The Three-Fund Portfolio

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manlymatt83
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Re: The Three-Fund Portfolio

Post by manlymatt83 »

Logged into my Schwab account this morning like I usually do every day. Found my holdings "too boring" to look at. Immediately logged out. I guess I accomplished simplicity.
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Re: The Three-Fund Portfolio

Post by bertilak »

manlymatt83 wrote: Thu Jan 21, 2021 8:34 am Logged into my Schwab account this morning like I usually do every day. Found my holdings "too boring" to look at. Immediately logged out. I guess I accomplished simplicity.
You've also accomplished something else. You've won the game if the score no longer matters.
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Taylor Larimore
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Re: The Three-Fund Portfolio

Post by Taylor Larimore »

manlymatt83 wrote: Thu Jan 21, 2021 8:34 am Logged into my Schwab account this morning like I usually do every day. Found my holdings "too boring" to look at. Immediately logged out. I guess I accomplished simplicity.
manlymatt83:

Congratulations and best wishes.

Taylor
Jack Bogle's Words of Wisdom: “One of my favorite rules is ‘Don’t peek.’ Don’t let all the noise drown out your common sense and your wisdom. Just try not to pay that much attention, because it will have no effect whatsoever, categorically, on your lifetime investment returns.”
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Re: The Three-Fund Portfolio

Post by ruralavalon »

manlymatt83 wrote: Thu Jan 21, 2021 8:34 am Logged into my Schwab account this morning like I usually do every day. Found my holdings "too boring" to look at. Immediately logged out. I guess I accomplished simplicity.
Congratulations on achieving "boring". You can stop logging in every day of you wish :) .
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link: Bogleheads® investment philosophy
manlymatt83
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Re: The Three-Fund Portfolio

Post by manlymatt83 »

ruralavalon wrote: Thu Jan 21, 2021 10:45 am
manlymatt83 wrote: Thu Jan 21, 2021 8:34 am Logged into my Schwab account this morning like I usually do every day. Found my holdings "too boring" to look at. Immediately logged out. I guess I accomplished simplicity.
Congratulations on achieving "boring". You can stop logging in every day of you wish :) .
I will! Now I just need to cancel some credit cards and simplify there too.... not worth the over-optimizing stress.
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"Simplify. Simplify."

Post by Taylor Larimore »

manlymatt83 wrote: Thu Jan 21, 2021 10:48 am
ruralavalon wrote: Thu Jan 21, 2021 10:45 am
manlymatt83 wrote: Thu Jan 21, 2021 8:34 am Logged into my Schwab account this morning like I usually do every day. Found my holdings "too boring" to look at. Immediately logged out. I guess I accomplished simplicity.
Congratulations on achieving "boring". You can stop logging in every day of you wish :) .
I will! Now I just need to cancel some credit cards and simplify there too.... not worth the over-optimizing stress.
manlymatt83:

Join the "simplicity" folks in investing and in life. I have one credit card -- thankfully.

Taylor

"Our lives are frittered away with detail. Simplify. Simplify." -- Henry David Thoreau
"Simplicity is the master key to financial success." -- Jack Bogle
Donwand
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Re: The Three Fund Portfolio

Post by Donwand »

Taylor Larimore wrote: Wed Feb 08, 2012 2:58 pm Semikger:
Are there any advantages or disadvantages of doing The Target Retirement Fund instead of the Three Fund Portfolio?
Target Funds designed by Vanguard experts, are nearly identical to the Three Fund Portfolio.

The Three Fund Portfolio's primary advantage over a Target Fund is in portfolios containing both taxable and tax-advantaged accounts. Target Funds are tax-inefficient and become more-so with time. They are seldom recommended for taxable accounts. The Three Fund Portfolio lets us locate tax-efficient stocks in our taxable account and tax-inefficient bonds in our tax-deferred accounts--a huge advantage over time.

If an investor has only tax-advantaged accounts, using Target Funds with similar stock/bond ratios in all accounts simplifies the portfolio because contributions and withdrawals from any account does not materially affect the desired stock/bond allocation.

Best wishes.
Taylor
If I understand this correctly the 3 fund portfolio is better for

Sep and rollover Ira's and non-retirement accounts.

Roth Ira's are better for target funds
sycamore
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Re: The Three Fund Portfolio

Post by sycamore »

Donwand wrote: Fri Jan 22, 2021 9:46 am
Taylor Larimore wrote: Wed Feb 08, 2012 2:58 pm Semikger:
Are there any advantages or disadvantages of doing The Target Retirement Fund instead of the Three Fund Portfolio?
Target Funds designed by Vanguard experts, are nearly identical to the Three Fund Portfolio.

The Three Fund Portfolio's primary advantage over a Target Fund is in portfolios containing both taxable and tax-advantaged accounts. Target Funds are tax-inefficient and become more-so with time. They are seldom recommended for taxable accounts. The Three Fund Portfolio lets us locate tax-efficient stocks in our taxable account and tax-inefficient bonds in our tax-deferred accounts--a huge advantage over time.

If an investor has only tax-advantaged accounts, using Target Funds with similar stock/bond ratios in all accounts simplifies the portfolio because contributions and withdrawals from any account does not materially affect the desired stock/bond allocation.

Best wishes.
Taylor
If I understand this correctly the 3 fund portfolio is better for

Sep and rollover Ira's and non-retirement accounts.

Roth Ira's are better for target funds
I don't think that's the conclusion to draw from what Taylor was saying. There's nothing special about Roth IRA as compared to Trad or SEP IRA that makes one or the other better suited to target funds versus Three Fund.

Taylor noted the primary advantage is in combining both taxable and tax-advantaged accounts.

One takeaway is if you only have tax-advantaged accounts (including one or more of Trad IRA, SEP and Rollover IRA, Roth IRA, 401k, 403b, etc.), then using a Target Fund is a very good choice. Reason being that Target Funds minimize complexity and rebalance for you. Note that some account types (401k, 403b) may have limited fund choices, making a Three Fund portfolio the better and lower-cost choice. So it's not like you should never use Three Fund even if you only have tax-advantaged accounts.

Another takeaway is that if you have a taxable account, it's better to avoid Target fund and bond funds in taxable because (because bond fund distributions are taxable as income as opposed to capital gains, which have a better tax rate). By using a Three Fund portfolio, you can put high tax-cost assets in tax-advantaged, and tax-efficient assets in taxable.

Another scenario: many BHers think assets with higher expected return, e.g., stock funds, should go in a Roth IRA (typically looking ahead to retirement age, they'd prefer a higher Roth IRA balance over a Trad IRA balance - to keep RMDs low). Even if they had only tax-advantaged accounts, their preference for optimizing returns means they prefer a Three Fund portfolio over a Target Fund.
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Re: The Three Fund Portfolio

Post by dbr »

Donwand wrote: Fri Jan 22, 2021 9:46 am
If I understand this correctly the 3 fund portfolio is better for

Sep and rollover Ira's and non-retirement accounts.

Roth Ira's are better for target funds
I also think this is not what Taylor meant.

Probably the operative point is that if all one's investments are tax deferred in the same way then the same balanced fund can be used in all the accounts. When there is a mixture of account types use of balanced funds starts to get more complicated regarding where to locate different kinds of assets for best tax advantage. Also Roth and Trad IRAs are different account types as far as taxes. It might be the best funds to put in a Roth are those that will grow the most, aka stock funds and no bond funds.

A complicating factor is that tax deferral and tax avoidance are not specific to the account being tax "protected." Capital gains taxes in stocks in taxable accounts are deferred until the stock is sold and avoided if the asset is passed on as an inheritance or donated to a charity. I bond income taxes are deferred for thirty years. Tax deferral of basis is different from tax protection of returns, thus Roth and Trad/401k are very different.

I personally think balanced funds of all kinds end up being more complicated than a three fund portfolio rather than simpler except in special cases.
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Re: The Three-Fund Portfolio

Post by Outer Marker »

OP, your portfolio is WAY too complicated.

Suggest you look at the three-fund portfolio: viewtopic.php?f=10&t=88005

Or, perhaps even better, an "all in one" Vanguard Target Date Fund that contains the three elements and automatically rebalances them for you.
dbr
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Re: The Three-Fund Portfolio

Post by dbr »

Outer Marker wrote: Fri Jan 22, 2021 11:10 am OP, your portfolio is WAY too complicated.

Suggest you look at the three-fund portfolio: viewtopic.php?f=10&t=88005

Or, perhaps even better, an "all in one" Vanguard Target Date Fund that contains the three elements and automatically rebalances them for you.
Just as in flying having a stabilized approach to investing at the outer marker is necessary to have a stabilized approach at the inner marker followed by a successful landing. A three fund portfolio is easy to stabilize.
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Re: The Three-Fund Portfolio

Post by HENRYGRUGER »

Mr. Larimore:

In addition to being authoritative and extensive in its data, your post answered an important question I had about you, personally, this morning...after reading a post you wrote on buying annuities at age 80. Another gentleman aggressively tried to indicate you were simply lucky in avoiding sequence of risk, enabling your obvious successful planning. While I see his point, I agree moreso, with your own position.

Putting all that to the side...I am simply gratified to know YOU are still alive and kicking, and based on the fact you updated this post yesterday, as smart and insightful as ever. As a newer reader and now member of this board, it pleases me greatly, that you are.

Thanks for your thought leadership.

BTW...I am one of those academics, not "in the pocket of an insurance companies," the other gentlemen referred to so with vitriol.
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Re: The Three-Fund Portfolio

Post by tucker99 »

It's that time of the year and I need to considering rebalancing. Is the recommendation that 20% stock portion of the Three-Fund Portfolio be with VTIAX based on the current climate, etc. Last I checked this fund is heavy in Asian equities, specifically China. Sounds like we may be relaxing things with trade, and relations in general. I'm wondering if that is an indication that we should be rethink the 20%.
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Re: The Three-Fund Portfolio

Post by Triple digit golfer »

tucker99 wrote: Fri Jan 22, 2021 1:44 pm It's that time of the year and I need to considering rebalancing. Is the recommendation that 20% stock portion of the Three-Fund Portfolio be with VTIAX based on the current climate, etc. Last I checked this fund is heavy in Asian equities, specifically China. Sounds like we may be relaxing things with trade, and relations in general. I'm wondering if that is an indication that we should be rethink the 20%.
The 20% recommendation is Taylor's opinion and has been for years and still is.

Regardless of what percentage to international you select, the important thing is that you stick to it and don't change often based on current events or feelings.

Some people don't invest internationally at all and others do 50% of their equities or more. Vanguard's target retirement and LifeStrategy funds use 40%. I personally am at 31% right now. You will get a multitude of opinions and everybody thinks theirs is right.

20% is reasonable by most standards. I feel it is too low. Jack Bogle would have felt it is too high. Taylor feels it is just right.
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Taylor Larimore
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Re: The Three-Fund Portfolio

Post by Taylor Larimore »

HENRYGRUGER:

Welcome to the Bogleheads Forum!

I appreciate your kind words.

Best wishes.
Taylor
Jack Bogle's Words of Wisdom: “Your success in investing will depend in part on your character and guts, and in part on your ability at the height of ebullience and the depth of despair alike that this too shall pass.”
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Re: The Three-Fund Portfolio

Post by 2beachcombers »

Taylor---Merci Beaucoup !

I copied this post here to thank you personally and is a good example of L. Swedroe's quote.

by manlymatt83 » Wed Jan 20, 2021 2:05 am

Really loved this quote at the end of Larry Swedroe’s book, the incredible shrinking alpha:
While it is a tragedy that the majority of individual investors unnecessarily miss out on market returns that are available to anyone adopting a passive investment strategy, the truly great tragedy is that they also miss out on the important things in life in pursuit of the Holy Grail of outperformance. Our fondest wish is that this book has led you to the winner’s game in both investing and, far more importantly, life.


Thanks for the education
Post by 2beachcombers » Wed Jan 27, 2021 2:30 pm


A special thanks to the Boglehead Forum, the recommended books, techniques, questions and answers. My 20 yrs of investing education has constantly improved my comfort level in managing my portfolio. The prior 20+ years of max 401 contributions was the start.

I have gone from an 80% equity portfolio managed by FIDO(first 5 yrs) :oops: , 5 years of ROTH conversions and thrashing investments; and the last 10 years moving from an 80% Dr. Bernstein-Ida portfolio, to slowly evolving to a 3 Fund @ 50% equity portfolio. The game is won, my new hobby is Vacation planning.! :moneybag

ROTH conversions executed in first few years of retirement(no salary, no SS); marker crashes via TLH; 2020 MRD, and any year with MarginalTR less than 22%

The education, and confidence in maintaining my plan was Prime. The overall excellent Market growth and the gift of Market crashes, combined with the Boglehead education--ER management, deferred and taxable AA, nonqual dividend control, TLH(especially selling taxable, rebalance via ROTH), tax management, ROTH conversions and rebalancing via ROTHs(post TLH yrs in taxable) contributed to the success.

Equity Portfolio today is 77% deferred 57% ROTH / 20% IRA. Muni(vteb) in taxable.
Sweat equity(do all maintenance and ground work) and frugality(my SC400 is 22 yrs old) contributed to Zero debt; Zero withdrawals. :sharebeer
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Taylor Larimore
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Re: The Three-Fund Portfolio

Post by Taylor Larimore »

2beachcombers:

Thank you for your informative reply. I can relate to this part:

"I have gone from an 80% equity portfolio managed by FIDO(first 5 yrs) :oops: , 5 years of ROTH conversions and thrashing investments; and the last 10 years moving from an 80% Dr. Bernstein-Ida portfolio, to slowly evolving to a 3 Fund @ 50% equity portfolio. The game is won, my new hobby is Vacation planning.! "

Pat and I bought 16 Vanguard funds when we moved our investments from Merrill Lynch to Vanguard in 1986. I mistakenly thought we were getting more diversification??

Enjoy your "Vacation planning." If you have the time and can afford it (thanks to your 3-fund portfolio), consider a world cruise.

Taylor
Jack Bogle's Words of Wisdom: "Simplicity is the master key to financial success. -- We ignore the real diamonds of simplicity, seeking instead the illusory rhinestones of complexity."
"Simplicity is the master key to financial success." -- Jack Bogle
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The 2020 Periodic Table of Investment Returns

Post by Taylor Larimore »

Bogleheads:

The Callan Company has posted their annual Periodic Table of Investment Returns for 2020. In my opinion it is the best visual information showing the importance of asset class diversification and the futility of market timing. It is also a primary reason for which many Bogleheads favor the total market index funds in The Three-Fund Portfolio. This is the Link:

https://www.bogleheads.org/w/images/d/d ... eturns.png

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 LadyGeek »

^^^ A better reference would be the wiki: Callan periodic table of investment returns
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Re: The Three-Fund Portfolio

Post by abuss368 »

Taylor Larimore wrote: Thu Jan 28, 2021 10:22 am
Pat and I bought 16 Vanguard funds when we moved our investments from Merrill Lynch to Vanguard in 1986. I mistakenly thought we were getting more diversification??

Taylor
When we moved from Merrill Lynch years back to Vanguard, we owned 15 - 18 funds. Bonds included TIPS, GNMA, Short, Treasury, Total Bond, Junk! Stocks includes Global funds, Total Stock, Small Index, Mid Caps, Precious Metals, Energy, REITs, Healthcare, International! And there were more.

Once we discovered owning a few total market index funds, we knew we were on to something special.

Thank you Jack Bogle and Taylor!
Tony
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Re: The Three-Fund Portfolio

Post by abuss368 »

LadyGeek wrote: Thu Jan 28, 2021 2:51 pm ^^^ A better reference would be the wiki: Callan periodic table of investment returns
Thanks for the link LadyGeek! I enjoy this table. I have learned much and the visual helps to show the importance of diversification.

Best.
Tony
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Re: The Three-Fund Portfolio

Post by abuss368 »

tucker99 wrote: Fri Jan 22, 2021 1:44 pm It's that time of the year and I need to considering rebalancing. Is the recommendation that 20% stock portion of the Three-Fund Portfolio be with VTIAX based on the current climate, etc. Last I checked this fund is heavy in Asian equities, specifically China. Sounds like we may be relaxing things with trade, and relations in general. I'm wondering if that is an indication that we should be rethink the 20%.
None of that matters! The Three Fund Portfolio can be structured in any allocation as long as the investor is comfortable based on timeframe, goals, and ability to take risk. Vanguard has recommended an international stock allocation of 20% to market weight (50% + -). Vanguard does allocate 40% to international stocks in the Target and LifeStrategy funds. Jack Bogle and Taylor have recommended 20% of stocks to international.

The most important decision is the overall asset allocation between stocks and bonds and stay with the plan.

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

Post by GRP »

I am not technically invested in the Three-Fund Portfolio. I'm invested in a single conservative Vanguard fund. However, I do believe this strategy is certainly in keeping with the overall Three-Fund philosophy.
Almost nothing turns out as expected.
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Re: The Three-Fund Portfolio

Post by NearlyRetired »

abuss368 wrote: Thu Jan 28, 2021 7:10 pm
LadyGeek wrote: Thu Jan 28, 2021 2:51 pm ^^^ A better reference would be the wiki: Callan periodic table of investment returns
Thanks for the link LadyGeek! I enjoy this table. I have learned much and the visual helps to show the importance of diversification.

Best.
Tony
There is another thread discussing the Callan table, and jsprag has created a very striking visual which you can see here viewtopic.php?p=5770573#p5770573
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Re: The Three-Fund Portfolio

Post by albireo13 »

Am a follower of the 3-fund portfolio.

I am 65, just retired. I recently inherited a collection of stock holdings, adding up to 6 figures. I quickly liquidated the stocks and put it all into three Vanguard ETF funds:

VTI (45%)
VXUS (15%)
BND (40%)

So, allocation is 60/40. This is a taxable account, separate from our nest egg. It will serve as retirement margin and also emergency funds.
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Re: The Three-Fund Portfolio

Post by 2beachcombers »

Sounds good:

Did you balance your whole AA( taxable +tax deferred) with your desired AA?
This is important and to take advantage of major market swings.
Taxable accounts drive taxable dividends and cap gains --which drives higher income-- which drives penalties--taxes, PartB premium, etc. And SS tax as a function of your income. Check out the WIKI on AA and taxes.

And I recommend at any market crash to rebalance with tax deferred and replace taxable assets into Tax Deferred

In my case a market drop drove - cash out some portion of taxable account, take CG loss, put sold $$ into MUNI VTEB. Reallocated Tax deferred with equivalent asset(that was sold)to rebalance entire AA. If taxable loss was large, execute ROTH conversions considering MAGI.(loss offsets ROTH tax)

Although I call my AA 3 fund, the bonds are munis in taxable, taxable bonds in deferred. Bonds in taxable i avoid. My IRA is in bonds, My ROTH in equities
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Re: The Three-Fund Portfolio

Post by manlymatt83 »

From the first post in this thread:
Taylor Larimore wrote: Sun Jan 01, 2012 5:02 pm Asset Allocation: Use this Investor Questionnaire and Inflation, Bonds and Stock Statistics to help you decide your very important stock/bond allocation. I suggest International stocks = 20% of equity.
Has vanguard removed the investor questionnaire? I can't find it anymore and the link in the first post is broken.
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Re: The Three-Fund Portfolio

Post by sycamore »

manlymatt83 wrote: Mon Feb 01, 2021 10:57 am From the first post in this thread:
Taylor Larimore wrote: Sun Jan 01, 2012 5:02 pm Asset Allocation: Use this Investor Questionnaire and Inflation, Bonds and Stock Statistics to help you decide your very important stock/bond allocation. I suggest International stocks = 20% of equity.
Has vanguard removed the investor questionnaire? I can't find it anymore and the link in the first post is broken.
Try this link instead: https://retirementplans.vanguard.com/VG ... Step=start
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Re: The Three-Fund Portfolio

Post by manlymatt83 »

sycamore wrote: Mon Feb 01, 2021 11:04 am
manlymatt83 wrote: Mon Feb 01, 2021 10:57 am From the first post in this thread:
Taylor Larimore wrote: Sun Jan 01, 2012 5:02 pm Asset Allocation: Use this Investor Questionnaire and Inflation, Bonds and Stock Statistics to help you decide your very important stock/bond allocation. I suggest International stocks = 20% of equity.
Has vanguard removed the investor questionnaire? I can't find it anymore and the link in the first post is broken.
Try this link instead: https://retirementplans.vanguard.com/VG ... Step=start
Ah! Perfect, thanks!
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Re: The Three-Fund Portfolio

Post by Taylor Larimore »

Sycamore:

Thank you for giving us the new link to Vanguard's "Asset Allocation Questionnaire." I have edited my Opening Post.

Best wishes.
Taylor
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Re: The Three-Fund Portfolio

Post by LadyGeek »

Likewise, thanks! I have updated the wiki.

The main content is here: Template:Self-assessment questionnaires which then appears in Risk tolerance and Assessing risk tolerance.

Unfortunately, Vanguard's "Get a recommendation" tool seems to have disappeared, so I removed it from the wiki. Here's what the content looked like before I made the change: Revision as of 03:01, 17 August 2016
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Historical Statistics For Inflation, Bonds and Stocks

Post by Taylor Larimore »

Bogleheads:

I have updated my post showing the 2020 U.S. (CPI) inflation rate plus the annual performance of each fund in The Three-Fund Portfolio:

Historical Statistics For Inflation, Bonds and Stocks

Best wishes.
Taylor
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Re: The Three-Fund Portfolio

Post by Highfeehater »

I have to chuckle as I read threads where people check their 3 fund portfolio accounts and get bored after a couple minutes. LOL. It's true. I do the same, but I also now have a quiet confidence that I never used to have before I "met" you Bogleheads a few years ago. I read some posts from the GameStop threads and I sense a whole lot more anxiety. The 3 fund strategy works and I sleep well at night.

PS. Nope, I did not get into the GameStop game. I stayed the course. It looked like gambling to me and sounded extremely stressful. I've already had those days. Thanks BH's.
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Highfeehater -- Helping Others Learn What Works

Post by Taylor Larimore »

Highfeehater wrote: Tue Feb 02, 2021 6:30 pm I have to chuckle as I read threads where people check their 3 fund portfolio accounts and get bored after a couple minutes. LOL. It's true. I do the same, but I also now have a quiet confidence that I never used to have before I "met" you Bogleheads a few years ago. I read some posts from the GameStop threads and I sense a whole lot more anxiety. The 3 fund strategy works and I sleep well at night.

Thanks BH's.
Highfeehater:

It is post like yours that give new investors the courage to invest for success.

Thank you and 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 abuss368 »

Highfeehater wrote: Tue Feb 02, 2021 6:30 pm I have to chuckle as I read threads where people check their 3 fund portfolio accounts and get bored after a couple minutes. LOL. It's true. I do the same, but I also now have a quiet confidence that I never used to have before I "met" you Bogleheads a few years ago. I read some posts from the GameStop threads and I sense a whole lot more anxiety. The 3 fund strategy works and I sleep well at night.

PS. Nope, I did not get into the GameStop game. I stayed the course. It looked like gambling to me and sounded extremely stressful. I've already had those days. Thanks BH's.
Warren Buffett has said investing should be as exciting as watching paint dry. Owning the market (the haystack) and moving forward with life pays rewards every day.

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

Post by manlymatt83 »

Is it safe to assume BNDW will out-perform cash @ 1% interest in the long run? I am tempted to sell about 10% of my VT holdings for cash right now, such that I can at least have some way to "buy low" should these historically high valuations retreat. In that case, is it better to adjust my 100% stock portfolio to 90% VT/10% BNDW and just re-allocate should a pullback occur?
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Re: The Three-Fund Portfolio

Post by 000 »

manlymatt83 wrote: Thu Feb 04, 2021 11:25 am Is it safe to assume BNDW will out-perform cash @ 1% interest in the long run? I am tempted to sell about 10% of my VT holdings for cash right now, such that I can at least have some way to "buy low" should these historically high valuations retreat. In that case, is it better to adjust my 100% stock portfolio to 90% VT/10% BNDW and just re-allocate should a pullback occur?
If your goal is market timing than holding BNDW instead of cash may not work out so well... pretty much everything other than cash tends to go down during liquidity crises which usually accompany stock market crashes.

To your other question "Is it safe to assume BNDW will out-perform cash @ 1% interest in the long run?", I don't know where you are seeing cash @ 1%, but nevertheless you should read up on bond duration and duration risk which help explain the risk of bonds under-performing cash depending on the length of time. There is a wiki article "bond duration".
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Re: The Three-Fund Portfolio

Post by lzh01 »

manlymatt83 wrote: Thu Jan 21, 2021 8:34 am Logged into my Schwab account this morning like I usually do every day. Found my holdings "too boring" to look at. Immediately logged out. I guess I accomplished simplicity.
I was perusing through my very boring 3-fund portfolio this morning (VBTLX, VTIAX, VTSAX) and decided to take a peek at some of the holdings of VTSAX. I noticed that VTSAX owns about 1.4MM shares of GME! I suddenly felt a tinge of excitement given the events of the past few weeks!
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"a tinge of excitement"

Post by Taylor Larimore »

lzh01 wrote: Mon Feb 08, 2021 7:14 am I was perusing through my very boring 3-fund portfolio this morning (VBTLX, VTIAX, VTSAX) and decided to take a peek at some of the holdings of VTSAX. I noticed that VTSAX owns about 1.4MM shares of GME! I suddenly felt a tinge of excitement given the events of the past few weeks!
Izh01:

We live on the 35th floor of a bayside condominium near downtown Miami. One of our balconies gives a good view of the Dade County commercial area which extends for miles in a westerly direction. It is very reassuring to know that my S&P 500 Index Fund owns a small part of nearly every large corporation we can see!

Best wishes.
Taylor
Jack Bogle's Words of Wisdom: "How could I possibly be against the idea of shares in a low-cost S&P 500 ETF being bought by an investor and held for an investment lifetime?"
"Simplicity is the master key to financial success." -- Jack Bogle
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Re: "a tinge of excitement"

Post by Triple digit golfer »

Taylor Larimore wrote: Mon Feb 08, 2021 10:05 am
lzh01 wrote: Mon Feb 08, 2021 7:14 am I was perusing through my very boring 3-fund portfolio this morning (VBTLX, VTIAX, VTSAX) and decided to take a peek at some of the holdings of VTSAX. I noticed that VTSAX owns about 1.4MM shares of GME! I suddenly felt a tinge of excitement given the events of the past few weeks!
Izh01:

We live on the 35th floor of a bayside condominium near downtown Miami. One of our balconies gives a good view of the Dade County commercial area which extends for miles in a westerly direction. It is very reassuring to know that my S&P 500 Index Fund owns a small part of nearly every large corporation we can see!

Best wishes.
Taylor
Jack Bogle's Words of Wisdom: "How could I possibly be against the idea of shares in a low-cost S&P 500 ETF being bought by an investor and held for an investment lifetime?"
That reassures me that my 500 index, which comprises the majority of my U.S. stock holdings due to availability, is good enough and I need not worry that I use it and not a Total Stock fund.
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Re: "a tinge of excitement"

Post by bertilak »

Triple digit golfer wrote: Mon Feb 08, 2021 10:44 am
That reassures me that my 500 index, which comprises the majority of my U.S. stock holdings due to availability, is good enough and I need not worry that I use it and not a Total Stock fund.
I too have all my US stock holdings in Vanguard's S&P 500 fund. I started with Total Stock Market (TSM) but did some Tax Loss Harvesting (TLH) a few months back by swapping into S&P 500. I am happy where I am. If there is another big enough drop in the market I will TLH back to TSM and be just as happy there.
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Re: "a tinge of excitement"

Post by Triple digit golfer »

bertilak wrote: Mon Feb 08, 2021 11:04 am
Triple digit golfer wrote: Mon Feb 08, 2021 10:44 am
That reassures me that my 500 index, which comprises the majority of my U.S. stock holdings due to availability, is good enough and I need not worry that I use it and not a Total Stock fund.
I too have all my US stock holdings in Vanguard's S&P 500 fund. I started with Total Stock Market (TSM) but did some Tax Loss Harvesting (TLH) a few months back by swapping into S&P 500. I am happy where I am. If there is another big enough drop in the market I will TLH back to TSM and be just as happy there.
Ditto. I am actually slowly reducing Total Stock and increasing 500 Index because it's all that's available in my 401k, and I have a huge chunk in taxable from tax loss harvesting back in March 2020, and when I contribute to taxable (my largest contribution bucket) it goes to the 500 index and not TSM because I hold TSM in our Roth accounts.

So, over time I'm becoming more and more S&P 500 heavy on the U.S. stock side as I contribute in taxable and exchange from TSM to TBM in tax-deferred accounts to maintain my AA. I could add small caps or extended market but it would be a lot of exchanging and tracking, which I really am not interested in doing.
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Re: "a tinge of excitement"

Post by lzh01 »

Taylor Larimore wrote: Mon Feb 08, 2021 10:05 am
lzh01 wrote: Mon Feb 08, 2021 7:14 am I was perusing through my very boring 3-fund portfolio this morning (VBTLX, VTIAX, VTSAX) and decided to take a peek at some of the holdings of VTSAX. I noticed that VTSAX owns about 1.4MM shares of GME! I suddenly felt a tinge of excitement given the events of the past few weeks!
Izh01:

We live on the 35th floor of a bayside condominium near downtown Miami. One of our balconies gives a good view of the Dade County commercial area which extends for miles in a westerly direction. It is very reassuring to know that my S&P 500 Index Fund owns a small part of nearly every large corporation we can see!

Best wishes.
Taylor
Jack Bogle's Words of Wisdom: "How could I possibly be against the idea of shares in a low-cost S&P 500 ETF being bought by an investor and held for an investment lifetime?"
Haha! I had a similar thought today while working from home in the basement of my home in Indiana. Somewhat remarkable as I went through the list noting all the companies I have done business with either personally or through work.

Now, I do have to admit that as I went through the list of bonds in VBTLX, I felt a little uneasy with the number of mortgage backed securities. Although that could be because I watched the movie The Big Short again just last weekend!
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Re: The Three-Fund Portfolio

Post by Chrysler28 »

Hey guys, you've convinced me to setting up my retirement portfolio in a three-fund setup. I live in Canada so I'm trying to figure out what the Canadian tickers are for VTI, VXUS, BND.

I'm 28 so I'll probably go with the 60/20/20 and not touch it until I retire. Ready for the paint to start drying lol
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Re: The Three-Fund Portfolio

Post by LadyGeek »

You're in Canada? The best advice comes from your home country.

I recommend you ask those questions in our sister Canadian forum: Financial Wisdom Forum

They have an excellent wiki: finiki, the Canadian financial wiki

Also see: Simple index portfolios and note the Canadian equivalent of the 3-fund portfolio.

Start a thread in the Financial Planning and Building Portfolios forum and post your portfolio using the My Portfolio: Seeking Advice format. It will make you think about the "big picture" while giving members the information they need to point you in the right direction.

Disclaimer: I'm a member of both forums.
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Re: The Three-Fund Portfolio

Post by LadyGeek »

Chrysler28 has a thread here: 3 Fund portfolio Canadian tickers
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Re: "a tinge of excitement"

Post by abuss368 »

Taylor Larimore wrote: Mon Feb 08, 2021 10:05 am
lzh01 wrote: Mon Feb 08, 2021 7:14 am I was perusing through my very boring 3-fund portfolio this morning (VBTLX, VTIAX, VTSAX) and decided to take a peek at some of the holdings of VTSAX. I noticed that VTSAX owns about 1.4MM shares of GME! I suddenly felt a tinge of excitement given the events of the past few weeks!
Izh01:

We live on the 35th floor of a bayside condominium near downtown Miami. One of our balconies gives a good view of the Dade County commercial area which extends for miles in a westerly direction. It is very reassuring to know that my S&P 500 Index Fund owns a small part of nearly every large corporation we can see!

Best wishes.
Taylor
Jack Bogle's Words of Wisdom: "How could I possibly be against the idea of shares in a low-cost S&P 500 ETF being bought by an investor and held for an investment lifetime?"
Hi Taylor -

I recall you mentioning that before! That really puts into perspective holding low cost total market index funds. The people in these companies are hard at work everyday with one simple goal of making money.

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

Post by Taylor Larimore »

Bogleheads:

Investors in The Three-Fund Portfolio are encouraged by the investment industry to add their additional funds. One such fund is a TIPS fund. This a copy of my recent post showing historical returns for each of the funds in The Three-Fund Portfolio going back to 1975. Adding a TIPS fund was unnecessary even during the -13.3% inflation in 1979.
Re: Good idea to hold TIPS now?
Post by Taylor Larimore » Sat Feb 13, 2021 12:02 pm

FIREchief:

I recently posted U.S. inflation rates and historical returns since 1975 for each of the funds in The Three-Fund Portfolio. The worst annual inflation rate during that period was -13.3% in 1979. Despite that inflation, the three-funds enjoyed a positive return.

viewtopic.php?t=315786

More money has been lost preparing for inflation than from inflation itself. Strive for simplicity--not complexity.

Best wishes.
Taylor
Jack Bogle's Words of Wisdom: "On occasion, rapid growth in the money supply has unleashed bouts of rapid price inflation. The effect on real long-term stock returns has nonetheless proved neutral."
"Simplicity is the master key to financial success." -- Jack Bogle
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Re: The Three-Fund Portfolio and Inflation

Post by abuss368 »

Taylor Larimore wrote: Sat Feb 13, 2021 11:23 am Bogleheads:

Investors in The Three-Fund Portfolio are encouraged by the investment industry to add their additional funds. One such fund is a TIPS fund. This a copy of my recent post showing historical returns for each of the funds in The Three-Fund Portfolio going back to 1975. Adding a TIPS fund was unnecessary even during the -13.3% inflation in 1979.
Re: Good idea to hold TIPS now?
Post by Taylor Larimore » Sat Feb 13, 2021 12:02 pm

FIREchief:

I recently posted U.S. inflation rates and historical returns since 1975 for each of the funds in The Three-Fund Portfolio. The worst annual inflation rate during that period was -13.3% in 1979. Despite that inflation, the three-funds enjoyed a positive return.

viewtopic.php?t=315786

More money has been lost preparing for inflation than from inflation itself. Strive for simplicity--not complexity.

Best wishes.
Taylor
Jack Bogle's Words of Wisdom: "On occasion, rapid growth in the money supply has unleashed bouts of rapid price inflation. The effect on real long-term stock returns has nonetheless proved neutral."
[ quote fixed by admin LadyGeek]

Very informative Taylor! I did not know that.
Tony
John C. Bogle: “Simplicity is the master key to financial success."
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Re: The Three-Fund Portfolio and Inflation

Post by BabaWawa »

abuss368 wrote: Sat Feb 13, 2021 6:46 pm
Taylor Larimore wrote: Sat Feb 13, 2021 11:23 am Bogleheads:

Investors in The Three-Fund Portfolio are encouraged by the investment industry to add their additional funds. One such fund is a TIPS fund. This a copy of my recent post showing historical returns for each of the funds in The Three-Fund Portfolio going back to 1975. Adding a TIPS fund was unnecessary even during the -13.3% inflation in 1979.
Re: Good idea to hold TIPS now?
Post by Taylor Larimore » Sat Feb 13, 2021 12:02 pm

FIREchief:

I recently posted U.S. inflation rates and historical returns since 1975 for each of the funds in The Three-Fund Portfolio. The worst annual inflation rate during that period was -13.3% in 1979. Despite that inflation, the three-funds enjoyed a positive return.

viewtopic.php?t=315786

More money has been lost preparing for inflation than from inflation itself. Strive for simplicity--not complexity.

Best wishes.
Taylor
Jack Bogle's Words of Wisdom: "On occasion, rapid growth in the money supply has unleashed bouts of rapid price inflation. The effect on real long-term stock returns has nonetheless proved neutral."
[ quote fixed by admin LadyGeek]

Very informative Taylor! I did not know that.
Tony
Guess Taylor learned that during all the years half of his bond allocation was in TIPS. Stay the course!
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