HOW TO CREATE A 3 FUND PORTFOLIO | SIMPLE INDEX FUNDS THAT WORK

Let's go over, HOW TO CREATE A 3 FUND PORTFOLIO.

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One really great way to invest simply is through a 3 fund portfolio. Investing does not need to be complicated. In fact, it can be very simple and highly rewarding. If done right, you can potentially earn comparable returns to someone with sophisticated techniques. When it comes to your investing approach, the range of options on how to do it is broad.

3 fund portfolio is an investing approach made widely popular by the Bogleheads. A group of investing enthusiasts inspired by Vanguard's founder John Bogle, a huge advocate for simplified, low-cost investing. This blog post will break down the key things you need to know about the 3 fund portfolio.

So, what is the 3 fund portfolio A.K.A. the lazy portfolio?
The three fund portfolio strategy is an investing strategy where you create a portfolio that only contains 3 assets. These assets are usually low-cost index funds or ETFs (Learn more about the differences between index funds and ETFs).

More specifically, these funds can be broken down into the following asset classes:

U.S. Stocks
U.S. Bonds
International Stocks

Examples of funds you can put in a 3-fund portfolio
When it comes to setting up a 3-fund portfolio, some specific fund examples include the following:

Popular U.S. Index Funds
Vanguard Total Stock Market Index Fund (Symbol: VTSAX)
Vanguard 500 Index Fund (Symbol: VFIAX)
Fidelity S&P 500 Index Fund (Symbol: FXAIX)

Popular International Funds
Vanguard Total International Index Fund (Symbol: VTIAX)
Fidelity ZERO International Index Fund (Symbol: FZILX)
Schwab International Index (Symbol: SWISX)

Popular U.S. Bond Funds
Vanguard Total Bond Market Index Fund (Symbol: VBTLX)
Fidelity US Bonds Index Fund (Symbol: FSITX)
Schwab US Aggregate Bond Index Fund (Symbol: SWAGX)

How do I set my allocation?
Great question!

Alternatively, you can use the very simple 120 minus your age as the stock percentage. A 40-year-old would put 80% stocks and 20% bonds.

Larimore, in his book, offers the rule that you should hold your age in bonds. So, a 40-year-old would put 60% stocks and 40% bonds.

That will tell you the percentage of stocks and bonds. Larimore, and Vanguard research on international equity, suggests a 20% international allocation where you can decide how much international exposure you’d prefer, but from there the math is easy.

If you were given an 80% stock, 20% bond and wanted to have a 20% international allocation, this is how’d you invest into the three funds:

Total Stock Market (VTSAX) – 64%
Total International Stock (VTIAX) – 16%
Total Bond Market Fund (VBTLX) – 20%

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DISCLAIMERS & DISCLOSURES

This content is for education and entertainment purposes only. Tray does not provide tax or investment advice. The information is being presented without consideration of the investment objectives, risk tolerance, or financial circumstances of any specific investor and might not be suitable for all investors. Past performance is not indicative of future results. All investing involves risk, including the possible loss of principal.
#lazyportfolio #indexfunds #3fundportfolio

[LetsTalkFinanceswithTrayTruitt]

Are you a fan of the 3 fund portfolio? Why or why not? Don't forget to

[scaleskl]

Great information! You keep thing so simple! I have FXAIX, FSKAX and FSRBX in my 403b. I also have FZILX in my ROTH IRA!

[MichaelCTruth]

Loving these videos. Can you give the ETF symbols that are similar? Is there a reason you chose mutual funds vs ETFS?

[johu]

Great video, thanks for explaining everything very well..

[freebird]

Yea i'm not too sure about international funds right now with all the unrest going on now.

[RachelY]

Great info, thanks a lot. At 403b, I saw they choose VBTLX, VFIAX, VTIAX for conservative style. 😆

[NetGhost]

Where you at big dog? Haven't seen a video in a minute, hope you are ok breh.

[GatorChompChris]

I was thinking about FXAIX, FSMAX, FTIHX and FXNAX for my Roth. Get about 200 more funds than replacing the first 2 with total market fund. I may be over thinking it though. Using my Roth as a savings for a major purchase in 18 years. Thoughts?

[ClayCarries]

At 23 years old would you say 70/20/10 would be a good allocation?

[soheylanoghrehkar]

The ticker symbol for Fidelity bond it’s not correct. FSITX doesn’t come up.

[orlandobloom]

I want to collaborate with u on a video, but I dn't know how to tact u。