at iShares Core US Aggregate Bond ETF (AGG) ER 0.04%. That ETF is a total bond market index fund and tracks the Bloomberg Barclays U.S. Aggregate Bond Index. The effective duration = 5.92 years, and the credit quality = AA, only about 8% in bonds with a duration of 6 years or more.

iShares 1-5 Year invmt Grd Corp Bd ETF (IGSB) ER 0.06%
is a good bond fund too. The effective duration is lower at 2.77 years, and the credit quality = A is lower too. Corporate bonds are somewhat riskier.

My preference is either total bond market or intermediate-term. We use Vanguard Intermediate-term Bond Index fund (VBILX) ER 0.07%, about 1/2 government bonds, 1/2 corporate bonds, with no mortgage backed securities (MBS), effective duration = 6.60 years, credit quality = A.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link: Bogleheads® investment philosophy
tres arcenes
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Re: The Three-Fund Portfolio

Post by tres arcenes »

Thanks for your response. It helps in my evaluation. Because this will be allocated in different funds, some of the bonds will have to use a Fidelity account (401k). Unfortunately, the ER on all of the available bond funds in the 401(k) plan is like .65%. Fortunately though, the 401(k) will only get 12.5% of the total bond funds.
manlymatt83
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Re: The Three-Fund Portfolio

Post by manlymatt83 »

Just came across a little bit of unexpected cashflow ($XX,XXX). I want to buy VTWAX in taxable with it (as part of my overall allocation). Reasons:

- I know I won't touch it. If I buy VT, I might do something like sell covered calls, etc. due to current valuations.
- I love the idea of not having to rebalance between VTI & VXUS, or the thought of overweighting one vs. the other.

I realize I'd lose the foreign tax credit. But for sub $100k, is it really that big of a deal in the grand scheme of things?
harshabogle
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Re: The Three-Fund Portfolio

Post by harshabogle »

tres arcenes wrote: Mon Apr 05, 2021 7:51 pm Because this will be allocated in different funds, some of the bonds will have to use a Fidelity account (401k). Unfortunately, the ER on all of the available bond funds in the 401(k) plan is like .65%.
Do you have access to BrokerageLink in your 401k at Fidelity? If yes, and if there is no plan cost for using BrokerageLink (this depends on the terms of your 401k plan), then you might be able to access a much broader universe of mutual funds with a lower ER, including bond funds.
Triple digit golfer
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Re: The Three-Fund Portfolio

Post by Triple digit golfer »

manlymatt83 wrote: Tue Apr 06, 2021 11:36 am Just came across a little bit of unexpected cashflow ($XX,XXX). I want to buy VTWAX in taxable with it (as part of my overall allocation). Reasons:

- I know I won't touch it. If I buy VT, I might do something like sell covered calls, etc. due to current valuations.
- I love the idea of not having to rebalance between VTI & VXUS, or the thought of overweighting one vs. the other.

I realize I'd lose the foreign tax credit. But for sub $100k, is it really that big of a deal in the grand scheme of things?
Do you have new contributions going into this account as well? You can rebalance that way.

I would not use VT or VTWAX in a taxable account. We can control few things in investing, and tax efficiency by using two funds instead of one is an easy thing do to earn a few extra bucks.

If you don't mind giving up what may be a couple hundred bucks a year (just a guess), so be it. I would not.
sman09
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Re: The Three-Fund Portfolio

Post by sman09 »

Triple digit golfer wrote: Tue Apr 06, 2021 12:52 pm
manlymatt83 wrote: Tue Apr 06, 2021 11:36 am Just came across a little bit of unexpected cashflow ($XX,XXX). I want to buy VTWAX in taxable with it (as part of my overall allocation). Reasons:

- I know I won't touch it. If I buy VT, I might do something like sell covered calls, etc. due to current valuations.
- I love the idea of not having to rebalance between VTI & VXUS, or the thought of overweighting one vs. the other.

I realize I'd lose the foreign tax credit. But for sub $100k, is it really that big of a deal in the grand scheme of things?
Do you have new contributions going into this account as well? You can rebalance that way.

I would not use VT or VTWAX in a taxable account. We can control few things in investing, and tax efficiency by using two funds instead of one is an easy thing do to earn a few extra bucks.

If you don't mind giving up what may be a couple hundred bucks a year (just a guess), so be it. I would not.
Triple digit golfer:

Could you please elaborate why you say
"I would not use VT or VTWAX in a taxable account. We can control few things in investing, and tax efficiency by using two funds instead of one is an easy thing do to earn a few extra bucks."
My understanding was stock index funds in general are okay in taxable/tax-deferred accounts while bonds are better in tax-deferred ones. Being so, wanted to know the reason for your suggestion.

Thank you.
tj
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Re: The Three-Fund Portfolio

Post by tj »

sman09 wrote: Wed Apr 07, 2021 10:53 pm
Triple digit golfer wrote: Tue Apr 06, 2021 12:52 pm
manlymatt83 wrote: Tue Apr 06, 2021 11:36 am Just came across a little bit of unexpected cashflow ($XX,XXX). I want to buy VTWAX in taxable with it (as part of my overall allocation). Reasons:

- I know I won't touch it. If I buy VT, I might do something like sell covered calls, etc. due to current valuations.
- I love the idea of not having to rebalance between VTI & VXUS, or the thought of overweighting one vs. the other.

I realize I'd lose the foreign tax credit. But for sub $100k, is it really that big of a deal in the grand scheme of things?
Do you have new contributions going into this account as well? You can rebalance that way.

I would not use VT or VTWAX in a taxable account. We can control few things in investing, and tax efficiency by using two funds instead of one is an easy thing do to earn a few extra bucks.

If you don't mind giving up what may be a couple hundred bucks a year (just a guess), so be it. I would not.
Triple digit golfer:

Could you please elaborate why you say
"I would not use VT or VTWAX in a taxable account. We can control few things in investing, and tax efficiency by using two funds instead of one is an easy thing do to earn a few extra bucks."
My understanding was stock index funds in general are okay in taxable/tax-deferred accounts while bonds are better in tax-deferred ones. Being so, wanted to know the reason for your suggestion.

Thank you.
You don't get the foreign tax credit if you use the global ETF.
bogledogle87
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Re: The Three-Fund Portfolio

Post by bogledogle87 »

sman09 wrote: Wed Apr 07, 2021 10:53 pm
Triple digit golfer wrote: Tue Apr 06, 2021 12:52 pm
manlymatt83 wrote: Tue Apr 06, 2021 11:36 am Just came across a little bit of unexpected cashflow ($XX,XXX). I want to buy VTWAX in taxable with it (as part of my overall allocation). Reasons:

- I know I won't touch it. If I buy VT, I might do something like sell covered calls, etc. due to current valuations.
- I love the idea of not having to rebalance between VTI & VXUS, or the thought of overweighting one vs. the other.

I realize I'd lose the foreign tax credit. But for sub $100k, is it really that big of a deal in the grand scheme of things?
Do you have new contributions going into this account as well? You can rebalance that way.

I would not use VT or VTWAX in a taxable account. We can control few things in investing, and tax efficiency by using two funds instead of one is an easy thing do to earn a few extra bucks.

If you don't mind giving up what may be a couple hundred bucks a year (just a guess), so be it. I would not.
Triple digit golfer:

Could you please elaborate why you say
"I would not use VT or VTWAX in a taxable account. We can control few things in investing, and tax efficiency by using two funds instead of one is an easy thing do to earn a few extra bucks."
My understanding was stock index funds in general are okay in taxable/tax-deferred accounts while bonds are better in tax-deferred ones. Being so, wanted to know the reason for your suggestion.

Thank you.
Add about 0.10% to the expense ratio to account for the loss of the Foreign Tax Credit eligibility. Note that this underlying expense is also present in retirement account types as well. In taxable, you do have an opportunity to get that expense back by splitting up, as suggested. There is a good argument on both sides on whether 1 or 2 funds is worth that credit or not.
VTWAX and chill
Triple digit golfer
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Re: The Three-Fund Portfolio

Post by Triple digit golfer »

sman09 wrote: Wed Apr 07, 2021 10:53 pm
Triple digit golfer wrote: Tue Apr 06, 2021 12:52 pm
manlymatt83 wrote: Tue Apr 06, 2021 11:36 am Just came across a little bit of unexpected cashflow ($XX,XXX). I want to buy VTWAX in taxable with it (as part of my overall allocation). Reasons:

- I know I won't touch it. If I buy VT, I might do something like sell covered calls, etc. due to current valuations.
- I love the idea of not having to rebalance between VTI & VXUS, or the thought of overweighting one vs. the other.

I realize I'd lose the foreign tax credit. But for sub $100k, is it really that big of a deal in the grand scheme of things?
Do you have new contributions going into this account as well? You can rebalance that way.

I would not use VT or VTWAX in a taxable account. We can control few things in investing, and tax efficiency by using two funds instead of one is an easy thing do to earn a few extra bucks.

If you don't mind giving up what may be a couple hundred bucks a year (just a guess), so be it. I would not.
Triple digit golfer:

Could you please elaborate why you say
"I would not use VT or VTWAX in a taxable account. We can control few things in investing, and tax efficiency by using two funds instead of one is an easy thing do to earn a few extra bucks."
My understanding was stock index funds in general are okay in taxable/tax-deferred accounts while bonds are better in tax-deferred ones. Being so, wanted to know the reason for your suggestion.

Thank you.
Vanguard Total World Stock (VT or VTWAX), as I understand it, is not eligible for the foreign tax credit. Therefore, it's not that it isn't okay to use in a taxable account, but you can get the same portfolio using two funds/ETFs (VTI/VTSAX and VXUS/VTIAX) and still get the foreign tax credit on VXUS/VTIAX.

Does that make sense?

If you're okay giving up the credit, then by all means, VT/VTWAX isn't a bad fund. It's just that you could do a little bit better without any cost or risk. If you value simplicity over anything else, which I can certainly understand, use VT/VTWAX and don't think twice about it. It's not like the fund is inefficient, it just isn't as efficient as the combination of the other two, the difference being the foreign tax credit.
muffins14
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Re: The Three-Fund Portfolio

Post by muffins14 »

manlymatt83 wrote: Tue Apr 06, 2021 11:36 am Just came across a little bit of unexpected cashflow ($XX,XXX). I want to buy VTWAX in taxable with it (as part of my overall allocation). Reasons:

- I know I won't touch it. If I buy VT, I might do something like sell covered calls, etc. due to current valuations.
- I love the idea of not having to rebalance between VTI & VXUS, or the thought of overweighting one vs. the other.

I realize I'd lose the foreign tax credit. But for sub $100k, is it really that big of a deal in the grand scheme of things?
You could also just buy VTI & VXUS one time at exactly the market proportion, and then *not* rebalance back to some arbitrary non-market number like 60% US / 40% international. It would have the same effect as buying VT in that it will track the market without rebalancing
Crom laughs at your Four Winds
sman09
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Re: The Three-Fund Portfolio

Post by sman09 »

Triple digit golfer wrote: Thu Apr 08, 2021 8:20 am
sman09 wrote: Wed Apr 07, 2021 10:53 pm
Triple digit golfer wrote: Tue Apr 06, 2021 12:52 pm
manlymatt83 wrote: Tue Apr 06, 2021 11:36 am Just came across a little bit of unexpected cashflow ($XX,XXX). I want to buy VTWAX in taxable with it (as part of my overall allocation). Reasons:

- I know I won't touch it. If I buy VT, I might do something like sell covered calls, etc. due to current valuations.
- I love the idea of not having to rebalance between VTI & VXUS, or the thought of overweighting one vs. the other.

I realize I'd lose the foreign tax credit. But for sub $100k, is it really that big of a deal in the grand scheme of things?
Do you have new contributions going into this account as well? You can rebalance that way.

I would not use VT or VTWAX in a taxable account. We can control few things in investing, and tax efficiency by using two funds instead of one is an easy thing do to earn a few extra bucks.

If you don't mind giving up what may be a couple hundred bucks a year (just a guess), so be it. I would not.
Triple digit golfer:

Could you please elaborate why you say
"I would not use VT or VTWAX in a taxable account. We can control few things in investing, and tax efficiency by using two funds instead of one is an easy thing do to earn a few extra bucks."
My understanding was stock index funds in general are okay in taxable/tax-deferred accounts while bonds are better in tax-deferred ones. Being so, wanted to know the reason for your suggestion.

Thank you.
Vanguard Total World Stock (VT or VTWAX), as I understand it, is not eligible for the foreign tax credit. Therefore, it's not that it isn't okay to use in a taxable account, but you can get the same portfolio using two funds/ETFs (VTI/VTSAX and VXUS/VTIAX) and still get the foreign tax credit on VXUS/VTIAX.

Does that make sense?

If you're okay giving up the credit, then by all means, VT/VTWAX isn't a bad fund. It's just that you could do a little bit better without any cost or risk. If you value simplicity over anything else, which I can certainly understand, use VT/VTWAX and don't think twice about it. It's not like the fund is inefficient, it just isn't as efficient as the combination of the other two, the difference being the foreign tax credit.
Thank you
- tj
- bogledogle87
- Triple digit golfer

That helps me to understand the reason.

Another question I have had in my mind for a while is about having bonds (such as Total Bond Market fund) in taxable - will perhaps post as a separate thread.

Thank you!
tres arcenes
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Re: The Three-Fund Portfolio

Post by tres arcenes »

harshabogle wrote: Tue Apr 06, 2021 12:33 pm
tres arcenes wrote: Mon Apr 05, 2021 7:51 pm Because this will be allocated in different funds, some of the bonds will have to use a Fidelity account (401k). Unfortunately, the ER on all of the available bond funds in the 401(k) plan is like .65%.
Do you have access to BrokerageLink in your 401k at Fidelity? If yes, and if there is no plan cost for using BrokerageLink (this depends on the terms of your 401k plan), then you might be able to access a much broader universe of mutual funds with a lower ER, including bond funds.
Thank you for your response. I checked and I do not have access to BrokerageLink. However, I did find out that the 401(k) plan allows for in-service withdrawals at 59 1/2. I'm coming up on that will make a direct rollover to an existing IRA so I'll be able to reduce the ER substantially that way.
moontower
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Re: The Three-Fund Portfolio

Post by moontower »

Show me i'm wrong, but just a 60/40 porfolio of VUG 60% and VEDTX (now EDV) 40% beats EVERYTHING back to early 2000s.

Can it really be that simple going forward, just 60% VUG/40% VEDTX and you beat S&P index by 1 to 2 full points with one third of the drawdown?
absolute zero
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Re: The Three-Fund Portfolio

Post by absolute zero »

moontower wrote: Sat May 01, 2021 8:59 pm Show me i'm wrong, but just a 60/40 porfolio of VUG 60% and VEDTX (now EDV) 40% beats EVERYTHING back to early 2000s.

Can it really be that simple going forward, just 60% VUG/40% VEDTX and you beat S&P index by 1 to 2 full points with one third of the drawdown?
If you have a time machine, I’d highly encourage you to go back to 2000 and invest 60% VUG and 40% EDV, based on your findings. If you don’t have a time machine, your back-testing conclusion is worthless.
moontower
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TWO Fund Portfolio??

Post by moontower »

TWO FUND porfolio

Show me i'm wrong, but just a 60/40 porfolio of VUG 60% and VEDTX (now EDV) 40% beats EVERYTHING back to early 2007.

Can it really be that simple going forward, just 60% VUG/40% VEDTX and you beat S&P index by 1 to 2 full points with one third of the drawdown?
sycamore
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Re: TWO Fund Portfolio??

Post by sycamore »

moontower wrote: Sat May 01, 2021 10:37 pm TWO FUND porfolio

Show me i'm wrong, but just a 60/40 porfolio of VUG 60% and VEDTX (now EDV) 40% beats EVERYTHING back to early 2007.

Can it really be that simple going forward, just 60% VUG/40% VEDTX and you beat S&P index by 1 to 2 full points with one third of the drawdown?
moontower,

1. Why are you shouting with the all-caps?
2. Do you really believe your 60/40 literally beat everything? There are plenty of single-stock or fund investments that crushed your 60/40 as well as the 3-funder. But that's neither here nor there.
3. What's so special about 2007?
4. Most importantly, do you really think that because your combo did well in the past that it will "be that simple going forward" ? Have you heard of "Past performance is no guarantee of future success" ?
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Re: The Three-Fund Portfolio

Post by LadyGeek »

moontower - I understand your enthusiasm, but please continue the discussion in the Two-fund portfolio thread. I moved your other post into that thread: Re: Jack Bogle - Two Fund Portfolio
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Re: TWO Fund Portfolio??

Post by abuss368 »

moontower wrote: Sat May 01, 2021 10:37 pm TWO FUND porfolio

Show me i'm wrong, but just a 60/40 porfolio of VUG 60% and VEDTX (now EDV) 40% beats EVERYTHING back to early 2007.

Can it really be that simple going forward, just 60% VUG/40% VEDTX and you beat S&P index by 1 to 2 full points with one third of the drawdown?
Growth is having its day in the sun. Sector and style outperformance will come and go. Reminds me of sitting at the beach watching the tide come in and out.

The Three Fund Portfolio includes all stock both US and International and the simplicity of one bond fund. By owning the market, investors do not need to worry about individual risk of select styles and sectors.

Tony
John C. Bogle: “Simplicity is the master key to financial success."
Mr. Stubacca
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Re: The Three-Fund Portfolio

Post by Mr. Stubacca »

I have moved from being in individual stocks-mostly tech- and tech funds to the 3 fund portfolio over time. I still check my portfolio way too much but resist the urge to tinker.

Now with the constant barrage of talk of bitcoin and crypto currency I like to come here to reassure myself of my course. When an NFL player decided to get paid millions non bitcoin last year instead of real money it caught my attention.I read about it in several places.

I have been tempted by crypto but I really don't understand it at all. To me it seems like investing in collectables like baseball cards or comics like I used to. Its value is solely in what others want to pay for.it as opposed to.any underlying fundamental.
Glad I can come here
Don't let the pursuit of the perfect stop the use of the good.
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bertilak
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Re: The Three-Fund Portfolio

Post by bertilak »

Mr. Stubacca wrote: Wed May 05, 2021 6:03 pm I have been tempted by crypto but I really don't understand it at all.
That's all you need to say. Stay away. It is all new and no one knows what it will do. Yes, if you were lucky and got (stumble) in on the ground floor, you might have made a killing, but that ship has sailed.

Stay away from the exotics unless...
  1. You really know what you are doing (and no one here is going to turn you into a crypto expert).
  2. You have a lot of money to play with (and most of us don't).
Now you could put a little of your "play money" into it just to see what happens but you will soon run out of "play money" if you jump onto every band wagon that comes along.
Last edited by bertilak on Fri May 07, 2021 7:00 pm, edited 1 time in total.
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Taylor Larimore
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Re: The Three-Fund Portfolio

Post by Taylor Larimore »

bertilak:

Nice post! Thank you.

Taylor
Jack Bogle's Words of Wisdom: "We ignore the real diamonds of simplicity, seeking instead the illusory rhinestones of complexity."
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happypediatrician
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Re: The Three-Fund Portfolio

Post by happypediatrician »

Hello,

Have been investing for about 10 months. Age 34. Forgive me for simple questions. Exchanged my TDF 2065 for 3 fund portfolio. 70% VTSAX / 20% VTIAX / 10% VBTLX. All in ROTH IRA and solo 401k.

Questions:

1.Saw an earlier post about TDF’s being used in tax deferred accounts and got a bit confused. I understand the possible inefficiency of a TDF in a taxable account. Just wanted to make sure there is no reason why a 3 fund portfolio is not a good option in tax deferred accounts correct?

2.How often do I re balance? Would threshold of 5% be reasonable?

Thanks so much,

-Rob
Kids are not little adults
Triple digit golfer
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Re: The Three-Fund Portfolio

Post by Triple digit golfer »

happypediatrician wrote: Wed May 05, 2021 9:03 pm Hello,

Have been investing for about 10 months. Age 34. Forgive me for simple questions. Exchanged my TDF 2065 for 3 fund portfolio. 70% VTSAX / 20% VTIAX / 10% VBTLX. All in ROTH IRA and solo 401k.

Questions:

1.Saw an earlier post about TDF’s being used in tax deferred accounts and got a bit confused. I understand the possible inefficiency of a TDF in a taxable account. Just wanted to make sure there is no reason why a 3 fund portfolio is not a good option in tax deferred accounts correct?

2.How often do I re balance? Would threshold of 5% be reasonable?

Thanks so much,

-Rob
It's good in a tax deferred account, but why not stick with the target date fund?

A 5% threshold is reasonable.
happypediatrician
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Re: The Three-Fund Portfolio

Post by happypediatrician »

Triple digit golfer wrote: Wed May 05, 2021 9:21 pm
happypediatrician wrote: Wed May 05, 2021 9:03 pm Hello,

Have been investing for about 10 months. Age 34. Forgive me for simple questions. Exchanged my TDF 2065 for 3 fund portfolio. 70% VTSAX / 20% VTIAX / 10% VBTLX. All in ROTH IRA and solo 401k.

Questions:

1.Saw an earlier post about TDF’s being used in tax deferred accounts and got a bit confused. I understand the possible inefficiency of a TDF in a taxable account. Just wanted to make sure there is no reason why a 3 fund portfolio is not a good option in tax deferred accounts correct?

2.How often do I re balance? Would threshold of 5% be reasonable?

Thanks so much,

-Rob
It's good in a tax deferred account, but why not stick with the target date fund?

A 5% threshold is reasonable.
My reasoning was:

1.I am not as comfortable with how high the international allocation is for TDFs or Life Strategy funds.

2.I would like to control the glide path from stocks to bonds overtime. Particularly if there was a very prolonged bear market.

Happy to hear if you think any of that is a bad idea. Trying to learn as much as possible. Hoping my three fund portfolio can be my set it and forget it, with changes to a more conservative AA as I get older. Had enough trepidation as it was moving from TDF to 3 fund portfolio given I am new to this. That being said, my 3 fund portfolio is fairly similar to the TDF 2065. Cost for TDF 0.15, cost for my portfolio 0.07.
Kids are not little adults
Triple digit golfer
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Re: The Three-Fund Portfolio

Post by Triple digit golfer »

happypediatrician wrote: Wed May 05, 2021 9:49 pm
Triple digit golfer wrote: Wed May 05, 2021 9:21 pm
happypediatrician wrote: Wed May 05, 2021 9:03 pm Hello,

Have been investing for about 10 months. Age 34. Forgive me for simple questions. Exchanged my TDF 2065 for 3 fund portfolio. 70% VTSAX / 20% VTIAX / 10% VBTLX. All in ROTH IRA and solo 401k.

Questions:

1.Saw an earlier post about TDF’s being used in tax deferred accounts and got a bit confused. I understand the possible inefficiency of a TDF in a taxable account. Just wanted to make sure there is no reason why a 3 fund portfolio is not a good option in tax deferred accounts correct?

2.How often do I re balance? Would threshold of 5% be reasonable?

Thanks so much,

-Rob
It's good in a tax deferred account, but why not stick with the target date fund?

A 5% threshold is reasonable.
My reasoning was:

1.I am not as comfortable with how high the international allocation is for TDFs or Life Strategy funds.

2.I would like to control the glide path from stocks to bonds overtime. Particularly if there was a very prolonged bear market.

Happy to hear if you think any of that is a bad idea. Trying to learn as much as possible. Hoping my three fund portfolio can be my set it and forget it, with changes to a more conservative AA as I get older. Had enough trepidation as it was moving from TDF to 3 fund portfolio given I am new to this. That being said, my 3 fund portfolio is fairly similar to the TDF 2065. Cost for TDF 0.15, cost for my portfolio 0.07.
#1 is reasonable, but #2 sounds like market timing. An enormous benefit of target date funds is that they remove potential behavioral pitfalls. Why would you want to change the stock/bond ratio during a bear market?
happypediatrician
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Re: The Three-Fund Portfolio

Post by happypediatrician »

Triple digit golfer wrote: Thu May 06, 2021 4:10 am
happypediatrician wrote: Wed May 05, 2021 9:49 pm
Triple digit golfer wrote: Wed May 05, 2021 9:21 pm
happypediatrician wrote: Wed May 05, 2021 9:03 pm Hello,

Have been investing for about 10 months. Age 34. Forgive me for simple questions. Exchanged my TDF 2065 for 3 fund portfolio. 70% VTSAX / 20% VTIAX / 10% VBTLX. All in ROTH IRA and solo 401k.

Questions:

1.Saw an earlier post about TDF’s being used in tax deferred accounts and got a bit confused. I understand the possible inefficiency of a TDF in a taxable account. Just wanted to make sure there is no reason why a 3 fund portfolio is not a good option in tax deferred accounts correct?

2.How often do I re balance? Would threshold of 5% be reasonable?

Thanks so much,

-Rob
It's good in a tax deferred account, but why not stick with the target date fund?

A 5% threshold is reasonable.
My reasoning was:

1.I am not as comfortable with how high the international allocation is for TDFs or Life Strategy funds.

2.I would like to control the glide path from stocks to bonds overtime. Particularly if there was a very prolonged bear market.

Happy to hear if you think any of that is a bad idea. Trying to learn as much as possible. Hoping my three fund portfolio can be my set it and forget it, with changes to a more conservative AA as I get older. Had enough trepidation as it was moving from TDF to 3 fund portfolio given I am new to this. That being said, my 3 fund portfolio is fairly similar to the TDF 2065. Cost for TDF 0.15, cost for my portfolio 0.07.
#1 is reasonable, but #2 sounds like market timing. An enormous benefit of target date funds is that they remove potential behavioral pitfalls. Why would you want to change the stock/bond ratio during a bear market?
Thanks for getting back to me.

To clarify (2). I would not change stock/bond ratio during a bear market. My concern is that a TDF that is set on an automatic glide path (though slow) would. The alternative would be a Life Strategy fund, which then puts me back to (1) above. Thus, my plan was a simple 3 fund portfolio, steady dollar cost averaging over a lifetime. No market timing. However, having more control over the glide path, stock/bond allocation as time goes on. Does that sound reasonable?

Appreciate your help,

-Rob
Kids are not little adults
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Re: The Three-Fund Portfolio

Post by Triple digit golfer »

happypediatrician wrote: Thu May 06, 2021 9:06 am
Triple digit golfer wrote: Thu May 06, 2021 4:10 am
happypediatrician wrote: Wed May 05, 2021 9:49 pm
Triple digit golfer wrote: Wed May 05, 2021 9:21 pm
happypediatrician wrote: Wed May 05, 2021 9:03 pm Hello,

Have been investing for about 10 months. Age 34. Forgive me for simple questions. Exchanged my TDF 2065 for 3 fund portfolio. 70% VTSAX / 20% VTIAX / 10% VBTLX. All in ROTH IRA and solo 401k.

Questions:

1.Saw an earlier post about TDF’s being used in tax deferred accounts and got a bit confused. I understand the possible inefficiency of a TDF in a taxable account. Just wanted to make sure there is no reason why a 3 fund portfolio is not a good option in tax deferred accounts correct?

2.How often do I re balance? Would threshold of 5% be reasonable?

Thanks so much,

-Rob
It's good in a tax deferred account, but why not stick with the target date fund?

A 5% threshold is reasonable.
My reasoning was:

1.I am not as comfortable with how high the international allocation is for TDFs or Life Strategy funds.

2.I would like to control the glide path from stocks to bonds overtime. Particularly if there was a very prolonged bear market.

Happy to hear if you think any of that is a bad idea. Trying to learn as much as possible. Hoping my three fund portfolio can be my set it and forget it, with changes to a more conservative AA as I get older. Had enough trepidation as it was moving from TDF to 3 fund portfolio given I am new to this. That being said, my 3 fund portfolio is fairly similar to the TDF 2065. Cost for TDF 0.15, cost for my portfolio 0.07.
#1 is reasonable, but #2 sounds like market timing. An enormous benefit of target date funds is that they remove potential behavioral pitfalls. Why would you want to change the stock/bond ratio during a bear market?
Thanks for getting back to me.

To clarify (2). I would not change stock/bond ratio during a bear market. My concern is that a TDF that is set on an automatic glide path (though slow) would. The alternative would be a Life Strategy fund, which then puts me back to (1) above. Thus, my plan was a simple 3 fund portfolio, steady dollar cost averaging over a lifetime. No market timing. However, having more control over the glide path, stock/bond allocation as time goes on. Does that sound reasonable?

Appreciate your help,

-Rob
I see. I apologize for misreading your post. Controlling the glidepath seems reasonable. If in a tax deferred account you can always go back to a target fund later if you wanted to, although the U.S./international ratio is a reason not to.

What you're proposing (70/20/10) in a tax deferred account is completely fine and reasonable.
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Re: The Three-Fund Portfolio

Post by ruralavalon »

happypediatrician wrote: Wed May 05, 2021 9:49 pm1.I am not as comfortable with how high the international allocation is for TDFs or Life Strategy funds.
This is my primary reason for not using a target date fund or LifeStrategy fund, a secondary reason is tax-efficiency.
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The Three-Fund Portfolio

Post by Taylor Larimore »

Bogleheads:

More good news for Three-Fund Portfolio investors.

Morningstar recently completed a study which found that large mutual funds (and ETFs) are safer than small mutual funds (and ETFs).

The Bogleheads' Three-Fund Portfolio contains three of the largest mutual funds (and ETFs) in each category.

The Largest Funds Are The Safest Bets

Best wishes.
Taylor
Jack Bogle's Words of Wisdom: "There may be better investment strategies than owning just three broad-based index funds but the number of strategies that are worse is infinite."
"Simplicity is the master key to financial success." -- Jack Bogle
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Re: The Three-Fund Portfolio

Post by GaryA505 »

Taylor Larimore wrote: Fri May 07, 2021 11:46 am Bogleheads:

More good news for Three-Fund Portfolio investors.

Morningstar recently completed a study which found that large mutual funds (and ETFs) are safer than small mutual funds (and ETFs).

The Bogleheads' Three-Fund Portfolio contains three of the largest mutual funds (and ETFs) in each category.

The Largest Funds Are The Safest Bets

Best wishes.
Taylor
Jack Bogle's Words of Wisdom: "There may be better investment strategies than owning just three broad-based index funds but the number of strategies that are worse is infinite."
Now we need to see the same sort of comparison for US and ex-US funds.
Get most of it right and don't make any big mistakes. All else being equal, simpler is better. Simple is as simple does.
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Re: The Three-Fund Portfolio

Post by abuss368 »

Taylor Larimore wrote: Fri May 07, 2021 11:46 am Bogleheads:

More good news for Three-Fund Portfolio investors.

Morningstar recently completed a study which found that large mutual funds (and ETFs) are safer than small mutual funds (and ETFs).

The Bogleheads' Three-Fund Portfolio contains three of the largest mutual funds (and ETFs) in each category.

The Largest Funds Are The Safest Bets

Best wishes.
Taylor
Jack Bogle's Words of Wisdom: "There may be better investment strategies than owning just three broad-based index funds but the number of strategies that are worse is infinite."
Hi Taylor -

Thanks for sharing Taylor! It is good to see that we are not missing out on not including Small Caps in our portfolio. The Two and Three Fund Portfolio’s are excellent strategies that will never be below average.

Have a nice weekend.
Tony
John C. Bogle: “Simplicity is the master key to financial success."
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Re: The Three-Fund Portfolio

Post by Taylor Larimore »

Tony wrote: Hi Taylor -

Thanks for sharing Taylor! It is good to see that we are not missing out on not including Small Caps in our portfolio. The Two and Three Fund Portfolio’s are excellent strategies that will never be below average.[/url]

Have a nice weekend.
Tony
Tony: The 2- and 3-fund portfolios both contain the market weight in small-cap stocks.

Thanks to Jack Bogle, my weekends are spent doing whatever I want!

Best wishes.
Taylor
Jack Bogle's Words of Wisdom: “Successful investing doesn’t require sophistication and complexity; all that’s necessary is a healthy dose of common sense.”
"Simplicity is the master key to financial success." -- Jack Bogle
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Re: The Three-Fund Portfolio

Post by abuss368 »

Taylor Larimore wrote: Fri May 07, 2021 6:28 pm
Tony wrote: Hi Taylor -

Thanks for sharing Taylor! It is good to see that we are not missing out on not including Small Caps in our portfolio. The Two and Three Fund Portfolio’s are excellent strategies that will never be below average.[/url]

Have a nice weekend.
Tony
Tony: The 2- and 3-fund portfolios both contain the market weight in small-cap stocks.

Thanks to Jack Bogle, my weekends are spent doing whatever I want!

Best wishes.
Taylor
Jack Bogle's Words of Wisdom: “Successful investing doesn’t require sophistication and complexity; all that’s necessary is a healthy dose of common sense.”
Hi Taylor -

“Thanks to Jack Bogle, my weekends are spent doing whatever I want!”

I love that Taylor. So powerful and quite an accomplishment thanks to the vision and simplicity of Jack Bogle. Owning the haystack with total market index funds is a winner with proven success.

You are right! Both the Two Fund and Three Fund Portfolio’s will never be below average.

Thank you for the vote of confidence. You are a shinning example that Mr. Bogle’s investment advice works!

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

Post by snailderby »

abuss368 wrote: Fri May 07, 2021 4:52 pm
Taylor Larimore wrote: Fri May 07, 2021 11:46 am Bogleheads:

More good news for Three-Fund Portfolio investors.

Morningstar recently completed a study which found that large mutual funds (and ETFs) are safer than small mutual funds (and ETFs).

The Bogleheads' Three-Fund Portfolio contains three of the largest mutual funds (and ETFs) in each category.

The Largest Funds Are The Safest Bets

Best wishes.
Taylor
Jack Bogle's Words of Wisdom: "There may be better investment strategies than owning just three broad-based index funds but the number of strategies that are worse is infinite."
Hi Taylor -

Thanks for sharing Taylor! It is good to see that we are not missing out on not including Small Caps in our portfolio. The Two and Three Fund Portfolio’s are excellent strategies that will never be below average.

Have a nice weekend.
Tony
Thanks for sharing the article, Taylor!

To clarify, the Morningstar article is about funds with a large amount of assets under management, not large-cap funds, right? Or I am I reading the article incorrectly?
Last edited by snailderby on Sun May 09, 2021 7:57 pm, edited 1 time in total.
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Re: The Three-Fund Portfolio

Post by Triple digit golfer »

snailderby wrote: Sun May 09, 2021 7:56 pm
abuss368 wrote: Fri May 07, 2021 4:52 pm
Taylor Larimore wrote: Fri May 07, 2021 11:46 am Bogleheads:

More good news for Three-Fund Portfolio investors.

Morningstar recently completed a study which found that large mutual funds (and ETFs) are safer than small mutual funds (and ETFs).

The Bogleheads' Three-Fund Portfolio contains three of the largest mutual funds (and ETFs) in each category.

The Largest Funds Are The Safest Bets

Best wishes.
Taylor
Jack Bogle's Words of Wisdom: "There may be better investment strategies than owning just three broad-based index funds but the number of strategies that are worse is infinite."
Hi Taylor -

Thanks for sharing Taylor! It is good to see that we are not missing out on not including Small Caps in our portfolio. The Two and Three Fund Portfolio’s are excellent strategies that will never be below average.

Have a nice weekend.
Tony
Thanks for sharing the article, Taylor! To clarify, the Morningstar article is about funds with large AUMs, not large- versus small-cap funds, right? Or I am I reading the article incorrectly?
That's how I interpreted the article. Assets under management, not the size of the companies held within the fund.
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Re: The Three-Fund Portfolio

Post by Dennisl »

sman09 wrote: Thu Apr 08, 2021 11:27 am
Triple digit golfer wrote: Thu Apr 08, 2021 8:20 am
sman09 wrote: Wed Apr 07, 2021 10:53 pm
Triple digit golfer wrote: Tue Apr 06, 2021 12:52 pm
manlymatt83 wrote: Tue Apr 06, 2021 11:36 am Just came across a little bit of unexpected cashflow ($XX,XXX). I want to buy VTWAX in taxable with it (as part of my overall allocation). Reasons:

- I know I won't touch it. If I buy VT, I might do something like sell covered calls, etc. due to current valuations.
- I love the idea of not having to rebalance between VTI & VXUS, or the thought of overweighting one vs. the other.

I realize I'd lose the foreign tax credit. But for sub $100k, is it really that big of a deal in the grand scheme of things?
Do you have new contributions going into this account as well? You can rebalance that way.

I would not use VT or VTWAX in a taxable account. We can control few things in investing, and tax efficiency by using two funds instead of one is an easy thing do to earn a few extra bucks.

If you don't mind giving up what may be a couple hundred bucks a year (just a guess), so be it. I would not.
Triple digit golfer:

Could you please elaborate why you say
"I would not use VT or VTWAX in a taxable account. We can control few things in investing, and tax efficiency by using two funds instead of one is an easy thing do to earn a few extra bucks."
My understanding was stock index funds in general are okay in taxable/tax-deferred accounts while bonds are better in tax-deferred ones. Being so, wanted to know the reason for your suggestion.

Thank you.
Vanguard Total World Stock (VT or VTWAX), as I understand it, is not eligible for the foreign tax credit. Therefore, it's not that it isn't okay to use in a taxable account, but you can get the same portfolio using two funds/ETFs (VTI/VTSAX and VXUS/VTIAX) and still get the foreign tax credit on VXUS/VTIAX.

Does that make sense?

If you're okay giving up the credit, then by all means, VT/VTWAX isn't a bad fund. It's just that you could do a little bit better without any cost or risk. If you value simplicity over anything else, which I can certainly understand, use VT/VTWAX and don't think twice about it. It's not like the fund is inefficient, it just isn't as efficient as the combination of the other two, the difference being the foreign tax credit.
Thank you
- tj
- bogledogle87
- Triple digit golfer

That helps me to understand the reason.

Another question I have had in my mind for a while is about having bonds (such as Total Bond Market fund) in taxable - will perhaps post as a separate thread.

Thank you!
I’ve been contemplating going from vtsax/vtiax to just vtwax. I’d lose out on the foreign tax credit and the opportunity to tax loss harvest. I would also pay more fees. However, it would make things a lot easier. I don’t have to worry about rebalancing and will make life easier in the future for the wife if I die, develop dementia, etc. I’m planning to do all my charitable giving from the separate MFs and just switch to total world.

As far as total bond market, given low yields, probably doesn’t make a huge difference. Can be less tax efficient in taxable because it is taxed as ordinary income, whereas dividends from index stock funds are currently taxed at lower rates.
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Re: The Three-Fund Portfolio

Post by HuckFinn »

Hoping for some input from fellow 3-Funders.

Our portfolio is a pure three fund portfolio:

Our Taxable account - holds all of our VTI (Total US Stock Market ETF)

Our Rollovers - holds VXUS (Total International Stock ETF) and our BND (Total Bond Market ETF)

Our Roth's - holds (VXUS) (Total International Stock ETF)

We will be selling our home and moving into an apartment for 2-4 years. All of the home sale proceeds will be deposited in the taxable account as there is no way to push that money into the Roth's or Rollovers. We may buy a home again in 2-4 years.

Our determined asset allocation, INTL/vs Domestic preference and our Investment Policy Statement direct us pretty well.

The initial plan looks like this:
Rollovers - we will sell all VXUS (INT Stock) and buy BND (Total Bond) which will now be the only holding in our Rollovers.
We will leave the Roth's unchanged holding VXUS (INTL Stock)
We will buy a large amount of VXUS (INT Stock) in the taxable account to replace what we sold in the Rollovers and add some more VTI (US Stock) in the taxable account.

This will leave us with approximately $200,000 in the taxable account that should go into BND (Total Bond) according to our asset allocation. If the rule still applies we understand that generally bonds should be held in the tax advantaged accounts but this isn't possible.

Since this $200,000 in the taxable account might be used toward purchasing a home in the 2-4 year period we are tempted to add a fourth fund despite the complexity - perhaps one of the safer short term bond offerings. That $200k represents about 13% of our Bond Holdings.

I know there are a lot of threads on what to do with "safe money" or potentially "short term" cash but it's out three fund conundrum that's creating the debate.

Thoughts appreciated, thanks.
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Re: The Three-Fund Portfolio

Post by sycamore »

HuckFinn wrote: Sat May 22, 2021 11:31 pm If the rule still applies we understand that generally bonds should be held in the tax advantaged accounts but this isn't possible.
The rule is intended to guide us toward tax efficiency. Taxable bonds like BND aren't the most tax-efficient it's true but currently with low yields the actual dollar cost of that inefficiency may be something you can bear.

What's your tax bracket? If it's 24% or higher, maybe you'll want to use a tax-free muni fund, like the Vanguard Limited-Term Tax Free Fund.
HuckFinn wrote: Sat May 22, 2021 11:31 pm Since this $200,000 in the taxable account might be used toward purchasing a home in the 2-4 year period we are tempted to add a fourth fund despite the complexity - perhaps one of the safer short term bond offerings.
I think this is the more important issue. BND has a duration longer than what your goal calls for, so a short-term fund is more appropriate, regardless of the tax efficiency. Given that you're not 100% certain you'll use the money to purchase a house, you could invest in BND regardless but only knowing that you may take a larger hit if rates do rise significantly over the next few years. Can you cover a shortfall of say 5% of $200k out of your earned income going forward?
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Re: The Three-Fund Portfolio

Post by CABob »

HuckFinn wrote: Sat May 22, 2021 11:31 pm This will leave us with approximately $200,000 in the taxable account that should go into BND (Total Bond) according to our asset allocation. If the rule still applies we understand that generally bonds should be held in the tax advantaged accounts but this isn't possible.

Since this $200,000 in the taxable account might be used toward purchasing a home in the 2-4 year period we are tempted to add a fourth fund despite the complexity - perhaps one of the safer short term bond offerings. That $200k represents about 13% of our Bond Holdings.
You might consider one of the tax exempt bond funds.
Bob
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Re: The Three-Fund Portfolio

Post by HuckFinn »

sycamore wrote: Sun May 23, 2021 10:40 am
HuckFinn wrote: Sat May 22, 2021 11:31 pm If the rule still applies we understand that generally bonds should be held in the tax advantaged accounts but this isn't possible.
The rule is intended to guide us toward tax efficiency. Taxable bonds like BND aren't the most tax-efficient it's true but currently with low yields the actual dollar cost of that inefficiency may be something you can bear.

What's your tax bracket? If it's 24% or higher, maybe you'll want to use a tax-free muni fund, like the Vanguard Limited-Term Tax Free Fund.
HuckFinn wrote: Sat May 22, 2021 11:31 pm Since this $200,000 in the taxable account might be used toward purchasing a home in the 2-4 year period we are tempted to add a fourth fund despite the complexity - perhaps one of the safer short term bond offerings.
I think this is the more important issue. BND has a duration longer than what your goal calls for, so a short-term fund is more appropriate, regardless of the tax efficiency. Given that you're not 100% certain you'll use the money to purchase a house, you could invest in BND regardless but only knowing that you may take a larger hit if rates do rise significantly over the next few years. Can you cover a shortfall of say 5% of $200k out of your earned income going forward?
We're retired from full time careers. My wife works part time but we should be in the 12% bracket for the foreseeable future. We do try to monitor income as we get our health insurance through the exchange.
We can cover the 5% shortfall should it occur. Like many other pollsters on semi related topics we'd prefer some stability. Thanks.
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Re: The Three-Fund Portfolio

Post by clip651 »

HuckFinn wrote: Sun May 23, 2021 3:30 pm
We're retired from full time careers. My wife works part time but we should be in the 12% bracket for the foreseeable future. We do try to monitor income as we get our health insurance through the exchange.
We can cover the 5% shortfall should it occur. Like many other pollsters on semi related topics we'd prefer some stability. Thanks.
A short term bond fund, high yield savings account, CDs, or a mixture of these seem like they would all fit your goals. Interest rates are low, and you're in a low tax bracket, so the tax hit should be minimal. Which you choose depends on how much liquidity and price stability you want. The pro and con lists for these three in your situation really don't vary a lot. The CD would actually give you the most predictable income for health insurance purposes. Or you can even put it in a low yield savings account if the small amount of income will be problematic.
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Re: The Three-Fund Portfolio

Post by Ineed$ »

Would the VG balance fund being like have a 2-3 fund portfolio? I looked at the returns but would like to hear comments.
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Re: The Three-Fund Portfolio

Post by Triple digit golfer »

Ineed$ wrote: Sat May 29, 2021 10:17 pm Would the VG balance fund being like have a 2-3 fund portfolio? I looked at the returns but would like to hear comments.
The balanced fund excludes international stocks, so it is a portfolio of U.S. stocks and bonds only.
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Re: The Three-Fund Portfolio

Post by ruralavalon »

Ineed$ wrote: Sat May 29, 2021 10:17 pm Would the VG balance fund being like have a 2-3 fund portfolio? I looked at the returns but would like to hear comments.
Vanguard Balanced Index Fund (VBIAX) is like having a two fund portfolio. "The fund invests roughly 60% in stocks and 40% in bonds by tracking two indexes that represent broad barometers for the U.S. equity and U.S. taxable bond markets."
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Re: The Three-Fund Portfolio

Post by Taylor Larimore »

Ineed$ wrote: Sat May 29, 2021 10:17 pm Would the VG balance fund being like have a 2-3 fund portfolio? I looked at the returns but would like to hear comments.
Ineeds$
The Vanguard Balanced Index Fund (VBIAX) contains approximately 60% in stocks and 40% in bonds. This presents three problems:

1. Most investors do not want a static 60%/40% asset-allocation during a lifetime of investing. Balanced Funds have a fixed asset allocation.

2. Balanced funds contain taxable bonds which are tax-inefficient.

3. Some investors benefit by using municipal bond funds.

For these reasons, I believe it is usually better to use separate stock and bond funds in a portfolio. Place tax- efficient stock funds in the taxable account. Place tax-inefficient bond funds in the tax-advantaged account.

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 holding 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."
Last edited by Taylor Larimore on Sun May 30, 2021 1:06 pm, edited 1 time in total.
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Re: The Three-Fund Portfolio

Post by LadyGeek »

I should point out that the Balanced Index Fund is a single "set and forget" fund that gives you a diversified portfolio. There's absolutely nothing wrong with owning these funds and we often recommend them to new investors or to anyone who wants to keep things simple.

It takes a bit of skill and understanding to know how to rebalance your portfolio among the stocks and bonds every year. A "set and forget" fund eliminates all concern.

The only issue is that the Balanced Index Fund may not be the best choice in your situation. Instead, one of the Target date funds would be better.

Ineed$ - May I suggest you post your portfolio information in a new thread in the Personal Investments forum using the Asking Portfolio Questions format? It will make you think about the "big picture" while giving us the information we need to point you in the right direction.

Completing that template will tell us if you want to invest in a taxable or tax-deferred (IRA, 401(k), etc.) type of account, for example. Our choice of fund depends on the type of account..

If you have any questions, ask in the new thread.
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Re: The Three-Fund Portfolio

Post by Ineed$ »

Ineed$ wrote: Sat May 29, 2021 10:17 pm Would the VG balance fund being like have a 2-3 fund portfolio? I looked at the returns but would like to hear comments.
Thank you all for the information.
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Re: The Three-Fund Portfolio

Post by hustler »

I am seriously considering improving my investment strategy for Taxable and non-taxable account. Currently it is - Fidelity Managed Account with close to 1% management fees. It's roughly 80% stocks and 20% conservative investments portfolio

My current strategy has given me following 2021 YTD returns, after taking off all the fees (management fees + expense ratios):

7.88% on Taxable Investment accounts
7.30% on non-taxable investment accounts

Question:
- How would you rate the performance?
- Would you share your YTD % return numbers and your Investment strategy?
- Do you think I would have better off doing a 3 fun portfolio / Vanguard PAS?
Last edited by hustler on Mon May 31, 2021 8:23 am, edited 1 time in total.
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Re: The Three-Fund Portfolio

Post by Da5id »

hustler wrote: Mon May 31, 2021 8:13 am I am seriously considering improving my investment strategy for Taxable and non-taxable account. Currently it is - Fidelity Managed Account with close to 1% management fees.

My current strategy has given me 2021 YTD returns of (after all the fees):

7.88% on Taxable Investment accounts
7.30% on non-taxable investment accounts

Question:
- How would you rate the performance?
- Would you share your YTD % return numbers and your Investment strategy?
- Do you think I would have better off doing a 3 fun portfolio / Vanguard PAS?
Comparisons aren't very valid unless similar risks assumed. And YTD comparisons are particularly shallow.

1% AUM fee is pretty high. I don't know your situation and how much you need an advisor. But if you need an advisor at least PAS is cheaper.
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Re: The Three-Fund Portfolio

Post by hustler »

Da5id wrote: Mon May 31, 2021 8:17 am
hustler wrote: Mon May 31, 2021 8:13 am I am seriously considering improving my investment strategy for Taxable and non-taxable account. Currently it is - Fidelity Managed Account with close to 1% management fees.

My current strategy has given me 2021 YTD returns of (after all the fees):

7.88% on Taxable Investment accounts
7.30% on non-taxable investment accounts

Question:
- How would you rate the performance?
- Would you share your YTD % return numbers and your Investment strategy?
- Do you think I would have better off doing a 3 fun portfolio / Vanguard PAS?
Comparisons aren't very valid unless similar risks assumed. And YTD comparisons are particularly shallow.

1% AUM fee is pretty high. I don't know your situation and how much you need an advisor. But if you need an advisor at least PAS is cheaper.
Good point. It's roughly speaking 80% stock, 20% conservative portfolio, if that helps. Also will update in original post.
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